Ladies and gentlemen, good day, and welcome to Brookfield India Real Estate Trust second quarter financial year 2024 earnings conference call. As a reminder, all participants line will be in a 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 call is being recorded. On the call, we have the following persons: Mr. Ankur Gupta, Managing Partner, Brookfield Asset Management, and Director, Brookprop Management Services Private Limited. Mr. Alok Aggarwal, Chief Executive Officer, Brookprop Management Services Private Limited. Mr. Sanjeev Kumar Sharma, Chief Financial Officer, Brookprop Management Services Private Limited, and Mr. Rachit Kothari from Brookfield, and also Mr. Shailendra Sabhnani from Brookfield. I now hand the conference over to management. Thank you, and over to you, sir. Thanks. Hello, everyone. Thanks for joining the Brookfield REIT Q2 FY 2024 earnings call. I'm pleased to say that we have successfully completed the acquisitions of Downtown Powai and Candor TechSpace G1 in August 2023. With these acquisitions, we have now doubled, doubled the scale of our REIT since IPO. The operating income increasing from approximately 38, operating area increasing from approximately 10 million sq ft to over 20 million sq ft. Diversification benefits of these acquisitions is also significant. Mumbai and Gurugram each represent one-third of our portfolio by value. The share of BFSI and consulting tenants has increased to almost 40% from 32% earlier. The tenant concentration in the technology sector has reduced from mid-forties to 30% earlier. Mid-forties to 30% now. Our top five tenant concentration has also reduced significantly from 52% to 31%, and our top ten tenant list has seen an influx of BFSI and consulting names such as Deloitte, Nomura, and Citrix, among others. Achieving scale and de-risking our portfolio with the acquisition of high-quality assets has been our stated objective, and we're happy to be executing on our plans. Coming to the performance of the portfolio, we have seen robust leasing during the quarter, having achieved 500,000 sq ft of cross leasing. We leased 326,000 sq ft via SEZ assets during the quarter, which is almost 70% higher than our post-IPO quarterly average. This is constituted approximately 68% of the new leasing achieved in the SEZ assets in the likes of Tietoevry, Axtria, Qualcomm, D. E. Shaw, Samsung, expanding their footprints at our campuses. With further signed expansion options of 94,000 sq ft at N2, we would also like to highlight that our non-SEZ portfolio is nearing stabilized occupancies, with N1 already being 37% occupied and Downtown Powai almost touching 90%. Our scheduled expiries for the pre-acquisition assets are largely scheduled to happen in H1 of 2024 and have impacted our reported committed occupancies. We also had an increase in same-store expiries with pre-acquisition SEZ assets during the quarter. However, we feel that essentially expiries are largely behind us. In G1, we saw expiries for about 0.3 million sq ft, which is completely under income support. In Downtown Powai, we're in advanced discussions to renew the scheduled expiries of 0.4 million sq ft in H2 FY 2024 at a significant mark-to-market rate. In FY 25, our SEZ portfolio only has scheduled expiries of 0.2 million sq ft, hence we are well positioned to see an improvement in our SEZ occupancies next year onwards. Our non-SEZ portfolio has scheduled expiries of 0.5 million sq ft, which we expect to get renewed or backfilled with high demand we see for space in these assets. With the limited expiries due and a strong demand across the board, we expect to see an improvement in our portfolio's committed occupancy over the course of financial year 25. Physical occupancy at our campuses continue to improve, as clarion call from many of our tenants, asking their employees return to work showing results. We have seen the effect of this, the escalation in expansion plans of our tenants. In fact, some of our tenants who had given up spaces, who have given up space less than a year back are now asking for additional space in our campuses and a lot of space to seat their employees. All this bodes well for our leasing momentum. We have experienced strong organic growth, with our existing leases having delivered a 7% average escalation on 1.6 million sq ft during the quarter. In H1 2024, we achieved an average escalation of 8% on 3.9 million sq ft. Additionally, we are on track to deliver about 80,000 sq ft of area, which is under development in Downtown Powai in the ongoing quarter. I'm pleased to report that we have achieved a five-star GRESB rating for the second year in a row. It's truly heartening to be recognized for our, for our efforts to place ESG at the center of what we do. We were ranked number 1 in Asia for management score and achieved a score of 100% in both social and governance categories for both standard investment and development. Additionally, we were awarded a prestigious score of honor of five-star plus by the British Council. We were also awarded a five-star rating for the second consecutive year in the Occupational Health and Safety Audit, with a score of 90% plus in the best practice indicator. During the quarter, we conducted workshops for tenants and employees on waste recycling and segregation, plastic reuse, and sustainability. We also unveiled a green cover book on biodiversity, biodiversity report, which provides insights into our assets' current biodiversity profile. As always, we continue to prioritize ESG and take the necessary measures to ensure that we remain leaders on the ESG front. Our high-quality portfolio has embedded growth at a rate of 14%, which will be realized through further leasing and the growing physical occupancy and margin recovery. We will now look to consolidate the recently acquired assets before we embark on future inorganic growth. We continue to have access to almost 50 million sq ft of the sponsor group assets in key gateway cities, India, which provides a strong pipeline to long-term growth potential for our REIT. Now, I would like to invite Sanjeev to provide the financial updates. Thank you. Thank you, Alok. Good afternoon, everyone. As Alok mentioned, we have successfully consummated the acquisition of Downtown Powai and Candor TechSpace G1 in the September quarter. Not only did this transaction led to a diversification of our tenant base, but the successful fundraising program also helped diversify our investor base. We also secured an INR 400 crore investment from our sponsor group through a preferential issuance at a 25% premium to the prevailing market price. We also issued our first commercial paper of INR 750 crore this quarter at an extremely attractive rate, and used the proceeds to rightsize the SPV level debt at Downtown Powai and Candor TechSpace G1. We have witnessed a growth of 33% in our operating lease rentals to INR 274 crore compared to the same period last year, and the adjusted NOI grew by 43% to INR 346 crore compared to quarter two of financial year 2023. This increase was primarily due to the addition of Downtown Powai and G1 to the portfolio. Post the acquisition, we have significant growth potential of 14% in our portfolio, which can be achieved through the lease up of vacant area and margin recovery. We have also achieved an NDCF of INR 193 crore this quarter, which translates to INR 4.39 per unit. We are distributing INR 4.40 per unit this quarter. The NDCF per unit was lower than our quarterly run rate since Downtown Powai and G1's contribution was restricted to 34 and 44 days, respectively, during the quarter. The pre-acquisition SPVs generated an NDCF of INR 5.03 per unit, without considering the impact of dilution from the units issued at QIP and the preferential allotment. Additionally, we are in the process of filing capital reduction schemes in some of our SPVs, which is expected to enhance the dividend component of distribution post the implementation of these schemes. Due to the acquisitions and organic growth in our portfolio, our gross asset value grew 74% to INR 28,500 crore, and our NAV as of 30 September 2023 is at INR 323 per unit. Our loan-to-value ratio is 38.5%. However, if we exclude shareholders, NCD, and liability component of CCD from minority shareholder GIC in two of these new acquired SPVs, LTV comes to 34.3%, which represents LTV versus external third-party debt. While we look to reprice the debt, we will do so when market conditions are favorable. The average interest rate of the portfolio debt is 8.3% as on September 30, 2023, and we have a strong balance sheet with a long-dated maturity profile and limited refinancing and amortization over the next few years. Thanks a lot. With this, I would request the moderator to open the full floor for Q&A. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question, may press star then one on your telephone. If you wish to remove yourself from the question queue, you may press star then two. Participants are requested to use handsets while asking questions. Ladies and gentlemen, we'll wait for a moment while we call the question queue assembled. Any, any questions, James? The first question comes from Puneet Gulati with HSBC. Please go ahead. Yeah, thank you. Good afternoon and congrats on a good distribution. Can you help me run down, you know, this enhanced distribution of INR 4.4? You know, how did you, you know, get that and does that in... You know, there is a gap, apparently on the NDCF walk down, if you can help me understand the gap also from INR 204 million down to the distribution. So Puneet, on 21, slide number 21, we have given NDCF walk down for SPV level. Yeah. So which is coming to 2048, and then that 2048 gets distributed in the form of interest on shareholder and repayment of shareholder debt, or NCD, which is given on slide 22. Yeah. In turn, REIT has invested INR 51 crore of a shareholder loan to the couple of existing SPVs. That's why it is coming, that figure is coming to INR 193 crore, which is INR 4.39. I, I would like to mention here that when I mentioned INR 5.03 distribution from the existing SPVs, that number is after netting off this INR 51 crore, which these SPVs receives from share, REIT. Okay. I would have thought INR 2,048 crore minus INR 51 crore minus INR 6.5 crore. Should that not plus INR 6.5 crore this time? Should I have done the math, are we not counting INR 51 crore two times? No, but 2048 is the generation this quarter- Okay. But there are surpluses in the SPVs, which is carrying from the previous quarters, as well as two of the SPVs which we acquired. There were certain cash balances lying in those SPVs. So the total which SPVs have distributed to the REIT is INR 237 crore, which is sum total of INR 101 crore and INR 136 crore. Then net INR 51 crore and treasury income, INR 6.5 crore need to be added, which comes to INR 193 crore. Understood. So So will it be fair to say that the cash flow generation would have been INR 160 crore, but INR 192 crore-INR 193 crore got distributed. Is that how I should take? It's not the cash flow generation; it's because the NDCF definition is, it gives only a framework what need to be included in NDCF and what need not to be included in an NDCF. But as far as overall cash flow, on cumulative basis, if you see the six months accumulation, that is what we distributed. So as an example, when we acquired this new SPV, the consideration paid was net of the cash balances or net of all other assets. Okay. That cash belong to REIT now. Okay. Understood, including that cash. Secondly, on the, you know, NOI slide or income support. So are we using full quarter of income support in this NOI calculation, or is it proportionate to whatever the few days, 34 days, I think you mentioned? So, for when I run go to the NOI numbers, it is net for the period post-acquisition. Okay, so the INR 50 crore income support is only for roughly a month? No, no, INR 51 crore because it is getting presented in the NDCF walk. That's why it's including walking. But, for the NOI numbers, which, which is in, coming in the account, is, only for the proportionate period. Puneet, I think this quarter distribution factors, for Q1, income support from first July. From July 1. Okay. Okay, yeah, that's what I wanted to say. Then lastly, on concession, there seems to have been some bit of deterioration in the facility rentals, while at the margin, you know, there hasn't been an occupancy change on Q-on-Q basis. In fact, it has gone up. Okay. 31.5 crore in Q1 has gone down to 35.6 crore, but your committed occupancy from June 30 has gone up from 79% to 84%. Can you help me there? Just give me a moment, please. Okay. ... Next question comes from Murtuza Arsiwalla with ICICI. Please go ahead. We're still on the previous question. So Puneet, basically what is happening is that the leases that we have entered into during the quarter are reflecting in the occupancy number. Okay. Some of the lease is going to be, like, reflected in the numbers in the subsequent quarter. The expiry we had in the last quarter, the impact of that dip is reflecting in this quarter. So basically, the leasing and the expiry, which happened, reflect in the numbers with a lag. Right. So, so the L&T Downtown 72,000 addition, which you got, probably happened towards the later part of the quarter? Yeah, that's it. Understood. Thank you. you. Thank you so much. That's all from my side. We can move to the next question. Thank you. The next question comes from Parikshit Kandpal with HDFC Securities. Please go ahead. Hello? Can I audio? Yeah, Preet, you can. All of the acquisitions have been done from the sponsor, with in some cases Committed Occupancy and also dilution to the sponsor. Our sponsor is like a triple-A credit large fund. Why have we not explored acquisitions from non-sponsor stress market, which would be more lucrative to the firm? Maybe, maybe I'll take that. Look, Preet, to answer your question, the quality of assets that the REIT with a long-term strategy would like to hold would come from, I would say, triple-A, you know, sellers, basically. And I think our sponsor group that has contributed assets has generally been limited like funds. That said, we have been exploring third-party opportunities. To the extent we like the quality, the location, the income profile, you know, we would not, you know, shy away from making those acquisitions, but it's also a function of the opportunity that is there in the market. And we continue to scout for them. But I would say one very important consideration for us is for these acquisitions to be accretive to the REIT. which means they have to come from a stable and income profiles, which are just generally stable in nature, occupancies which are inching up, and rental profiles, that should deliver a total return north of 15%-16%. All those criteria are very difficult to find in new investments, but we continue to look for them. Thanks for the answer. So one more question is on the distribution. The effective tax rate to the unitholders is low because the dividend is taxed as SPVs are in the old tax regime. So this fortunately would be over in some years. So is it safe to assume that post some years, the tax rate would be marginal tax rate, which is complex? So let me answer, Preet, here. Two things. One, over a period of time, definitely the dividend paying capacity will increase of these SPVs, in normal course. But to accelerate the same process, as I mentioned in my briefing also, we are filing one scheme of capital reduction to the NCLT. Which will wipe off the accumulated losses sitting in these SPVs, so that SPVs dividend paying capacity gets enhanced earlier than a normal process. So maybe a year or nine months down the line, our dividend distribution from the SPVs will get enhanced from the stage where we are as of now. Okay. Thank you, sir. Thanks for the answers. Next question comes from Sameer Baisiwala with Morgan Stanley. Please go ahead. Thank you, sir, for the opportunity. My first question primarily deals with our SEZ. So just wanted to understand, are we looking at denotifying some of the vacant blocks that we have? But considering the fact that the committed occupancy across some of our SEZ parts like G1 and Noida would these provide ample opportunity for denotification. So are we looking at that as an option going forward? Yeah. I think that's a, you know, good and obvious question. We have identified the areas, and as soon as we are getting the forms, we can come to them later, maybe they can this quarter. They don't have it this quarter. By next quarter, it should definitely happen. We are hopeful for them to happen this quarter. We have identified the areas which would like to denotify, in terms of SEZs. And, of course, we have phase by program, and some criteria have been ascertain on the basis which we will take some of the areas first, which have never been leased.... We have, you know, excess, excess, standing where direct excess. Some of the criteria have been identified, and as soon as the forms come, we'll take them for denotification. Got it, sir. So, under the existing rules, like if, let's say, for some reason if the reforms get delayed, so would we be also moving denotified under the existing rules where we can- do we have any opportunities where we can go denotify entire buildings in these parts? So, under existing rules, we do not have opportunities to denotify. So we are aware of that. So we'll have to wait for the SEZ reforms to be able to denotify the existing buildings or the existing clause. Okay. Got it. Second question pertains to N2. So the income support, I think, ends at this financial year. The income support will end. So post that, because there's a large difference between committed and economic occupancy. Just wanted to understand what the strategy would be to sort of increase that over there. So, yeah. So fair point. So if you really see now in Noida, we have, we have two assets, and one is largely and probably even work further 2019, 2029, actually. And now we are left with N2. And what we are doing is every, every tenant, entire pipeline, we are focusing on N2, and we have got some successes. And we are hoping that we should be able to, you know, ramp up the occupancy. And if SEZ reforms happen, then, of course, you know, it could be up, it could work bit faster. And we think the SEZ reforms should happen, enough officials happen and they are constantly with the government. So our focus remains on N2 to ramp up occupancies, in next two quarters. Thank you, sir. That was all. Thank you very much. Once again, if you wish to ask a question, please press star then one. The next question comes from Murtuza Arsiwalla with Kotak Securities. Please go ahead. Yeah, thank you. I just wanted to check, you know, you talked about the rental escalations of 7% on 1.6 million sq ft. Just to be clear, these are your typical contractual escalations? And part of the question is, you know, we're used to usually seeing double-digit kind of contractual escalations, some might rule of 15% every 3 years. So whatever typically would come up by, you know, contractual escalation would be in double digits. So how should we read at this 7% in the current quarter, 8% for the first half in terms of regular escalations, or is my understanding around this new contractual sort of off? And the second question is really on the interest cost. My understanding is that the interest cost that we're seeing on the PNL this quarter only takes a large quarter of the interest cost attribute to the asset. Therefore, you know, what can be a normalized set of numbers? Should I just assume on the level 1,000 crore of gross debt, at the 8% interest rate for the second half of this year? Yeah. Let me take the first question. So you see, the escalations are either 15% every three years, and in many of the cases, they are 5% every year. So what we're talking here about is that average increase in this quarter. Okay. That should, I hope that clarifies, your question. Okay. Yeah. Would we have large proportion of such subjects which have annual, you know, if I were to take up your portfolio, in terms of annual escalations versus three-year escalations, would you have some ballpark mix? So largely, Mumbai is annual escalation. And Calcutta, well, Noida is escalations are repeated. A function of, a bit of a function of market. Okay. Also on the financing cost, just to give you a slate, the pre-acquisition portfolio, Yeah. is at an 8.2% coupon. The acquisition portfolio debt is 8.5%, and the CP is at 7.6%. The rest of the debt, as we've articulated in his opening remarks, is largely more from a consolidation perspective and shareholder debt. These are the three external debts that you should probably factor in, which on a blended basis is 8.3%, for the external debt. The next question comes from Saurabh Kumar with JPMorgan. Please go ahead. Hi. A few questions. Thank you. First is, you know, so if we remove the support this quarter or the acquisition impact, would it be fair to say the NOI was, like, largely flat Q2? Yes, Saurabh, it was flat on year-over-year basis. Even quarter-over-quarter, right? I mean, I was getting a marginal sign of 6% growth. Right. More or less same range. Okay. And second, sir, is essentially when would you expect your, you know, your net leasing to turn positive? So your growth is obviously growing okay, but on a net basis, when you expect to turn positive? No, I think- Sort of that way. Maybe, maybe ask him to inform since ... Hello. Hello, actually, you know, when I made the statement earlier, as I said, that we have seen, you know, we have seen them since H1 and since we achieved higher. And from financial year or I would say calendar year Q2 onwards, we should see occupancies move up gradually. Okay, so your net leasing should turn out positive, maybe this quarter onwards then, right? I think quarter after next, because impact of this quarter- Okay, okay. -this quarter. I understand. Next quarter, we are moving in, I would say, April, okay? At the time, we are confident that net leasing should be positive. Okay. This is without ESG reforms. That's something we should keep in mind. If SEZ denotification comes, then that's an added positive. Okay. Yes, you see. Okay. So basically, this your GAV math. So, the GAV you're reporting on an INR billion basis is full consolidated. Per share is your share, right? Which is attributable to the REIT. Yeah, that's correct. Okay. Okay, and just one last thing. I mean, you know, so whatever they are saying, no impact on Brookfield's investment plans in India? Absolutely. Absolutely plan. Okay. Exactly. Thank you. The next question comes from Sri Karthik Velamakanni with Spark Capital. Please go ahead. Hi. Thanks. So you disclosed the adjusted pre-merger distribution to be close to INR 5 rupees, and the post-merger close to INR 4.4. There are two questions here. One is, you also indicated the number of days over which you received the NOI from the acquired assets. So if that were to be fully normalizing for the entire quarter for Q3, would your distributions organically move close to 5% on a INR 4 or 5 rupees on a post-merger basis? So, Sri, the answer is it is going to be more or less same, because only the impact of whatever expiries have happened has happened, as Alok mentioned. So from next quarter onwards, it should be stable. But stable, you are anchoring to the 4.4 level, is it? No, it is going to be because 4.4 has only part of these two acquisitions. Correct. But after impact will come, it will go to our more or less original run rates. Which is close to around INR 5 a quarter, source level? Yeah, more or less. Understood. Secondly, the trend with respect to the occupancy level in G2, which is now down to around 78%. And there's a very sharp... I know you talking about this in the opening remarks, but directionally, both good assets seem to be trending weaker than some of our peers who, which have reported early on. Any specific events that is particular to Goodwill that is driving this? So really, if you really see, it's, you know, so let me, let me take SEZ versus non-SEZ. I think, we are all clear that honestly, it is doing substantially well, whether it's N-One or Powai, both are in a good, good space as well as occupancy. Now let's come to, SEZ. But SEZ, if you see Gurugram and N-Two, I mean, they are- they have quite a impact due to vacancies. This is it all three. But as, as we said, that, from, Q2 next onwards, we should start to see. The pipeline is strong. The good part is that pipeline is strong. It's almost about 2.2 billion sq ft. And it is not that we have not been doing leasing in SEZ. We need almost, you know, you see 100,000 sq ft leasing the last quarter. I mean, last this quarter, only in SEZ. Even previous quarter, we did good leasing in SEZ. So leasing momentum is there, pipeline is there. We have many cases, you know, today, tenants who have rendered a space, they have more people coming back to offices. They said, "I want a floor. I want to close in a month." That's also happening. So the vacancy and the centers are behind us. I mean, that's the important point. And leasing momentum, we are confident, should continue. In a case about, you know, let's say about 0.3 million sq ft. And that should, you know, reflect in occupfancies moving up. All right. Thank you. Thank you. Next question comes from Pradyumna Choudhary with JM Financial. Please go ahead. Yeah, hi, so, so one thing I missed out on when you mentioned when you expect the net leasing to turn positive from, I missed out the exact quarter you mentioned. Yes. So, yeah, so it's about Q2 2024 onwards. So when we look at calendar year, from April quarter onwards, we should be turning it into positive. Why that so, like, why so much delay? Because of the weakness in demand or some other reason also, like, aware of the SEZ issue, but apart from that, any other thing which you're witnessing? No, it's a leasing, it's a kind of a standard what we indicate, you know, our deck. And the leasing run rate what we are having, it should indicate that from— I mean, it's not, it's just about 2.5 months away, and we should see positive numbers. Understood. Would we expect the occupancy to remain at current levels until then, or would it decline further? Because already we are at 80% occupancy, committed occupancy. It should remain around that level. It should remain around that level. That's our indication. And we were talking about just saying there are no SEZ reforms. If they come, it's bonus. It should remain that level. Net leasing, is it positive in non-SEZ category and/or even there, we see certain weakness? So in non-SEZ, we are 97%. I mean, in, in one we are 97%. In Mumbai, we are 90-approaching 90%. We have... In next quarter, we have 2 large expiries of 0.4 billion sq ft. We have, you know, almost kind of a, you know, discussions are at last stage to almost 30% mark-to-market lease. So honestly, it's doing fairly well. It's only a question of SEZ portfolio which should start coming next, next, you know, 4-5 months actually. And that's also, I mean, see, it's, it's visible. I mean, run rate is visible. Expiry is right behind us. Some point change will happen by March, and that's where we are. Understood. Thank you. Next question comes from Trish Ved with Morgan Stanley. Please go ahead. Thanks. I just have a further question. So, just wanted to understand if you can provide the split between for re-leasing spread between our renewals and vacant area, what would be the split between these? So it's 18% and 6%. Pardon me, sir. 19% is a re-leasing spread on the new leasing, 6% on renewals. Got it. Thank you, sir. That was all. Thank you all very much. We will, there are no further questions. So I would now like to hand the conference over to the management for closing remarks. Thank you everyone for joining today's call. I wish each and every one of you a happy Diwali, and look forward to connecting you next quarter. Thank you. On behalf of Brookfield India Real Estate Trust, that concludes this conference. Thank you for joining us, and you may now disconnect your line.