Good evening, everyone. A very warm welcome to all the Embassy REIT's First Quarter FY 2024 Earnings Conference Call. Currently, all participants are in a listen-only mode. Our speakers will address your questions at the end of the presentation during the question and answer session. As a reminder, this conference call is being recorded. I would like to introduce your host for today's call, Ms. Sakshi Garg, Investor Relations Manager of Embassy REIT. Ma'am, you may now begin. Thank you. Thank you. Welcome to the First Quarter FY 2024 Earnings Call for Embassy REIT. Embassy REIT released its financial results for the quarter ended June 30, 2023, a short while back. As is our standard practice, we have placed our financial statements, earnings presentation, discussing the performance, and a supplementary financial and operating data book in the investor section of our website at www.embassyofficeparks.com. As always, we would like to inform you that management may make certain comments on this call that one could view forward-looking statements. Please be advised that the REIT's actual results may differ from these statements. Embassy REIT does not guarantee these statements or results and is not obliged to update them at any time. Specifically, any financial guidance and pro forma information that we will provide on this call are management estimates based on certain assumptions and have not been subjected to any audit review or examination procedures. We caution not to place undue reliance on such information, there can be no assurance that we'll be able to achieve them. Joining me today are Aravind Maiya, our CEO; Abhishek Agrawal, our CFO; and Ritwik Bhattacharjee, our CIO. We'll start off with brief remarks on our business and financial performance then open the floor to questions. Aravind Maiya? Thank you, Sakshi. Good evening, and thank you all for joining us to discuss our Q1 results. To start with key highlights for the quarter, we leased a total of 1.1 million sq ft, delivered an NOI growth of 9% year-over-year, and announced distributions of INR 5.38 per unit. In addition, based on our Q1 performance, our existing healthy pipeline, and considering a clearer interest rate outlook, we have provided guidance for the full year FY 2024, which Abhishek will take you through shortly. On the macro front, India has emerged as the fastest-growing large economy in the world, and its stature continues to grow as a real alternative to China. Along with this, moderating inflation levels and a pause in policy rate hikes has improved the general business and market sentiment, as well as reinforced the growth stance of the government. The same positivity is also reflected in the Indian commercial real estate market, where demand remains strong from premium office spaces. This is in stark contrast to many developed office markets, and it's largely supported, the growth of Global Capability Centers, or GCCs, in India, is currently driving the new demand. By leveraging the Indian skilled talent and the associated cost advantage drops, these global companies continue to set up and expand their offshoring centers in India. As per recent industry reports, 115 such centers are expected to be set up every year in this decade, employing 2.6 million additional headcount. This will be a key driver for the new office space requirement of over 450 million sq ft, expected over the next 10 years. Also, moving up the value chain, these GCCs are emerging as centers of excellence and innovation, and are driving product development in multiple areas such as AI, cloud, engineering, and data analytics. Second, the physical office attendance continues to improve in Indian office markets as compared to the West, where remote working is still quite prevalent. Even in our properties, back-to-office numbers are rising steadily. It is also encouraging to see the recent commentary from multiple industry leaders regarding their updated back-to-office strategies and their continued focus on getting their employees back to the offices. With this backdrop, let me move to our portfolio and start with the leasing performance for Q1. We leased 1.1 million sq ft across 22 deals, including 407,000 sq ft of new leases at 68% re-leasing spread. We also pre-committed 448,000 sq ft in our under-development projects at a premium to market rents and renewed 209,000 sq ft leases at 15% renewal spread. The leasing demand is primarily driven by GCCs, contributing to over 71% of our total leasing. In terms of sectors, besides technology occupiers, BFSI, consulting, engineering, and manufacturing firms led the demand. We also noted a strong trend of expansionary demand, with over 80% of the new or re-leasing by our existing occupiers. Deviating a bit from the last quarter's trend, couple of large-sized deals got signed in Q1. Embassy Manyata contributed 61% of the total leasing this quarter, its occupancy touched 91%. This asset has been going through a positive churn in terms of occupier mix, we've been able to increase its in-place rentals by around 20% in the last 18 months. Now our two largest markets, Bengaluru and Mumbai, are at greater than 90% occupancy levels. Factoring the 702,000 sq ft of exits during the quarter, primarily from IT service occupiers, our Q1 occupancy stood at 85% for the overall portfolio and 87% on a same-store basis. Of the 5.1 million sq ft current vacancy, around 67% is concentrated in Pune and Noida, significantly smaller markets for us. On a value basis, this Pune and Noida vacancy translates to only 5% of our portfolio value. Looking forward, we have a promising leading pipeline of 2 million square feet for our operational portfolio, as well as our under development projects. On the SEZ front, we are still awaiting regulatory clarity on the SEZ bill amendment. We continue to be hopeful for a resolution soon. In the meantime, we continue to work on what is under our control. We leased 0.5 million square feet of SEZ space this quarter to existing SEZ occupiers looking to expand. We are in the final stages of denotifying our existing 0.4 million square feet D3 building in Embassy Manyata. We've already leased 41% of this building at 210% re-leasing spreads. With a pipeline of another 225,000 square feet, we are hopeful to fully lease this building by the end of the year. This is a perfect example of the strategy that we continue to follow to denotify any completely vacant SEZ buildings, where leases get expired, or where we are able to relocate existing occupiers. We have identified another building, Manyata, totaling 0.8 million sq ft, which we will look to denotify within this financial year. With this, our current SEZ vacancy stood at 15% or 3 million sq ft, seeing an improvement from the last quarter. The non-SEZ vacancy for our portfolio is 10%, excluding the new buildings in Pune delivered last year. This non-SEZ space has good traction, and we are confident to lease up the same. Moving to our development portfolio. Our development pipeline, totaling 7.9 million sq ft, is a key organic growth lever for us over the next 3-4 years. With a total committed CapEx of INR 4,000 crores, these projects are expected to add approximately INR 900 crores annual NOI upon stabilization, resulting in a very attractive yield. Three projects, totaling 2.1 million sq ft, are due for delivery this year across Bengaluru and Noida. Of this, 1 million sq ft N3 Block A, in Embassy Manyata, is awaiting occupancy certificate, which is expected by next month. This block is already 45% pre-committed with a healthy pipeline for the balance. In addition, 0.4 million sq ft of Embassy Business Hub is on track for delivery next quarter and is almost fully pre-leased. Overall, over 90% of our total development projects are in Bengaluru, which continues to lead India's office absorption. Around one-fourth of the total developments are already pre-committed to leading global companies. We are building a strong pipeline for the remainder. In terms of key upgrades, we have completed the refurbishment of 0.2 million sq ft, Block K at Embassy Manyata. Around 72% of this block has already been leased at 215% re-leasing spreads. For the remainder, we have a healthy pipeline of over 100,000 sq ft. We expect to fully lease this building by the end of this year. Lastly, on our hotels, the strong rebound in our hospitality business continued with a 53% occupancy, a 30% year-over-year ADR growth, and an EBITDA of INR 40 crores in Q1. We are extremely proud to see our unitholder register crossing 85,000, as compared to 4,000 at the time of our listing and around 47,000 at the same time last year. We particularly welcome the expansion of domestic, institutional, and retail investors in our books. To build our understanding and awareness of the REIT product, we have undertaken multiple education initiatives for retail investors across India, and we are happy to see increasing recognition of the long-term potential of the product. I am pleased to announce the elevation of Abhishek Agrawal as the CFO of Embassy REIT. Abhishek was designated as the interim CFO of REIT in May 2022 and is known to all of you. I wish him great success in his elevated role, and with that, over to Abhishek for our financial update. Thank you, Aravind, and good evening, everyone. Let me take you through the financial update for the quarter. Revenue from operations grew by 10% year-on-year to INR 914 crores. This was mainly driven by new leases at attractive re-leasing spreads, contracted rent escalation, and a ramp-up in our hotel business. This was partially offset by the impact of exits in our office portfolio. Net operating income grew by 9% year-on-year to INR 738 crores, in line with the increase in our revenue from operations. Our office NOI margins stood at 85%, demonstrating our scale and efficiency. Net distributable cash flows grew by 1% year-on-year to INR 510 crores. The year-on-year increase in our NOI contributed positively to our distributions, which was primarily offset by an increase in interest costs, as well as other working capital changes. We have declared Q1 distributions of INR 510 crores or INR 5.38 per unit, making this our 17th quarter of 100% distribution payout. Moving to our balance sheet update. Our balance sheet remains best in class, with a 7.3% increased debt cost and dual AAA stable credit rating. We remain focused on active capital management and interest cost optimization. In the last two months, we have successfully raised two NCDs, totaling INR 2,075 crores at an average rate of 7.8% to refinance bank loans, which were due for refinancing. In this refinancing, we achieved a 120 basis point spread over GSEC, our lowest ever. We also secured 146 basis points pro forma savings as compared to the expected rate on repricing of new loans. Of our debt book totaling INR 15,600 crore, INR 4,100 crore of entities are due for refinancing in the latter half of this financial year. Considering the continued pause in interest rate hikes by RBI, as well as the rate achieved on our recent debt raise, we are confident of refinancing these at industry leading rates. We will also look to raise debt across different tenures to continue staggering our debt maturity. I will update on the outlook for the remainder of FY 2024. Given that more clarity has emerged on our leasing pipeline as well as on the trajectory of market interest rates, we are providing guidance for the full year FY 2024. We expect our NOI to be in the range of INR 2,924 crores-INR 3,136 crores, and our distributions to be in the range of INR 20.5-INR 22 per unit. Our outlook is based on the following key assumptions for the full year. Considering the market outlook and our pipeline, we have assumed a total lease-up of 6 million sq ft. This comprises of 4 million sq ft of new lease-up, including new building deliveries planned in FY24, 0.7 million sq ft of renewals, and 1.3 million sq ft of pre-commitments. With this, we expect our same store occupancy to end up marginally higher year-on-year. We expect to achieve contracted rent escalations of 14% on 6.7 million sq ft leases during the year. We expect continued improvement in our hotel business, both in terms of occupancy and areas, and have factored in a 60% year-on-year increase in our hotel EBITDA. Finally, we have assumed our overall interest cost for the year to increase by 15%-18% year-on-year. Two-third of this increase is expected to be due to overall increase in rates, and one-third due to the additional interest costs related to our new deliveries. Also, while we do not want to give any specifics beyond FY 2024, we believe that this year will likely represent what has been an eventful first five-year cycle for Embassy REIT. The key drivers for this will be, first, we expect leasing demand to pick up, given how optimally positioned India is, both from talent availability and cost arbitrage perspective. Traditionally, the new supply that we are developing in Bengaluru will provide further impetus to our leasing, particularly from GCC. Lastly, we also expect the rate cycle to moderate and have a positive impact on our cost of funding. All of these factors should contribute to the start of a period of secular growth for Embassy REIT. With this, let's now move to question and answer, please. 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 touchtone 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 a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Kunal Tayal from Bank of America. Please go ahead. Great, thanks. I have two, three questions, if I could ask them in one go. You know, the first one was around the swell in your pipeline. I'm assuming that a lot of this comes from GCC, given the comments you just had. Wondering if, you know, even for the pipeline, the observation is similar, that bulk of it is coming from existing companies that already have GCC operations and they are planning to expand? Or do you think this is coming from, you know, new companies wanting to set up shop in India? That's the first question. My second one was, you know, any additional color on whether IT services contribution is bottoming out for the business? I think last quarter you mentioned that it's down to about 15% of the portfolio. You know, the last one is on the delta between NOI growth and distribution. I do get it that, you know, interest expense is one component of it, but, you know, there are to be some other factors as well. Wondering if it is working capital and, you know, what exactly is contributing to this increase in working capital versus earlier? Thank you. Thank you, Kunal. Let me take the first one and hand over to Abhishek in relation to the NOI to NDCF walk. First, in relation to pipeline, I would say it's a combination of couple of things. One, as we mentioned, the pipeline is significantly coming from GCCs. I would say it's a combination of existing GCCs who are looking to expand, some of them expanding quite significantly and some of them marginally, as well as a few new, you know, guys who have entered into India. It's a combination of both, which is there in the 2 million sq ft of pipeline. Secondly, in relation to IT services, the numbers, first of all, is largely similar. 15% is now down to 14% because we did have one big exit. I think in terms of overall, the way we are seeing going forward, probably it might be a good statement to make, probably that it's bottoming out for the simple reason that while overall business is down, if you look at it from a realistic point of view, the message which is coming from almost all leaders is very clear that they want people back in office. That's number one. Number two, we were picking up a data point from a recent research report which said that the last three years, hiring only 27% of that has got converted to lease space, which basically means as people come back, they will definitely need more space. Having said that, probably the expansion of space might take a little bit more time for the business to stabilize. In terms of downside, it might be a good statement to make that it is bottoming out. These are the two quick responses to the first two questions. With that, why don't I hand it over to Abhishek for the third one? Yeah. Kunal, you rightly picked up that actually, there are two major components. One is the interest, as you said. The second one is the non-cash NOI. Why this is will come is because I think we have started leases that will do on that, then there will be gap between the LCVs and the RCV, because of which there will be non-cash revenue, which will come during the current year. There will be right portion of this working capital, which is normal in the business, will have timing gap in collection and. Got that. All right. Thanks a lot, Aravind and Abhishek. Thank you. Thank you. Thank you. The next question is from the line of Puneet from HSBC. Please go ahead. Yeah, thank you so much. My first question is, you know, just on your NID, it seems IBM, the share of space from IBM has gone up again. Can you talk a bit more about what kind of space have they taken, this into the very cost-conscious customers earlier? I think, Puneet, in terms of new pickups, let's say in the quarter, there are none. The percentage change will just be a change in composition of the other tenants. Yeah. because their own share has gone up from six and a half to 6.7. That's the reason for my question. Yeah. It's because of change in composition of the other top tenants. Just from a little bit of way ahead, if I can give some perspective, I think from a return to office point of view, based on discussions, they have been pretty clear, while they had encouraged complete work from home, they've changed it. There is significant return back to office. Overall, from a business, while we are seeing some offshoots, I would say it's still early. Okay. Second, on your, you know, leasing, while Manyata seems to be improving a bit, there hasn't been any material improvement in leasing for Quadron, which I thought is non-SEZ and should lease out well. Similarly, if you can comment a bit more on what's happening on Galaxy and Oxygen as well. Sure. In terms of Quadron, it's SEZ space, Puneet. Okay, my bad. That one actually changed. Just from a leader point of view, considering all the infrastructure which is happening in and around the space, largely the metro, there is a bit of situation in terms of traffic, et cetera. From a medium to long-term perspective, we are pretty confident of that park. We've already done the necessary upgrades. That's on Quadron. In terms of Galaxy, we did have one large IT services tenant exiting this quarter. That's the reason why you see occupancy dipping. This is a non-SEZ space. Yeah And there is good amount of traction on this asset and a large, part of the pipeline, which is there, is also coming from this asset. We are pretty confident of leasing up this space. In Oxygen? In Galaxy. Oxygen is a SEZ space. Oxygen, I would say from an overall demand perspective, is still sluggish. This, I would say, is an asset which we categorize similar to Quadron, where we'll have to wait for some overall infrastructure upgrades to be done, including the new airport. Just to give you a different perspective, if I were to take both Pune and Noida assets together and take the vacant space of these two assets, put together, they are only 5% of the overall value. Yeah, you know, just to sum it up, these two assets will take some time for the lease up to increase. Understood. That's it. My last one is on the refurbishment cost. There seems to be a lot of refurbishment that you are doing. How would those refurbishment costs be treated from distribution perspective and also from premium perspective? Yeah. The refurbishments are largely funded by debt, which has typically been our strategy around all CapEx. These refurbishments, at least in the case of Manyata, which is done, have provided a significant return because you would have seen that both B and K blocks, we've been able to get a re-leasing spread in excess of 200%. Right. What kind of refurbishment expense should one run with for next three quarters? The way to look at it is, based on historical evidence, these refurbishments can range from INR 1,000-INR 1,500, depending on the age of the asset and what are the upgrades which are required. Other than the two which we've already disclosed, I did my remarks that we have another building. We do have another IT services tenant, which is expected to vacate later in the year, which is part of our expiry lease. That's one full block in Manyata, and we would be taking up refurbishing that building similar to B and K, and we expect similar results in terms of the re-leasing spread on that building. Understood. That's it. Thank you so much, and all the best. Thank you. The next question is from the line of Murtuza Arsiwalla from Kotak Institutional Equities. Please go ahead. Yeah. Hi, Aravind, hi, everyone. A couple of questions. One is, you know, typically, how much time is it taking for you to denotify? You know, you've had some sort of building-wise denotification. How much time is the entire process taking? That's question number one. Question number two is on the hotels business. Generally, when we look at other hotel companies out there, they're showing pretty robust numbers in terms of occupancy. Your room rates obviously have increased, but anything that's holding back on the occupancy? The third is a more generic one on common area maintenance, you know, the facilities management business, specifically with the kind of margins that you are making. Got it. Thank you, Murtuza. Time for de-notification, I think, we've discussed this in the past, but let me take Bengaluru as the right example, because it is where we will be undertaking more de-notifications in the time to come. What our experience in the recent building of D3, well, it's let's say two weeks away, it's taken us about five months to de-notify that space end-to-end. There are a few little bit of learnings which we have taken from this de-notification, which should compress this time a bit. For the five months, what we need to de-notify buildings in Bengaluru. Pune, the Hilton which will be de-notified, took much more time, because the process was more difficult. If you were to replicate that in Pune, probably we could again learn from that experience and reduce the 12 months to, you know, It will be difficult for me to give a exact time frame, but definitely we can look at some reduction even in Pune. Noida is one area, as you mentioned, it's taken us a lot of time, on the overall construction as well. We have gone a little slow considering the demand, so we will undertake that denotification as and when the building is coming up more close to completion. That's on the denotification. In terms of hotel, honestly, Murtuza, the two Hiltons, which is Embassy Golf Links and Manyata, are doing phenomenally well. Golf Links is upwards of 60%, which is in, I would say, in similar range as compared to peer hotels, but the ADRs are much higher. Embassy Manyata, you know, it's much around 62%, right? Some more recent months, about 60% as well. That also, when we look at it from a past perspective, occupancy is still not significantly up because IT services coming still there. We believe that this will pick up significantly in the next few months. The only hotel which kind of brings the average down for us is Four Seasons. That is one focus area for us as we look into the year ahead. We are working closely with our operator, which is Four Seasons, to look at more initiatives in relation to marketing as well as profit higher. This is a space to watch out for, specifically for us as management. Lastly, we can, Abhishek, do you want to take it? Murtuza, what actually happens is, we have 20% markup to, all the costs that we sign off now. Does that answer your question? Murtuza, are you there? I must move on and come back with you. Okay. Abhishek, I think we can move ahead. Mr. Murtuza, you may please go ahead, sir, if you can hear us. I can hear you guys. Okay. Sorry we lost you. I didn't know where you were. No, I got my responses. Thank you. I was saying thank you, but I don't know why it was not. Thank you. Okay, great. Thank you. Thank you. Next question is from the line of Vishal Parekh from Kotak Investment. Please go ahead. Hello? Hello. Go ahead. Yeah, go ahead, Vishal. Yeah, I can hear you. On the refurbishment cost, I had one query. That new block which you put for refurbishment, approximately, I think INR 1,250 per sq ft seems to be the cost which you have indicated in the CapEx schedule. Does that include denotification costs as well? Because I think that particular building is SEZ and occupied by one client, which is expected to vacate. Vishal, it doesn't include the denotification cost, because that's a number which could vary depending on how the assessment goes with the local state authority, so we've not factored that cost. Understood. On the statement of maintaining a similar occupancy going ahead, considering that particular tenant is moving out and you also have to de-notify that particular tower, would you still be able similar occupancy basis, the pipeline which you have in Manyata? The way to look at it, Vishal, is, this tenant is expected to exit in the next quarter. Of course, there would be some time gap by the time we fill up this space. On a quarterly basis, you could see this number going down. When we end the year, we're pretty confident that on an overall portfolio as well as we will be marginally higher, including same store. We should be marginally higher than what we doing. Understood. Thank you so much. Thank you. The next question is from the line of Pritesh Sheth from Motilal Oswal. Please go ahead. Yeah. sorry. Thanks for taking my question. just one question to clarify. Out of the 1.3 million sq ft that's expected to expire in Embassy Manyata this year, 0.8 million square foot is in the tower. is that... any sort of negotiations that are happening for the rest of the 0.5 million sq ft, if you can highlight that? I think in terms of, 0.8, you're absolutely right. That's part of the 1.3. The balance, without getting into specifics of Manyata specifically, I think, we have indicated the overall renewal number for the full year. Of the balance expiry, we expect 0.5 million sq ft to be renewed off the balance, and, logically, the balance should be most likely exit. Sure. Just in terms of refurbishment, I think you answered in a way in the previous question. How much time it takes for you to refurbish the tower and then re-lease it, based on your experience, on in D3? The D3 and K have taken similar time of around nine months. If you look at it, K Block is 70% leased by the time the building was refurbished. D3 is around 40% plus re-leased. With both these assets are in significant pipeline, you could say another three to four months or six months max for it to be back to fully leased. Sure. With this floor-by-floor denotification, I mean, given where your portfolio stands, especially Embassy Manyata, where you are looking to, you know, denotify whole tower, will this floor-by-floor de-notification help you in your other assets? I'm not sure, you know, if there is any scope for, you know, doing that in other assets. If you can help. There definitely is scope for doing floor by floor in other assets and Manyata. We will still be having vacancy across our parks, which is not necessarily full buildings, and not necessarily we'll be able to relocate some of the tenants to make it fully vacant. 100%, the floor-by-floor denotification is going to benefit us significantly across all the parks. Sure. If you can just, you know, help me with your current SEZ vacant space, I'm not sure if I've missed that, if you mentioned earlier? Yeah, the current SEZ vacancy is around 14% for the entire portfolio. Got it. That, that's helpful. Thank you. All the best. Thank you. Thank you. Second is, Pradyuman Chaudhari [inaudible]. Please go ahead. Hi. The exits during the quarter at 0.7 million sq ft seems to be quite high compared to the renewals of 0.2 million sq ft. What would explain this? Like any, you spoke about IT being weak during the quarter, but generally why the renewals has been quite low? Are we seeing enough demand from other segments to make up for these exits? Because the occupancy seems to have slightly fallen in the quarter. Of the 0.7 million sq ft exits, we had a large occupier in excess of 0.5 million, which exited in our Galaxy Park in Noida for various reasons. As I mentioned, this is an asset which is in Sector 62 of Noida, where we are seeing significant amount of demand for this. We're pretty confident of leasing of this space. Balance expiry for the year were one large exit, which is coming up again, a similar story, IT services. Overall, this is the reason for the exit what we're seeing. At the same time, if you see the new lease-up, which is happening, as well as the new lease-up which is projected and what you're seeing in the overall market, it's a significant shift what we are seeing from IT services to GCC, right? From our portfolio point of view, 55% plus now is in GCC. The first quarter lease-up, 70% plus is GCC. That's evident in all the research reports you're seeing in terms of how it is not just back office work which is coming to India, but it's value-added work. As per the recent NASSCOM report, GCCs are now becoming the transformation hubs for their home centers, whichever country they are in. Overall, it's a shift in the occupier base for the entire industry. Bangalore, of course, is benefiting the most from this GCC. 34% of the overall headcount of GCC is located in Bangalore. 50% of the new GCC set up last year were in Bangalore. When you take all of this together, the shift is working out very well for us because, again, these guys are not very cost conscious. They don't mind paying the best rent for the best assets which we own. Understood. What would explain the fall in occupancy, considering the demand still is quite strong, for the Grade A offices? Why has there been a fall in occupancy, and are we seeing any kind of slowdown from any other segment apart from IT? Pradyuman, what we'll continue to see for later part of this year is there will always be a gap, right? From an occupier leaving to a new tenant coming. That will always be there, number one. Number two is, as Vikas mentioned, in terms of GCC, what's happening is till last quarter, you would have seen that the general average lease up would have been in the range of 50,000-100,000, but you have seen two large deals which have happened this year. Any large deal even from a GCC point of view, it does take a little bit more time for the sign-off to come from global offices, including their global CEO, CFO, who all might have to approve. The decision might end up being a bit slower than what we want, causing this temporary gap in our occupancy. Understood. Any other segments, which are witnessing, some sort of a slowdown apart from IT? Not necessarily, but I mean, nothing to highlight. All right. Thank you so much. All the best. Thank you. Thank you. The next question is from the line of Kunal Lakhan from CLSA. Please go ahead. Hi, good evening. My first question to you, Aravind, on any update on the Chennai ROFO asset, like where we are in terms of delivery there? No, why don't I request Ritwik to take this? Yeah, sure. Thanks for the question, Kunal. Can you hear me okay? Yeah. Okay, great. look, I think, like you said, you know, the capital markets right now aren't necessarily conducive for us to pursue an acquisition sort of on the scale of where Chennai is. We've actually put that process effectively on pause. I think that's no different from, I mean, where you see a sort of a high cost of capital at this point in time in the market, where the interest rate is and where stock prices are trading. As you know, we depended on that to actually fund an acquisition. I think, you know, while we have a lot of, you know, time for the asset, and we think it's a fabulous, asset, it's just to think about sort of providing value to shareholders and, doing it on a periodic process. We sort of on the lookout for this point in time, that's been put on pause. Sure. Thanks. Second question was on the guidance. I mean, when I look at your NOI and DPU guidance, the NOI guidance is about 10. On the lower end of the INR 29 billion of NOI on the lower end is actually higher than what we did last year. On the DPU side, again, the lower end is at about INR 20.5, which is significantly lower than last year's INR 21.7. What are you estimating here in terms of. Because NOI growth is not, you know, translating down to DPU for sure. Kunal, this is Abhishek. If you look at the NOI growth, what will happen is because of the 16% that we are assuming, the NOI is growing. However, there will be a drag from the interest cost, which we are estimating to increase by 15%-18% over the previous year cost. Second is, there will be non-cash NOI because of the difference between the dates of LPD and RPD. Some of this NOI will be non-cash for this year, and slight working capital change. Because of this, the NOI is growing, the DPU is not growing now. Kunal, a lot of this lease-up, which has happened this year, will translate to full cash revenues ideally next year. See a significant bump up in the cash distribution because of the current year lease up in next year. Whereas this year you will always have the non-cash gap. Sure. Just on the debt bit, right? I mean, when we look at our expiries and, you know, a substantial portion of our debt expiry over 2024, 2025 is essentially fixed rate debt at about less than 6.5%. The current repricing is like you said earlier, it's about 7.8%. You know, is it like something that will just, you know, like, what I'm trying to understand, like the interest cost increase, would it settle down in FY 2024, or it will just again carry forward in FY 2025 also? Kunal, again, what will happen is basically, the INR 4,100 crores of NCD, which is coming up for refi in the latter half of this year, will definitely increase the interest cost. This is what we are saying, that in two-third of the total interest, increase in interest cost of the, of the current year will come from increasing the interest rates. One-third will come from the interest cost now hitting our PL because of the new deliveries that we'll do during the current year. Look, it's really clear. I think, you know, we look at sort of distributions quite pragmatically, right? At the end of the day, what happens for us is that, you know, we've always faced a mildly elevated environment. I think I'm, you know, given the fact that, you know, we've created effectively our debt in the mid sevens, with the balance sheet, that I think is, you know, quite remarkable given all the volatility that we face. You know, whether it's a pandemic, whether it's an inflationary environment, right? Rates globally for lease are backed up to almost like 2x or 3x, what their people have been saying. We backed up probably like 100 basis points. The reality is that that is going to sort of a slight drag on distributions this next year. It is what it is. I think, you know, for calendar 2024, and I'm saying for calendar 2024, not just refi, that the INR 4,100 crores of NCD vintage that we did at 6.5%, that's coming up, which we'll probably get done in sort of a, you know, we're pretty confident of getting that done competitively, but it will be elevated. I just want to be clear about that. I think, you know, the moment this rate cycle sort of, you know, pauses, the moment we get, which, you know, we think that hopefully this last, this will be the last couple of hikes. In that environment, that's what we meant by sort of the secular growth. We start thinking of the moment that moderates, I think you're going to sort of see a drop-off both in rates and hopefully sort of, as a lease-up, you know, this entire assumption that we've taken on comes to fruition, that should hopefully sort of lead to sort of a new distribution cycle. The rate... Look, we've always been very concerned about managing the balance sheet. We don't never want to take on more than we can chew for, whether it's on development or the acquisition. The pipeline of governance, our sector banks, you know, credit rating as our sector banks. I can hear you, yeah, but there's still some noise. Yeah, the operator, can you just ensure that everybody else is on mute, please? Everyone else is on mute, only the main line and the current participant is unmuted. Okay, fine. Let's move on. That's fine. Yeah, I think the point I was just trying to make, I'll just reiterate that very quickly, is that, look, we think that we'll get this refi done quite competitively. It's more elevated than what we originally did it at. FY 2024 should be a better year from a rate perspective, and that should flow into distributions. Sure. Thanks so much. Thank you, Kunal. Thank you. Thank you. The next question is from the line of Mohit Agrawal from IIFL. Please go ahead. Yeah, thanks. Couple of questions. Firstly, on the SEZ demand. While we understand that, you know, it's weak because we are waiting an SEZ amendment and you know. Just trying to understand, how has it been for the last few quarters? If you could give some color on in the gross leasing that we've been reporting, how much has been the SEZ leasing, and how has it been across various markets, let's say Bengaluru, Pune, Noida? That's the first question. Yeah. Yeah, just to take the SEZ in terms of, for us, when you look at Q1, the overall SEZ lease-up was around 45% of the total lease-up what we've done. If I look at the market stat for Bengaluru, I think it's a similar number. Unfortunately, I don't have it handy as to what it was in other markets. Interesting stat which I want to give out over here, which is when you look at our 16 million existing SEZ occupiers, close to 50% of those are GCCs. What could infer from is, as some of these GCCs expand, who are already living and have set up SEZ, have some runway ahead of them in terms of the tax holiday period, there is a high chance that they'll continue to take space in SEZ, and that's largely what we have seen in the current quarter for us in terms of the entry lease-up. So even if, let's say, the, you know, the much-awaited amendment gets delayed, let's say, you know, let's say due to next year of elections or something, even in that case, Pro continue to see the occupancy in the SEZ portion to ramp up. Is that understanding correct? Yeah, I think there is still SEZ demand in Bangalore, there, because, again, as I mentioned, when you correlate some of the stats with the growth in GCC and some of them are existing GCCs as they're growing, we are seeing some of this take-up happening. That probably will be the same for some of our other markets like Pune and Noida, because these are ITES markets, actually micro market where we are located. The same story for some of the other markets, where, floor by floor denotification would be important for them. Okay, understood. Secondly, you mentioned in your opening remarks that the physical occupancy is improving. Again, could you give some color on where the portfolio is? Between GCCs and non-GCCs, how has that share changed? I think this is a number which you could dissect in multiple ways, trying to look at more this on overall basis, portfolio level, I think the BPO is ranging from 52%-54%. When you look at the physical occupancy for some of our largest GCCs, it ranges from 75%-80%, versus some of the IT/ITES players are still hovering around, say, 25%-40%. It's a mix of all these which culminates into this 52%-54%, which is there on an average basis. As GCCs grow, that's number one. Number two, as the ITES guys are calling more and more people back, this number on a blended basis should also go up for us. Okay, understood. Thanks a lot. That's all from my side. Thank you, Mohit. Thank you. The next question is from the line of Chetan from Kotak Securities. Please go ahead. Chetan, your line is unmuted. You may please go ahead with your question. Hi. I think one of the questions already got asked and answered, I think. The second question which I wanted to ask was on Embassy Galaxy, where you mentioned that there's a large tenant who has vacated this quarter. I understand the in-place rental was low, and you are now mentioned that there is a strong pipeline to refill that. What are the rents you are targeting for this opportunity? I think, to keep it short, Chetan, we are looking at a MTM spread ranging from, say, 30% to 40%. To the in-place rental of that tenant. Okay, understood. Time you are expecting to close by this quarter? No. I think from a overall guidance perspective and the assumptions what we've factored, we believe a significant portion of this should be leased up during the course of the year. When you mentioned 30%-40% over your existing in place, which was there earlier, that comes to lower than the market rent today? Is that the right estimate? What happens, Chetan, is if there is a small lease up, it will be similar to the market rent. If there is a large anchor tenant coming, it will of course be at some small discount to the market rate. Okay, understood. Thank you. Thank you. The next question is from the line of Satvinder Singh Bedi from Eon Infotech. Please go ahead. Satvinder, your line is breaking. Please go ahead with your question. Mr. Satvinder Bedi? Yes, can you hear me, please? Yeah, we can. Okay. Yeah, yeah. Thanks for the opportunity and congratulations on stable set of numbers, and much commend your disclosures, which are truly world-class. I feel in line with what we get, let's say in Singapore or in the U.S. My question... So, one question to Aravind. Aravind, what are the top three concerns that you have that bother you today? I think, let me keep it simple. Instead of answering it as top three concern, honestly concern, which is our simple goal for us is to increase the occupancy. The way I look at it, our business model is very simple. I am able to increase the occupancy, our capital, and we are going to use equity to grow. On an overall basis, we are looking at increasing, so that, so the simple short-term focus is to increase lease-up distribution. Of course, we do have the organic 7.9 million sq ft, which we are developing over and above the existing vacant area, which we can lease up, which will add to the organic growth story. That's the way we are looking at, or I'm looking at it, Satvinder, to just focus on increasing the overall occupancy. Okay. Aravind, on this, probably I'd like to, maybe this got answered earlier. Last quarter, you said that the large, the absence of large deal inquiries is some concern. Has anything shifted on that with the large or is it still the same? Satvinder, the way we are seeing is we have done two this quarter. There are in the market which we have participated, and we. Having said that, it is certain that these guys need to take up the space. While, when they do go to their home countries for approval, more time, because the situation in their respective home country is much different than what it is in India. The deal making still takes a bit more time than what it used to take, let's say, a few years back. Slowly we are seeing traction the way you've seen in our Q1, some of the leader. Okay. Okay. What we, there is a significant part of pre-lease commitments. Just wanted to understand what does it take in terms of pre-lease commitment. How much is the future tenants skin in the game? Is it six months of security deposit or what kind of commitment does he have, when he pre-lease? Satvinder, you are talking about security deposit? There are pre-lease commitments, so significant part of the lease, so pre-lease commitment, but it's a commitment made today. We wanted to understand this commitment. What kind of commitment upfront? Okay. Is it different or commitment? Typically what happens is, they enter into letter of intent, and they do place some amount of security deposit. That's typically how the pre-lease commitment works. Okay, fine. Thank you. One final question for Abhishek. Abhishek, EGL distribution, can you help us understand how this worked out, this INR 567 million? From EGL, we get two lines of revenue. One is the dividend, which we understand is the profit as a 50% owner of the EGL asset. Second is distribution from investment Gulf Tech. How this INR 567 million arrived at for this quarter? Satvinder, the total receipt that we have from EGL is INR 80 crore for this quarter, which basically includes dividend. That is one, which is INR 23 crore. Yeah. The next two part is basically, if you remember, we had actually invested in their entity for acquisition of a some building. Yeah [audio distortion] P lease repeat, Satvinder. What happened is there are three components, right? One is dividend. Yeah, dividend is INR 23 crores, which is not there in the INR 5 million. Yeah, that's right, 233. Yeah, 233. Yeah. Balance is INR 5 million. It's basically interest amount of okay, fine. Thank you for wonderful. Thank you. Thank you. [inaudible], please go ahead. Hi, I just had two clarifications. One, you said only 40 breakup in your total non-SEZ area. Is the breakup of your vacant area also the same, 60, 40? [audio distortion] One second. You talked SEZ area in the current quarter. Is it all to the tenants who were already occupying that area? I mean, existing SEZ tenants, is that how it works because of the taking up new SEZ space? Is that understanding? It's an expansion of existing guys. The answer to the second question is, it is existing, right? All my tenants are SEZ. Yeah. Yeah. Going back to the first question, I think it's a similar percentage, around 60, 40. It's 85% vacancy essentially for both SEZ and non-SEZ areas, broadly? No, no. Oh, yeah, it's a small marginal difference, 85 and 86. 85 is the SEZ occupancy, 86 is non-SEZ occupancy. Fair enough. Thanks a lot. Thank you. Ladies and gentlemen, that was the last question for today. On behalf of Embassy REIT, that concludes this conference. For joining us, you may now disconnect your lines.