Ladies and gentlemen, good day, and welcome to Brookfield India Real Estate Trust Q1 FY 2024 earnings conference call. As a reminder, all participant lines will be in the listen-only mode until the floor is open for questions. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to the management. Thank you. Thank you. This is Alok. Very good evening to everyone. Welcome to the earnings call for Q1 FY 2024. At the outset, I'm pleased to say that we are on track to completing the acquisitions of Downtown Powai and Candor TechSpace G1 in partnership with GIC. Like we had stated at the time of announcement of acquisitions, these transformative acquisitions will significantly increase our operating scale and diversify our portfolio. We have secured INR 27 billion of equity to finance acquisitions. Thanks to the support from our existing unitholders and new investors, we raised INR 23 billion through the recently concluded institutional placement. Further, we have commitment to raise INR 4 billion from the Sponsor Group through our preferential issuance, subject to the unitholders' approval, which is scheduled for end of August. With this, we are well placed to complete the acquisitions of Downtown Powai and G1 during the ongoing quarter. These acquisitions will lead to our total area increasing by 35% and our operating area increasing by 44%. There will be significant improvement in geographic diversification, with Mumbai and Gurugram becoming the largest geographies by value in our portfolio. The top five tenant concentration will reduce from 51% to 31%, with the share of DSSI tenants increasing by approximately 10%. During the quarter, our current portfolio witnessed gross leasing of 0.3 million sq ft at a re-leasing spread of 42%. Additionally, 0.1 million sq ft of NOIs are under execution. We renewed our lease with a market tenant at N1 at a 49% higher rent than the expiring rent. Our existing leases have delivered a robust embedded growth, with a 9% average escalation on 1.7 million sq ft during the quarter. The physical occupancy at our campuses continue to improve. That, combined with our robust leasing pipeline of 1.2 million sq ft, gives us confidence that we'll be able to backfill the expiries in this year. We have achieved a 5% increase in our adjusted NOI run rate over the same quarter last year and have generated NDCF per unit of INR 4.91 per unit, in line with our current quarterly run rate. Considering the impact of the additional units that were issued as part of the institutional placement, we are distributing INR 3.85 per unit for the quarter. Our portfolio has robust embedded growth that will grow our NOI organically by approximately 16% from balance leasing and growing physical occupancy, aiding margin recovery. This organic growth, coupled with potential inorganic growth from the 25 million sq ft of high-quality sponsor assets in Bangalore, Mumbai, Chennai, Delhi, and Pune, provides for strong medium to long-term growth trajectory for our REIT. We have continued to achieve success on the ESG front. We are transitioning our campuses to consuming green energy. Approximately 28% of the electricity consumption in the last quarter was from green sources. Candor TechSpace K-One achieved a 100% green energy status in the last quarter. We achieved an IGBC Gold rating for Kensington and an IGBC Platinum rating for the recently completed tower, Tower 11 and 11A at Candor TechSpace N-Two. With this, the entire campus of Candor TechSpace N2 is IGBC Platinum rated. We also won the Golden Peacock Award for Energy Efficiency in the real estate and construction category for 2023. We continue to take incremental measures to ensure that our assets are green, efficient, resilient, and future fit, so that we can achieve our net zero target by 2040. Now, I would like to invite Sanjeev to provide the financial updates. Thank you, Alok. Good evening, everyone. Our fundraising program for the acquisition of Downtown Powai and Candor TechSpace G1 has progressed very well over the last month. I am delighted to announce that we have successfully raised INR 2,305 crore through our first institutional placement, which saw a robust participation from both existing unitholders and new investors. We issued 9.1 crore units to 64 institutional investors, with participation from all categories of investors. This institutional placement has also led to approximately 60% increase in free flow. New investors have subscribed to approximately 65% of the issue, which has led to significant diversification of the investor base. We have secured a commitment of INR 400 crore from our sponsor group through the proposed preferential issuance, which is subject to approval at the unitholders meeting scheduled on August 26th, 2023. The proposed preferential allotment is at around 25% premium to the current price, demonstrating the long-term commitment reposed by the Brookfield sponsor group in the Brookfield India Real Estate Trust. Post the completion of fundraise, the Brookfield Group would continue to be the largest unitholder, with approximately 44% of the unit holding. With a combination of this institutional placement and preferential issuance, we have secured the funding for the acquisition of Downtown Powai and Candor TechSpace G1. We expect to achieve closure of our first commercial paper of INR 750 crore this month, and have secured investor commitment from several reputed mutual funds. The proceeds from the commercial paper issuance will be issued to right-size the SPV level debt at Downtown Powai and Candor TechSpace G1. We have achieved a stable NDCF of INR 164 crore, in line with our quarterly run rate, that is, INR 4.91 per unit. Considering the additional units that were issued as part of the fundraising through the institutional placement, the adjusted NDCF per unit is INR 3.86 per unit for Q1 FY 2024. The board has approved the distribution of INR 164 crore or INR 3.85 per unit this quarter. With completion of the acquisition in Q2 FY 2024, we expect the full benefit of the acquisition to flow through to our distributions from Q3 2024, and organically grow thereafter. We have witnessed a growth of 4% in our operating lease rentals to INR 211 crore compared to the same period last year. The adjusted NOI for this quarter grew by 5% to INR 245 crore compared to Q1 FY 2023. We continue to hold a significant organic growth potential of 16% in our existing assets, which can be achieved through the lease-up of vacant area and margin recovery. Further, our NOI potential will significantly increase upon the addition of Downtown Powai and Candor TechSpace G1 to the portfolio. Our robust balance sheet has a loan-to-value ratio of 33% and average interest rate of 8.2% as on June 30, 2023. Our debt structure has ensured that we have limited amortization of only 5% till FY 2026. The SPV level debt at Downtown Powai and Candor TechSpace G1 is also at a repo rate, linked competitive rate of 8.5% per annum, with limited amortization over the next few years. With this, I would request the moderator to open the floor for Q&A, and thanks to all. Thank you very much. We'll now begin the question and answer session. Anyone who wishes to ask a question, may press star and one on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking your question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. Participants, you may press star and one to ask a question. First question is from the line of Puneet from HSBC. Please go ahead. Yeah, thank you so much for the opportunity, and congratulations for getting through this QIP. My first question is, Sorry to interrupt, your voice is coming a little muffled. Can you please speak through the handset or little- Yeah. Closer to the handset? Is it better? Can you hear me well? Yes. Okay. Yeah. My first question is, you know, when does this acquisition finally get through? Post the acquisition, do you still have rights to the cash flows from the acquired assets from first business onwards, or does that start accruing from Q3 only? Yeah. Sanjeev here, Puneet. The acquisition we expect to, to complete by end of, the current month. As far as cash flows are concerned, it's, it's, on, on all earnings post-acquisition, plus whatever will be as a opening the cash balance, on the, on the day of acquisition in these SPVs, REIT will have right over that. Yeah, Puneet, the income support on G1 will kick in from the first of this quarter, which is the first of July. Right, but the cash flow, would it have changed from what you first indicated or, or, the opening cash balance, or will that also be the same? Opening cash balance, as far as Powai is concerned, there is about, you know, INR 23 crore of opening cash that will continue to remain unvalued, and the REIT will not pay value for it, but that will become available for distribution, in the- And the- Quarter ending 31st September. The earnings that the asset would have accrued in the first five months? Not in the first five months. So the earnings of any cash flows from end of August onwards, by which point in time we should have closed the acquisitions, will accrue to the REIT. There are three components. Yeah. One is income support starting first July. Correct. There is INR 23 crores of opening cash in Powai. Yeah. There is any cash flows that may accrue, you know, after 31st August. After 31st August. Understood. What is the plan on the debt side? There was some repayment of debt which was planned, I presume part of it will go through. What happens to the rest? Puneet, this is Ankur. Just like with every acquisition, there will be a change in the capital structure to align with- Mm-hmm. what, capital structure of a REIT-owned SPV should be. Okay Both in terms of type of amortization as well as the quantum of debt. Part of the proceeds of capital raising is, is used for that debt, capital structure that befits a REIT-owned SPV. That's all it is. Right. No, last time you had indicated almost, you know, INR 1,350 crore of repayment of debt. I presume after the INR 2,700 that you've raised, INR 2,400 or INR 2,600 will go into your share, and the balance would go into repayment of debt, right? Some debt will still remain. Yeah. That will remain still. REIT SPVs will have, the right amount of leverage. Okay. These SPVs are currently privately held, so there is a higher leverage, slightly higher leverage than what a public REIT should have. Right. Part of the, of the capital raising are going towards, towards that, debt resizing. Puneet, I'll just add, Sanjeev, here. Yeah. The INR 1,350 crore of debt will fully get replaced at the SPV level by a shareholder loan. 50% this will be contributed by the REIT. Okay This will be, effectively through the CP issuance that is underway. The balance half comes from our counterparty, where again, the transaction is committed. Effectively, you know, whatever we had articulated on the INR 1,350 crore happens in entirety. Understood. That's very clear. Thank you. Lastly, what are the roadblocks to this acquisition? I presume it's just procedural now. Yeah, that's correct. It's all procedural. We expect to conclude both the transactions between 20th to 30th of August this month. Understood. Understood. Just one on the operational side, I noticed that the average escalation for the 1.7 million square feet was about 9.1%. How should one read that? Should it not have been between 12%-15%? We explained that in the footnote, you know. Sorry to interrupt you, but you're not audible. Can you please come a little closer towards the speaker? Yeah. We've explained that in the footnote, you know, below. The Kensington assets had a, had an average escalation of 13%, and the Mumbai asset had an average escalation of 4%. This is because the Kensington assets have an escalation once every 36 months. Right. Right, right. Yeah, I know that. No, no, understood. My bad. Yeah, that's all from my side. Thank you so much. Thank you. Participants, you may press star and one to ask a question. Next question is from the line of Kunal Tayal from Bank of America. Please go ahead. Great, thank you. My first question is that your loan-to-value on a post-acquisition basis, seems like it might move into the high 30s by next quarter. Is the plan to maintain that level of LTV, or would you intend to bring this down, in the subsequent quarters? Kunal, the long-term plan would be to bring it down. As we've stated, historically, we would be top 35% on an ongoing basis. Again, if we basically look at the debt, including the CP issuance that we are doing, we'll be just, it'll be somewhere in the 30%-37% range, which we would look to bring down in due course, over a period of time. Just to add here, what Shailendra mentioned, this high thirties is coming because of one accounting treatment also. The partner's shareholder loan is going to be treated as a loan while calculating LTV. It's as good as shareholder loan from REIT and shareholder loan from the partner. Understand. Okay. The next question is on the physical occupancy. It seems like a very solid improvement. Just want to refresh what your definition is. Is this like, you know, any seat getting utilized or occupied anytime during the week? Or is there a filter, like it needs to be occupied twice or thrice a week at a minimum? Yeah. Actually, you know, when we say 66% physical occupancy, what we're saying is, if there are 1,000 seats in a campus on a particular day, then 66% is occupied. Of course, you know, this is a peak, and generally the physical occupancy is higher on Tuesdays, Wednesdays, and Thursdays. That's how, how you treat it. Is that an average across the week or, like, on a daily basis that you calculate? I mean, I'm trying to understand if someone were to come in once a week, will that count as part of the 66, or will it count as 0.2% occupancy? See, now, what is happening is, generally, most of the companies have mandated three times in a week, and as time is progressing, they are kind of, making it mandatory. Till now, while they had mandated, but they were not very, very particular about it. So, so I would say in most of the companies, I mean, exceptions leave apart, people are coming at least two times in a week. We should take it as a, you know, maximum, on a particular day, which could be Tuesday, Wednesday or Thursday. Yes, if so- somebody comes once in a week, on that particular week, it will get counted. Got it. Okay. Then last one, would be great if you could just sort of, you know, help us with what is the latest you are hearing from your IT services tenant base, both in terms of incremental space requirement as well as the return to office space? Thank you. Yeah. I think on the wall is clear. People, except leave apart, I would not say what statements I'm making, these are universally, you know, applicable to everybody. I would say large number, large percentage of companies are very clear, they want people back to office. There's no 2 ways about it. Of course, everybody has gone for a hybrid work culture. That's true. This means they want people, some of the people, they want 3 days in a week, that's where they want people. Also, please understand that most of the companies have kind of a downsize considering this, this hybrid work, hybrid work culture. What we are seeing is, you know, at least most of the companies are saying at least 5%-6% growth in terms of employees, they're expecting year-on-year. They already have downsized. They already have rationalized their real estate, kind of a portfolio, which is, which is present right now. As people will come back and as we see businesses grow, incremental real estate requirement will come up, you know, quarter-on-quarter. That's very, very evident. Perfect. Thank you so much. Thank you. This is the first RN one to ask a question. Next question is from the line of Shirish Waze, from Moneylife Advisory. Please, go ahead. Thank you, sir, for the opportunity. My question pertains to the acquisition. Sir, average dilution price comes out to somewhere about INR 260, including both the institutional placement and the preferential issue, which represents a 22% discount to our pre-acquisition NAV, while we are acquiring assets at a 12% discount to NAV, the new assets. Just wanted to understand, would this lead to a reduction in NAV for existing investors before the acquisition? How should existing investors look at this acquisition? Thank you. This is Ankur. The, the largest existing investor is Brookfield in this case, and as a board and as sponsor, we are supportive of growth, simply because of the quality of assets that are adding to the portfolio. You know, while the, while, while we can-- while all of us would like to believe that everybody can time the market, but we are also in the phase of the growth of the REIT business in the country. Some amount of dilution, with prospects of long-term value creation, is important for all of us in this business. That's how I would like to read this, read these numbers. If you look at the quality of income profile that are being, that are being added to the REIT, the stability and the diversification that it provides. Again, I would reiterate the quality of portfolio that that we are on track to develop with this acquisition and with the pipeline that we can demonstrate. I think investors today, long term, will be better served with a larger business and with a demonstrated path of both liquidity, creation, in terms of more float, as well as, a more, diversified portfolio. Got it, sir. Do we have a number for what the... or an estimate, rough estimate, what the post-acquisition NAV would look like for the- on a per unit basis? Per the regulations, you know, we have to, we, we, we are, we are supposed to update NAV on a 6-monthly basis. You can take the March NAV with the INR 260 issue per unit and do the math. Brookfield's contribution will be right around the NAV mark, so you can use that as a proxy as well. It's about INR 315 odd, approximately. I could be wrong by a few cents here or there. Okay. Got it. Thank you so much. Next question is on. We have used about INR 750 crore in CP as a bridge financing. How are our, how are we looking to retire this? Like, are we looking at a additional equity raise down the line, or we'll be replacing with this with a longer-term debt? Shailendra here. There are, there are basically two ways to eventually settle the CP. One could be to roll this over through a NCD program at the REIT, okay? You may see, there are no maturities that are coming in our existing debt portfolio, both on the existing assets, including, and the assets that we are acquiring. Those are all long-term facilities with no near-term maturities or very limited near-term maturities. We could very well do a bond. The other path that we could potentially take is to effectively replace this with an equity raise. If you actually look at the stated intent when we had announced these acquisitions, was to look at a INR 3,400 crore fund raise. Potentially in one or more tranches. With the QIP and the preferential allotment, we have done a INR 2,700 crore effective fundraise, and the balance could, you know, over a period of time, be done to retire the CP. Eventually, these are the two possible routes. We will take our own calls based on various other parameters that are appropriate at that point in time to eventually deal with this. Got it. Thank you, sir. My last question relates to our committed occupancy. In our existing portfolio across all our assets, we have seen a decline in committed occupancy in this quarter. Are we seeing any system-wide reason for this? Because this is across geography. No. This is a lot, not, not really, I would say, you know, I would say, see, what's happening is we are kind of predicting a 1.2 million sq ft of expiries, and we're also predicting, you know, kind of a 1.2 million sq ft of cross leasing. There could be some timing gap which could be leading to a declining occupancies. Also, keep in mind that some, some of the, some of the assets, they have really gone up in last two to three quarters. I, I, there's no trend. I mean, there's really no trend. It's just a question of timing here. We will, we'll, you know, as the leasing would happen, what we're predicting, it should pick up. Got it. Thank you, sir. I'll get back in touch. Thank you. A reminder to all the participants, you may press star and 1 to ask a question. Next question is from the line of Puneet from HSBC. Please go ahead. Yeah, thanks for the opportunity again. My question is on the CapEx for G2. That has gone up to almost $200 million. Can you explain the nature of this CapEx, and can you also explain broadly what sort of maintenance CapEx would you need to do for these properties, going into future? Sanjeev here, Puneet. There is some regulations which require CapEx to be incurred for green energy in NCR. We are going to do that in G2 as well as Noida assets. You may find that some increase there because of that green pit, which is going to be used for gas-based green energies. You mean the gensets, the gas-based gensets you'll have to put? Yes, yes. The kits will be required for gas-based generation. You see, these regulations almost have been coming from last 3, 4 years. They have been kind of then gone on a back seat. Probably, probably, we have to be ready for these. Even if we go on a back seat, we have to gradually take it up. You know, right now, we want to cater for it because it's a, it's a requirement. Understood. Would you need similar CapEx in other geographies also, given that, you know, genset regulations have changed in CPCB IV+? Sure. as well, for across the country now? Right now, right now, largely for NCR and Gurgaon and Noida. Okay. Understood. What kind of maintenance CapEx should one assume, on a yearly basis? Sorry, come again? What kind of maintenance CapEx should one assume on a yearly basis for your assets? Maintenance CapEx will not be there. This will be a one-time CapEx. There's no further maintenance CapEx required. Okay, got it. Any comment would you want to make on the Kensington vacancy, which has gone up a bit? Kensington? No, I mean, I would say, if you're talking about Kensington, yes, we had, we had a expiry, but we have a good, I would say, good pipeline, and we should be able to, you know, gradually fill up the vacant spaces at, you know, I would say, good mark-to-market. I can leave it at that. Okay. Puneet, I can just add. There was, there was one IT services player who turned up... Yeah. 100,000 sq ft of space, which has largely contributed to this. Got it. You have also seen that we've done about $1 million square foot, or just under $1 million square foot of, renewal with. Yeah. TCS. On an overall NOI basis, this is far more additive, and we have a fairly healthy pipeline in Kensington. We think all of this will get back to, you know, normalization, and, you know, present a good opportunity for us to scale up. What kind of timeline should one assume for this, fill up of this vacancy? I think we can be, we can be somewhere 90%+ sometime next year. 90, next fiscal year? I, I mean, sometime next year, whether it will be two, two... It's very difficult to kind of time it. Yes, we should, we should be 90%. We should cross 90%. Okay, got it. That's all. Thank you so much. Thank you. Next follow-up question is from the line of Shirish Waze from MoneyLife Advisory. Please go ahead. Thank you, sir. I just have two more questions. You know, after the completion of the acquisition, on a consolidated basis, what would be our total floating rate, floating rate debt%? We are entirely floating rate at this point in time, at the SPV level. Post our CP issuance, the CP issuance will be a fixed rate instrument. Okay. got it. We also have a few ROFO assets in Powai. Do we have a sort of a timeline in mind of when that acquisition will sort of come up for us? This is Ankur. We just completed a massive acquisition. Let's, let's take a moment to consolidate that. Many of the assets in Powai that are in the ROFO are still sometime away from stabilization or being the right fit for the REIT. The board will take a call. Those are, again, smallish assets at this point. Oh, got it. Thank you. Thank you. Next question is from the line of Kunal Lakhan from CLSA India. Please go ahead. Yeah, I, I just wanted to reconcile- Kunal, your voice is breaking. Is it better now? Slightly better. Sure. This quarter, we did about INR 1,642 million. Exclude the impact of the income support from the acquisition, how much would that be? Because you said that the income support started from 1st of July. How much would that be? Kunal, income support will reflect in the next quarter distribution. This is the distribution for the period until 30 of June. Okay, good. Lastly, may I know your your DPU 3.85 adjusted for, this is adjusted only for the QIP done, INR 22 billion QIP done, right? It's still the INR 12.7 million of, you know, from a preferential issue would again reflect, would probably get that number lower than 2.85. That's correct. That's about 3% of post-money holdings, so this number would have looked like 3.75, if we had, those units in the mix as well. Sure, sure. But just, you know, post-acquisition that I think Q3 would be the Q3 would be the full, full quarter, which will reflect, you know, the full impact of acquisition. Would you expect the, you know, the DPU to move back to, you know, $5 per unit, you know, which, which was there last year on an average? Look, this quarter and the next quarter has a bit of noise. This quarter, because the distributions are from previous years' earnings on a larger equity base. Yeah. Next quarter will have, or, or the quarter that we are sitting in right now, will not have full income on all the units, from the 2 acquisitions. There will be some noise, between, call it, the quarter that we are reporting right now and the current quarter that we are in. On a steady-state basis, you know, as we, as we laid out the income profile of these assets, which are going to double in size, to almost INR 2,000 crore steady state. I would expect our distributions to go back to levels that we previously reported, which is INR 5 a quarter. From Q3 onwards, you're saying? Three. I didn't catch that actually. Which quarter onwards? Q3 onwards. That, that would be our expectation. Yeah, yeah. Great. Great, thanks a lot. Thank you. Thank you. Ladies and gentlemen, I now hand the conference over to the management for closing comments. Okay, you know, we had an eventful quarter, and, you know, the business is looking pretty solid. I think the worst is kind of behind us, so that's the message I want to give. The worst is behind us. We are looking for, you know, occupancies to move up, and we are able to achieve our performance. Thank you so much. Thank you very much. On behalf of Brookfield India Real Estate Trust, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.