Ladies and gentlemen, good day and welcome to the Mindspace Business Parks REIT's earnings conference call for financial results for the quarter and nine months ended December 31, 2021. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference, please signal an operator by pressing star then zero on your touchtone telephone. Please note that this conference is being recorded. I now hand the conference over to Mr. Kedar Kulkarni. Thank you, and over to you, sir. Thank you, and good afternoon, everyone. Welcome to the third quarter financial year 2022 earnings call for Mindspace Business Parks REIT. At this point, we would like to highlight that the management may make certain statements on this call that may constitute forward-looking statements. Please be advised that our actual results may differ materially from these statements. Mindspace REIT does not guarantee these statements or results and is not obliged to update them at any time. We would like to reiterate that the acquisition of Asset SPVs by Mindspace REIT was effective on July 30, 2020. Consequently, consolidation of financials of the Asset SPVs with Mindspace REIT has been done effective August 1, 2020. Current consolidated first nine months and full year 2021 numbers therefore reflect five months and eight months financial performance of the Asset SPVs. However, for the purpose of comparison in the earnings presentation and for the purpose of this call, we have provided pro forma revenue from operations and net operating income for Q3 and nine months of FY 2021. I would now like to welcome Vinod Rohira, CEO, and Preeti Chheda, our CFO. Vinod will share the business update, growth opportunities, and his views on macro environment and the sector. Preeti will further share an update on the financial performance. We will then open the call to Q&A. I now hand over the call to Vinod. Thank you, Kedar. Good afternoon to all participants. Hope you and your families have been safe and are doing well. Thank you for joining Mindspace REIT's earnings call. As I mentioned during our last quarter earnings call, the sectoral tailwinds continued during Q3 FY 2022. We witnessed leasing of circa 1.8 million sq ft in December quarter, taking the cumulative leasing to 3.8 million sq ft in the first nine months of FY 2022. The preference of occupiers towards well-managed, top-notch Grade A assets which offer the best in terms of health, safety, sustainability and wellness has grown stronger, and we have benefited immensely from this shift. During calendar year 2021, we are able to capture a significant market share of the cross-leasing volumes recorded in our gateway cities. Wellbeing of our building occupants has been at the core of our health and safety initiatives, and we continue our journey towards providing our occupiers with best-in-class assets. Our efforts towards this cause continue to be recognized by the prestigious British Safety Council. We have won seven Sword of Honor awards across five of our business parks which recognize and reward these organizations that have reached the pinnacle of health, safety, and environmental management. The last quarter of 2021 saw a healthy pickup in leasing momentum. However, the third wave led by the Omicron variant has caused a temporary disruption. Unlike previous waves, the restrictions imposed this time were not akin to a full lockdown, and most states permitted almost all economic activities, including offices, to continue. While economic activity continued to remain stable and resilient with technology companies continuing to grow and perform, the back-to-office plans saw a temporary detriment. Compared to the impact of the second wave of infections, this wave has been thankfully largely mild and has not caused a strain on the healthcare infrastructure, having peaked much faster in line with the trend observed across several nations worldwide. Observing the pickup in the leasing momentum post the decline of the second wave, it is evident that offices continue to be in the mainstay in the post-pandemic era as occupiers and employees alike have recognized the importance of having a collaborative work environment and the requirement for a deeper engagement. With the third wave already on the decline, we are confident that occupiers would resume their back-to-office plans in the coming months. On ground, we continue to see large technology companies evaluating spaces for new expansion and consolidation requirements. The leasing momentum that we have witnessed across our parks in this quarter is in tandem to the growth of technology companies and global captives. The IT industries and the GCCs in India have hired a record number of people over the past one and a half years to cater to the changing technology landscape and increased focus on digitization. Few companies have already started formulating their footprint expansion plans to accommodate the increased headcount. Many new RFPs have started floating across micro markets, and we expect to see this activity assume greater momentum in the coming quarters. Coming to the updates on the specific micro markets, the established business districts of Hyderabad are witnessing recovery in demand as key commitments and additional space take up by GCCs continue to provide momentum to the absorption, and we are excited about the mark-to-market opportunity for our portfolio that Madhapur has on offer. In the Mumbai region, Thane-Belapur Road micro market is expected to witness three-dimensional demand driven by fintech, support activities of MNCs, and data centers. The recent budget announcement conferring the infrastructure status to data centers will provide an impetus to the development of this sector. This move, coupled by data localization norms and upcoming launch of 5G, is expected to enhance the attractiveness of our assets in the Mumbai region for data centers. The budget announcement to reform the SEZ regulations to aid ease of doing business and allowing inclusive participation of domestic businesses would augur well for the demand for our SEZ spaces in this region. Pune is witnessing strong traction for technology companies, and we expect this to lead to a buoyant demand. Our assets across the city have seen strong interest from occupiers, which has helped us achieve robust leasing and occupancies. We have also successfully pre-leased our under-construction asset, which is a part of a larger business park in Kharadi, Pune, to a leading e-commerce company. On the back of these encouraging trends and limited space availability at our parks, we are looking at advancing our future development pipeline to bring in new supply early. On the back of these macro tailwinds and strong leasing performance demonstrated by our team, we are gearing ourselves to cater to the demand upswing. We are exploring construction and redevelopment opportunities at our existing parks, and continue to evaluate attractive inorganic opportunities from time to time. Our under-construction pipeline now stands at 1.8 million sq ft. In addition, we are seeking necessary approvals for redevelopment of 1.3 million sq ft at Mindspace Madhapur, Hyderabad. We are excited to have received the ROFO notice from the sponsor for Commerzone Madhapur, located in one of the prime business districts of Hyderabad. It is substantially complete and fully pre-let, circa 1.8 million sq ft asset leased to a major tenant. We should evaluate this and such other opportunities in the coming months. On the financial performance, our net operating income for the quarter grew by 3.4% sequentially to INR 3.7 billion. The nine months NOI stood at INR 10.9 billion, recording a growth of 7.3% year-on-year. Our collections have continued to remain strong at over 99% throughout the pandemic. We continue to focus on having high-quality tenants in our portfolio. Our distributions for the quarter stood at 2.75 billion or INR 4.64 per unit. I would now like to take you through the specific operational updates for the third quarter. We achieved a gross leasing of circa 1.8 million sq ft across 26 tenants for the quarter ending December 31, 2021. Of this, circa 0.8 million sq ft was on account of re-leasing, and 1 million sq ft was under construction vacant and new area leasing. Average rent realized of this 1.8 million sq ft of leasing was INR 64 per sq ft per month. We achieved a re-leasing spread of 27.8% on the 0.8 million sq ft area re-leased. We pre-leased our entire under-construction buildings, circa 0.7 million sq ft, at Commerzone Kharadi, Pune. In the first nine months of this financial year, we have achieved leasing of over 3.8 million sq ft across our portfolio. 82.1% of the leasing during the quarter was to existing tenants, while balance was to new tenants. Committed occupancy for the December quarter stood at 84.6%. 0.7 million sq ft of pre-leasing of under-construction area at Pune done during the current quarter, and the pre-leasing of under-construction area done in earlier quarters are not factored while computing committed occupancy. These areas will add to committed occupancy post-completion. The in-place rent in our portfolio has grown from INR 58 per sq ft in the previous quarter to INR 59 per sq ft at the end of the December quarter. Of the total usable area of 31.3 million sq ft, our portfolio has 24.2 million sq ft of completed area, constituting 91.8% of our portfolio value. 1.8 million sq ft is currently under construction, and we have another 5.3 million sq ft available in the portfolio for future development. The portfolio is leased to more than 170 market clients, with a weighted average lease expiry of 6.9 years. One of the buildings at our project Mindspace Madhapur has won Best Commercial Development Award at the CREDAI CREATE Awards 2021. We continue to focus on building an ecosystem that prioritizes on environment, social wellbeing and governance. Health and safety, sustainable development, and mainstreaming the principles of rightful business conduct continue to be our primary driver. We are certain that these measures will strengthen our position as a responsible entity committed to creating a measurable and positive impact. With this backdrop, I will now hand over to Preeti to walk you through our financial highlights of the quarter and full year. Thank you, Vinod. Good afternoon, everyone. On the financial performance, we closed the third quarter of the financial year 2022 with a revenue from operations of INR 4.4 billion. Net operating income for Q3 FY 2022 stood at INR 3.7 billion, a 3.8% YoY increase over NOI for Q3 FY 2021, and a 3.4% increase on a sequential basis. The nine months NOI stood at INR 10.9 billion, a growth of 7.3% YoY. We continue to maintain NOI margins at 80%+. We announced a distribution of approximately INR 2.75 billion, which is INR 4.64 per unit, for the quarter ended December 31, 2021. The distribution comprises approximately 93%, which is INR 4.31 per unit of dividend, which is not subject to tax in the hands of unit holders, and approximately 6.9%, which is INR 0.32 per unit of interest, and other income of approximately 0.2%. This translates to an annualized yield of approximately 6.7% on the issue price. With this, the total distribution for nine months FY 2022 is approximately INR 8.2 billion, which is INR 13.8 per unit. On the funding side, our leverage on the portfolio on a consolidated basis stood at 15.8%. Our net debt as on December 31, 2021 was INR 40.5 billion. We have undrawn lines of INR 2.1 billion from financial institutions. Our low leverage levels and the strength of our balance sheet provides us the flexibility to pursue both organic and inorganic opportunities. Towards the quarter end, we raised another INR 5 billion through issue of listed non-convertible debentures at an attractive coupon of 6.35% per annum. With this, our pro forma cost of debt has further reduced to 6.6%. We have achieved a substantial reduction of approximately 260 basis points in our average cost of borrowing over March 2020. We continue to pursue opportunities to further reduce our borrowing cost. Our board has approved sale of approximately 40 acres of land at Mindspace, Gachibowli, Hyderabad as per the terms of the MOU, as was disclosed in our IPO offering document. To conclude, we expect the improving market environment and the positive leasing trends to help the growth of NOI and distributions from the portfolio in the coming financial year. With this backdrop, I request the operator to now open the floor to Q&A. Thank you. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may enter star and one on their touchtone telephone. If your questions have been answered and you wish to withdraw yourself from the queue, you may enter star and 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. To ask a question, you may enter star and one. We have the first question from the line of Adhidev Chattopadhyay from ICICI Securities. Please go ahead. Yeah. Good evening, everyone. Thank you for the opportunity. My first question is on this early re-leasing you have done in FY 2023 and 2024 of almost 0.5 million sq ft. If you just help us understand, is it, like, initiated by the tenants? And if so, then what is the thought, what is their thought process? And versus what you are expecting the lease rental whenever these would come up for expiry, is the rent which you have achieved now higher or lower or on the market? If you just help us understand. Primarily, it's very healthy business and a very happy moment when you have a client who's been with you for 10+ years wanting to continue and renew, and who's, in this environment, seen visibility of stability and growth and wants to renew early instead of renewing later. We would grab that opportunity with both hands. Having said that, we have got the mark-to-market rents that we were looking for from this tenant, and in fact, preponed that number, gave them the average values for the 1-year prepayment, accordingly adjusted for that rent, and renewed early. NOI went up, while the rent that we got from them is the expectation of rent that we were expecting from that space on renewal. It was a win-win for both. Okay. Sir, could you share what is the re-leasing spread we have achieved across these deals? It's about 28%. 28%. Okay. Sir, and this excludes? Is it included in the nine months number? Just a clarification. This 37% on re-leasing spread we have for nine months. Yeah. Whatever gets re-leased, it's factored in. Okay. Sir, just following up. Are we expecting many more such early re-leasings to happen now, considering how the market is shaping up with things opening up? A lot of times this is part and parcel of business. You will always find a mix. Some tenants start talking of things early, and some tenants talk closer to expiry. Those who want to renew are far more advanced in their discussions, and they come quite early in the day to renew. This is normal. Okay. I think it's normal. Okay. Sir, just the second question. As we're heading into FY 2023, the expiries which are there, the balance expiry, so how confident are we of retaining now considering the improved environment? We already have visibility of 60-odd% of that renewal, clearly with us. For FY 2020, out of the INR 1.4, how much? 1.08. Sorry? From 1.4, we already pre-leased some. What we're left with is 1.08. From there we already have 60% visibility going forward. Okay. Sir, sorry, just I got confused in numbers. Say it is. You are saying it is 2.5, right, which is expiring in 2023, the area? No, no. It's 1.4. Okay, one point. It's 1.4. 0.4 we already pre-renewed early. From the 1.08 odd area, we have 60% visibility of that getting re-leased already. Just 4 lakh sq ft of area is the balance which needs to be. That's it. Fine. We have the whole year for it. Yeah, yeah. Okay, fine. That's it from my side. I'll come in, I'll come back in the queue if I have more questions. Thank you. Thank you. We have the next question from the line of Puneet from HSBC. Please go ahead. Yes. Thank you. Just a bit of clarification on FY 2023, you know, expiry. So you said number is 1.4, but as per the presentation it was only 0.23 of FY 2023 which is pre-leased. So does it signal that you have to lease 1.1 or is it point z er o? Can you just clarify that a bit again? It's 1.1. Go with 1.1 as a gross number, circa 1.1. From there, we have visibility of 60% already. On 1.1, 60% is visible? From 1.1 we have 60% visibility of renewals already. Okay. Understood. That's helpful. Then secondly, if you can talk a bit about Hyderabad as a market. You know, the vacancies have gone up and a lot of construction is also due. How are you looking at your positioning in Hyderabad market? If you can qualitatively comment more on supply coming from, you know, other players as well. Obviously the demand side as well. Okay. Cumulatively, first I'll speak for myself. We started the year with almost 1.6 million worth of vacancy and an under construction asset of 1.8 million. We are Yeah. We will end the year with 800,000-900,000 of vacancy this year, and the rest of it we've already managed to pre-lease. We see a far more healthier environment for our assets in Hyderabad. We are actually eager to start construction faster on the 1.3 million piece because the under construction ROFO asset also has got pre-leased. Okay. We want more supply, in fact, of our Grade A assets. While, yes, there is an overhang of feasible vacancies in the macro market. Right Each asset is going to be looked at very differently, as we have been mentioning to you in the past as well. Yes. They're far more choosier about what they want to pick on and what suits them best for their business. If that asset stacks up, you're getting a lease first, and that's what we're seeing. Understood. Even the new construction is not all Grade A quality. You know, there are a lot of aspects that may have got missed out in the volume development that generally took place prior to the pandemic. Okay. Some of those volume developments may or may not stack up for the wellbeing, health, and safety protocols. Understood. That, that's something, that's all from my side. Thank you so much. Thank you. We have the next question from the line of Atul Tiwari from Citigroup. Please go ahead. Yes, sir. Thanks a lot. On this ROFO asset, just a couple of questions. Would it be possible to share how much annual rental it has been leased at currently? Unfortunately, we can't give you those numbers, Atul, but happy to address any other question around the ROFO. Okay, sir. Sir, okay, I mean, what is the kind of timeline we are looking at, you know, to kind of complete or evaluate this deal? Any idea on that? Atul, hi, Preeti here. We just got the board approval to start our evaluation, and in the next coming months we will. I would say between now and the next quarter is when we'll be evaluating and then taking it back to the board. Okay, great. Thanks. That's all. Thank you. We have the next question from the line of Rahul Marathe from ICICI Prudential Pension Funds. Please go ahead. Yeah. Thank you, sir, for allowing the opportunity, and congrats on the good set of numbers. Sir, my question is regarding the two related party transactions that we are seeing in this quarter. One is the sale of that land across 40 acres, and other is with respect to the Chalet Hotels deal. If you could just throw some more clarity on both these transactions. Hi, Preeti here. Firstly, regarding the 40 acres at Pocharam. This transaction was already envisaged at the time of our offering. This was already disclosed in our IPO offer document. Since we were awaiting certain ATPD notifications, we could not conclude. We now received the denotifications, and therefore we will be concluding this. This 40 acres is a part of our Pocharam Mindspace development in Hyderabad, and this 40 acres was already contemplated to be carved out. We are just concluding the transaction, which is already disclosed. That's on Pocharam. The second one was, we also had disclosed another MoU, which we had signed with Chalet Hotels for a small 2-acre piece of land at our Mindspace Airoli asset. This is again a part of our offering disclosure. Again, we are awaiting certain approvals there. In the meantime, we've extended the agreement. Yeah. At what valuation is that 40-acre deal happening? That's at INR 80 crores, which has been disclosed in the offer document. For unit holders, will the proceeds be passed on in the form of distribution or how it will happen? You know, if there is no alternative immediate investment plan, then we would, you know, make this a part of the distribution. Okay. Thanks. That's it from my side. We'll have to just evaluate that, but that's probably what it will look. Okay. Thank you. We have the next question from the line of Kunal Tayal from Bank of America. Please go ahead. Sure. Thank you. Two questions from my side. First, you know, wanted to better understand benefit you are expecting on your SEZ assets post the development of the budget. Then, the second question was, you know, around the ROFO opportunity. I guess you broadly know that some of the considerations include maybe next activity ought to be accretive. Given that, you know, interest rates probably are at a low point right now and would look to increase sometime in the near future, would there be a special consideration you would bake in for such a scenario, maybe have more than normal expected accretion from an acquisition? Thanks. First, hi, Kunal. To address your question on the SEZ, it's broadly in line with what we were envisaging, and the legislation that is likely to come through will allow us far greater flexibility to have rupee billing and coexist equivalent of STPI occupiers or on the denotified portion, which will hopefully be unit-wise, and that will just open up the supply to be offered to non-SEZ demand, which we've seen very well, it turned out for us from the building we denotified in our Airoli park last year, and we've seen huge amounts of traction of demand there and done significantly well on our leasing in that building as well. We are hopeful of that coming through soon. On to the second part of your question, on the ROFO asset. Primarily, this is a Grade A asset which was customized and built to suit for a very high-end technology company, who's just taken this entire building up for their primary office in India. In the right micro market of Madhapur, it's a very attractive asset from its intrinsic value, and from the way it stands out from a value perspective, we would be excited to look at that ROFO opportunity. Interest rate, yes, in short, medium, long term, we all know, but they're still very excited about looking at this asset and its value being accretive for the REIT. Understood. Thanks a lot. Thank you. Ladies and gentlemen, if you have a question, you may enter star and one. We have the next question from the line of Shashank Savla from Somerset Capital Management. Please go ahead. Hi there. Thanks for the opportunity. My first question is on the mark-to-market potential, where if I see for the last six quarters, it has been gradually declining, like from 17% to now 7%. Can you throw some color on that, and as to what's driving that? Because I thought some of the other projects which might be expiring would stabilize the mark-to-market potential going forward. Yeah. This mark-to-market was really in line with the estimate that we had given forward in terms of the broad rents we were hoping to achieve. As the markets are firming up and getting stronger, we see a better opportunity going upwards from there. So far, we've just maintained this. Right. The second question was on the distribution. If I look at the NDCF levels, there is an inflow from debt of INR 2,195 million versus the CapEx is around INR 1,500 million. I was just trying to wonder if part of the dividends are being funded by increase in debt. Yeah. Hi, Shashank. Preeti here. To answer your question, see, this is something which, you know, we've been talking about in the previous calls as well. There's always some amount of phasing which is happening in terms of the cash flows. This time also some of, you know, the reasons why you see this gap between the CapEx and the overall debt drawn. We've had certain elements. One of course is, you know, the put outs, which I've always said. Part of it gets, I mean, while we consider it as CapEx, it gets for an accounting purpose gets clubbed under your operating cash flows. Some amount sits there. For us, all our CapEx, including put out CapEx, generally is funded out of debt. You'll have to look at both together. That's one. Also because we've done extremely good leasing in this quarter, we've had incremental brokers payoffs as well. Another element has also been you know because of certain power disruptions which all of us have heard of in the last quarter. The power cost has gone up. You know, given our arrangement, the true up of this, I think you can recover that from the tenants, that happened subsequently. T o that extent, you have an interim, I would say, mismatch. All of these factors have contributed to this gap. Again, as I said, because these are all saving issues, we generally try to normalize this. That's the reason you are having this gap in this quarter. Of course, there are again certain prepaid expenses for both the quarters which gets paid in, you know, the starting of the second half. All these factors are contributing to this gap. Great. Okay. Thank you. All good. Thank you. Thank you. We have the next question from the line of Sameer Baisiwala from Morgan Stanley. Please go ahead. Yeah. Hi. Thank you so much, and good evening, everyone. Preeti, just picking up from the previous question, which is in your EBITDA to NDCF flow. It's not the only quarter where we have about, you know, INR 50 crores-INR 70 crores excess borrowing versus the CapEx. You know, you do cite some of these, you know, cost heads every quarter. This has been, you know, sort of there for last, actually all the last five, six quarters that I can see. How should we model this? Do you think this is something that's a recurring thing will continue? Or at some point in time, this should taper down? Sameer, just to answer, let me just start with the second half of last financial year when we did our first distribution. At that point in time, we did the distribution only in the second half. We did not do in the first half. In fact, I'd mentioned even in the earlier calls that a big chunk of our tax refunds which were envisaged in the second half, we got in the first half, which we used to repay down the debt and therefore we had to borrow. Otherwise, in that financial year, there was absolutely no gap in our operating cash flows to meet our dividends. Now coming to this financial year, as you rightly said, there has been a gap on all the three quarters. Some of the gap we had envisaged given at the time of our offering, which I'd mentioned even last time. The other gap had been contributed by one: we had almost INR 35- INR 40 crore of tax refunds, which were again supposed to come in this in the first quarter of this financial, which we got earlier in the last quarter. Because obviously, once we get the cash, we, you know, use that money to pay down the debt. Therefore, in that quarter, when we are actually doing our distribution, we have to draw the debt back. That's why you see some, you know, debt being drawn to fund the distribution. That's because every time we get some earlier cash flows, we use that money and pay down the debt. Sometimes if we are falling short in this month and we know that cash flow is coming in the next, then we make sure that we normalize. That's the reason we are seeing these mismatches. Again, Sameer, to broadly answer your question, some of rentals are given at the time of IPO, and some of these are phasing issues which should normalize as we end the year. Okay, that's fine, Preeti. It would be, you know, good if you can have some disclosure around this. You know, if it's just a timing issue, that's fine. You know, some cash come early, some late, et cetera. That clarity if you can provide in the presentation, it would be great. That's the request. Sure. We'll do that. The second question is on the ROFO assets. How do you plan to fund that? Sameer, while you know, the entire structure is something which we will start working on and evaluating, but one could also one you know, form of this acquisition could also be swap of units already to the share of the SPV coming in. That also could be one probability in which case we may not need any capital for the acquisition. That's something still under evaluation. We'll come back to you guys once we've completed it. Sorry, Preeti. Did you say it would be by issue of units? Is that what you said? I'm saying one option, which is possible could also be swap of units. In which case we will not actually have any capital requirement. All right. Oh, got it. That's again still under consideration. Once we evaluate the asset and, you know, get to a final stage, we will have a better clarity. Okay. Okay, that's fine. The other question I have is in regards to, you know, 85% occupancy. We've got 4.5 million sq ft, which is sort of vacant, Hyderabad and two assets in- INR 3.56 million. Sorry, my bad. INR 3.56 million. Between Hyderabad and two Airoli. How do you see this take up going forward? And B, is it also related to physical occupancy, you know, employee footfall coming back? And what's the visibility on that? Thank you. Like the way we had envisaged, and we saw that in the previous quarters, it's panning out in the similar direction. Maybe we are seeing the large RFPs first come through, and those large RFPs will set the trend for demand for build to suits or customization or larger footprint for 12, 18-month to 24-month business plan for most of these occupiers. Along with that, you will start seeing the pickup of the 50,000 sq ft and 100,000 sq ft occupiers. The immediate need for growth, et cetera, when physical occupancy starts rising, which I believe will happen between March and May. That's the time you will start seeing the smaller office take up as well pick up. The way we see it is, Hyderabad, I'm quite excited because we have only that supply. When the demand starts coming in, we'll be able to encash the opportunity of mark to market. From an Airoli perspective, we are seeing within the non-SEZ space, demand picking up steadily and nicely and great occupiers looking at that space. We've done significantly well, much more than we had envisaged at the beginning of the year. We are excited about the SEZs allowing denotification to happen to accommodate those kind of occupiers. While that will go slower till the denotification comes through, we have some tailwind there because we have some under construction supply available in the non-SEZ, which we'll quickly keep leasing, and are hopeful by then we will get the catch up on the supply of the SEZ becoming denotified so that the continuity for our business remains in that space. You'll see a slight lag there. We see above 90% in our occupancy, as we had mentioned even last time, by the end of next financial year. Okay. No, that's great. And Vinod, would you say that your, you know, in next two years or whatever timeframe, your steady state occupancy should be what? 97%-98%? We would all hope for all of those numbers. Yes, absolutely. Okay. Okay, great. Well, finally, if I may, you know, with your permission. On Airoli East, I think about 2.1 million sq ft, you know, ability to do brownfield. Any thoughts on that? We are looking at a lot of data center opportunities. While anyways the value that we've embedded in this is nothing, so whatever comes is bonus in that sense. There is a combination of customers we are looking at. As things stabilize, we'll come back with those things, yeah. All right. Okay. Thanks. Thank you. We have the next question from the line of Mohit Agrawal from IIFL. Please go ahead. Yeah, thanks for the opportunity. My first question is regarding how do you see the FY 2023 distribution now? You know, with FY 2022, it looks like the, you know, it's gonna be around INR 1,000 crores, you know, given that you've had a similar run rate for the first three quarters. Could you give a sense? We've seen about a 10% increase in our blended rentals over the last, you know, four, five quarters. The occupancy level seems to have broadly stabilized. What kind of a growth do you envisage in the next year? Hi, Preeti here. I wouldn't be able to put a number to this, but directionally, we should definitely see a growth in the distribution vis-a-vis FY 2022. Given that, of course, we've done a good amount of leasing in this year, and the rentals of those leases should start flowing in in the coming quarters. Of course, the routine growth in terms of escalations, mark-to-markets, which will come. Directionally, yes, we should be seeing a growth in the distribution, but I won't be able to put a number to that. At least, like we've seen 10% increase in blended rentals, at least that kind of distribution growth should we expect more than that? Most honestly, we won't be able to comment on the percentage growth. I can only set the direction. My next question is on, you know, the Hyderabad market, again. In the presentation you have mentioned that there is about 5 million sq ft -6 million sq ft of RFPs. Vinod has also mentioned that, you know, large deals are now coming back. Is it possible to give a sense of how this compares to the pre-COVID times? Broadly, where are we in terms of the interest and the RFPs and inquiries, if that is possible? In the peak, which was just pre-COVID, Hyderabad ended up with 14 million sq ft of gross leasing. Okay. With gross leasing. Okay. So, uh- This is roughly about less than about 50% of where we were at the peak. Currently, that's right. Okay. Thanks a lot. That's all from my side. Thank you. We have the next question from the line of Satinder Singh Bedi from Eon Investments. Please go ahead. Yeah. Thanks for the opportunity. Congratulations, Vinod and Preeti, for a fabulous set of numbers. Mr. Bedi, this is the operator. I'm sorry to interrupt. The audio from your line is slightly muffled. Could you use the handset? Yeah. Okay. I will do that. Is it better now? Sure. Thank you. Please go ahead. First question is to Vinod. Vinod, I couldn't get a full hang of the SEZ and non-SEZ in terms of the budget, because Airoli West, like you had mentioned in the last call that once this regulatory change or legislative change happens, okay, Airoli West should see a better time. I just wanted to understand what is the update on that. Okay. We are waiting for the fine print to come through. The pointers that have come out from the various government agencies seem to suggest that they are looking at these as employment generation centers, and they want to promote and grow these businesses in these micro markets and these ecosystems. They want to be facilitators for this, allowing for flexibility of businesses to grow and coexist. Similar to the regime that was earlier there in terms of unit-wise SEZs, STPI units or EOU units which could coexist in the same building as units and allow for rupee billing and allow for domestic billing, etc. All of that as a combination is being worked out. We are very hopeful that it'll come out in that shape and form. Okay. This flows from the budget announcement? Your understanding is the budget announcement? They are working on this in any case in parallel. They've said on or before September of 2022, they would have announced the bill. Okay, fine. Thank you. Next question is to Preeti. Preeti, we have a floating debt of about INR 3,300-odd crores. The general market consensus is that the interest rates are at the lowest possible, and they're probably ready for a move up now. Any thoughts on converting this into fixed or something like this, locking this in, okay, given that probably consensus view is that we are close to the bottom? Yeah. Hi. As we talk, we've already converted almost 50% of our debt into fixed cost debt. And as you rightly said, we are at the bottom of the interest rate cycle, and we do expect that in, you know, the coming financial year, there could be rise in the interest rates. We are working towards converting a little more of our floating cost debt into fixed cost. That's something which is already in the works. Okay, yeah. Thanks. Vinod, regarding your Square, BKC, when does the rent start, okay? Because it is already leased out. Yeah. First quarter next year. First quarter next year. Okay. It will be fair to assume that maybe 50%, 60%, 70% of this rent will incrementally flow down to the distribution? Is that a fair assumption to make that in the next financial year, if we rent at INR 270 for 0.1 million times 12 months, then about 60% of that should flow down to the distribution this year? Is that a fair assumption to make? Approximately in that range. I can't give you an exact number on that distribution, but yes. Okay, fine. Okay. Thank you very much. This answers the queries I had. Just a small comment, taking up from what Satinder also pointed out earlier. It'll be great if the amplification of this NDCF flow, Preeti, could be provided in terms of the debt drawdown. I think it will offer a lot of clarification and create a confidence in the whole thing. Okay. Thank you very much. Sure, Satinder. Thank you. Thank you. Thank you. We have the next question from the line of Adhidev Chattopadhyay from ICICI Securities. Please go ahead. Yeah. Thanks for taking my follow-up question. My question is on the slide 45 on the portfolio summary. Could you help us understand in Airoli West, the gap between occupancy and committed occupancy? When does this 7% gap get operational? That is first question. Sorry, can you repeat that question? I'm seeing in your Gigaplex asset, current occupancy is around 60-odd%, whereas the committed occupancy is 67%. When does this gap get breached? Means when do the tenants start, when does the rent start for the balance 7% of the area which is there, the committed occupancy? Generally, whenever we sign the lease, it generally takes about 4 months -6 months for every tenant to do the fit-out. That's exactly the timeline that we expect for the rents to come. This is something which will start flowing from second quarter of FY 2023. Is that a correct way of looking at it? Yes, it is. Between first and second. Yeah. Between? Okay, sometime in the first half, okay, of next year. Yeah. Okay, okay. Similarly for this, Kharadi, the pre-leasing we have done, sir, when will the asset become operational? The approximate rents in this asset may start from first quarter calendar year 2023. Q4 FY 2023, if that's the other way to look at it. That's right. Okay. The occupation start only six months prior to that. Okay. Yeah. Occupancy is scheduled for the end of first quarter, this calendar year. Okay. Sir, this pickup in leasing, especially for the rent-free periods, do you again see them now coming down from where it was? Not because of pandemic, we are giving higher rent-free periods across the board. Do you see that? No, it's really larger clients require a larger amount of time, so that's what's getting translated. When the smaller areas start getting picked up, you will anyway definitely feel, see that the market is really picked up. Whatever is fair and justified in the current scenario is what will become as rent-free. They continue to be part and parcel of the deal. There's no dramatic difference in what needs to be done and what is getting done. Okay, okay. Fine, sir. That's pretty helpful. Yeah. Thank you, and all the best. Yeah. Thank you. The next question is from the line of Sri Karthik from Investec. Please go ahead. Thank you. I know you clarified regarding the fact that there could be timing difference with respect to tax receipts on NDPS. If I even take a five quarter view, almost 25% of our distributions are being funded by debt. If you could further clarify as to why such a large portion of it is being funded through debt drawdowns. That'd be useful. That is one. The second question is, if probably I might have missed it, but the pricing of the land transaction, is it in line with the recent Telangana government's land sale price of about roughly INR 40 crores an acre? No, no. This is Pocharam, which is eastern Hyderabad, on the other end of Hyderabad. If you studied that micro market, you would probably have a different view on valuations completely from what you're envisaging from Madhapur, et cetera. We have 4 lakh sq ft lying vacant there, and we find it extremely difficult to lease. The rents are in the range of INR 20-INR 25- Sir, the price at which the transaction happened? Sorry? The price at which the transaction happened, if you could clarify that? The transaction is at INR 80 crore for 40 acres. It is about INR 2 crore per acre. This is what was disclosed in the offer document as well. Thank you. The first question please. Coming back to Longer term view on this. Yeah. Yeah. Coming back to your first question, you know some of the things which I had mentioned earlier as well. Part of this was anyway, any which way, when it was given at the time, you know, our projected numbers during the IPO. The balance is because of certain cash flow savings, where like for example, we are getting some of the tax refunds which are coming in earlier as compared to the quarters that we had in the past. Some bit of, you know, working capital which is coming up in advance. Some gap is bound to continue to remain, while some of the gaps by the time we end our financial year, some of them should normalize. Understood. The fact that about 20 or plus percent of your distributions are being funded by debt, is that the correct assessment? No. Actually, that's not the way you should be looking at. You know, since you mentioned five quarters, the first two quarters, if you look back, we had almost received close to about 100 crore of tax refunds last year in H1, which was actually contemplated in H2. Now those were our cash flows planned for H2, which we received well in advance, and we have paid down the debt. Obviously, we had to draw that debt back when we were doing distribution for H2. A large amount of that number actually happened in H1, which we took by way of debt in H2. Similarly, again, when you are looking at this financial year, we have almost, as I mentioned, 30, 40 crore of tax refunds which came in advance. We have certain brokers payouts which have happened because of huge leasing that we've done in these quarters, which we've paid this time. We've had certain power costs, which I was mentioning, which will be trued up only in the next financial year. That gap may, you know, remain for a little longer. It's a combination. It won't be right to say that 20% is funded out in debt. It's more of managing the cash flows as and when they come. When we get the cash flows in advance, as a prudent practice, we take that money and pay down the debt and draw that back when we need it. This is very useful. Thank you so much. Thank you. Thank you. We have the next question from the line of Rajan from Elitehold. Please go ahead. Actually, I wanted to understand that, the ROFO asset that we are getting, okay, is there any possibility of we are funding it totally through debt? Hi, Rajan. As I mentioned that, we are just going to start the evaluation now that we've got the board approval. Having said that, one of the options which we have is also swap of units of the REIT with the SPV share. It is unlikely that this will be fully funded out of debt. As I said, we've just started the evaluation, and we'll take the next few months to evaluate what is the most appropriate capital structure when we talk of acquisition. Yeah, sure. Because recent days we have got higher prices, so we can be evaluating this. So that's first. Second is about the lease agreement. Okay, like, say, what I mean, what type of escalation clauses are there? Three-year, five-year? I mean, in general, I want to understand. They are standard escalation clauses as they used to be. In most cases should be between 13% and 15% every t hree years. It's moving towards a trend where some leases we are able to even get annual escalations. Okay. It will be better, okay, next time, you know, you more priority will call to unitholders rather than direct some securities firm which have no relation. I mean, no direct relation. Okay? That will be great. Sure. Thank you so much. Mm-hmm. Thank you. Before we move to the next question, we would like to remind participants to ask a question, you may enter star and one. We have the next question from the line of Shashank Savla from Somerset Capital Management. Please go ahead. Hi. Thanks again. I wanted to understand the committed occupancy and the occupancy. If I look at the last four quarters, the committed occupancy has been between, like, 84%-85%, but the actual occupancy hasn't improved. This was coming back to your previous statement that it takes, like, 4 months -6 months for that committed occupancy to flow into the occupancy. Why haven't we seen that actual committed occupancy flowing into the occupancy numbers? There are two parts to this. One part obviously is. Take for example, when you're leasing out something, at the same time you have a customer who's exited and terminated their lease. Till they are physically occupying it doesn't factor into your vacancy. While we may have announced their exit, because when we receive the notice, it's generally between four and six months, after which the tenant walks away. The impact starts to show in your occupancy vacancy numbers only after that four or six months or tenure gets over, and that's when it may drop or go up. At the same time, every quarter you're leasing fresh new space as well as re-lease of vacant space. That vacant space factors for committed occupancy at the same store. If there's new or under construction, that gets added at a later date. It's a constant sequence of leasing that takes place. They're separate operations that are taking place parallelly. The effect is shown to you on the presentations every quarter. Sometimes where the NOI is signed, which is binding, till the time it doesn't move to a binding agreement that is registered, it stays as occupancy, committed occupancy versus confirmed only when we do a registered document. That's where the gap comes. Right. Just trying to understand, given the current sort of environment and given that you still sort of give a few months of free rent, would we see any meaningful improvement in the actual occupancy numbers in the next couple of quarters? We should see, definitely. When we discussed about the September quarter, we were at 7% at the end of that September quarter. While we discussed with you towards November, December, we had already reached 14% occupancy to be booked. After the Omicron wave hit us, the occupancies dropped down. We will see them catch up, I think in my view from March going up to May, you will see the occupancies climb back up really quickly. Right. Any change in the base rent or incentives which you give, given the improving environment? For us it's about the selection criteria about the tenant, what is the quality of tenant, and what is its stickiness on the portfolio. We will do the best rate that we want to get and for the tenant where he's satisfied with the rent number. For us it's a win-win. We want to take volumes, take the right tenant and move forward in business as usual. Right. The numbers are The numbers. One final question. For Grade A assets, the numbers will firm up because Grade A assets are going to thin out in terms of supply over the next few quarters. One final question. I just wanted to understand on the taxes. What exactly are they for? Like, for a REIT, given that they have some tax advantages, I just wanted to clarify what the taxes paid for are actually for and what sort of rate should we assume going forward? you mean taxes at the asset SPV level or taxes in the hands of the unitholder? Taxes which you show at the consolidated level, at the corporate level. Right. Essentially these are the taxes which the Asset SPVs, landlord paying. These taxes depend on each of the SPVs because some of the SPVs still enjoy tax benefits because they are SPVs or they were IT parks, in which case MAT is something which is applicable. In all the other cases, full tax, which is again around 29%. That's what is applicable. Right. Okay. Thank you. Thank you. We have the next question from the line of Manish Agarwal from JM Financial. Please go ahead. Hi. Thank you. My first question would be pertaining to the liability side. We have considerable interest cost benefit over the past one and a half years. How do you see the trend going forward? Because it will have a direct contribution on the NDCF. What are the broad conversations you're having with the lender side, if you could indicate that. Manish- Manish, we couldn't get your question. Can you please repeat? Yeah. Could you please repeat? Yeah. My question is pertaining to the liability side. We have had the interest cost benefit flowing to us, which provides a buffer to the NDCF in a way. Going forward, how do you see this trend playing out, the interest cost? What are the broad conversations you're having with the lenders right now? Manish Agarwal, in terms of, you know, the debt conversations, of course, we've seen a good 250 basis points reduction in our interest cost. That's one reason why we have been, you know, converting some of our variable cost into fixed cost. Now as we talk, you have noticed 50% on fixed cost. Some of our debt is already locked in at these rates for the next two to three years, depending on when we had raised the NCD. That's one thing. We're already working on converting a little more of our variable cost into fixed cost. Of course, we'll take a call. Some of that can continue to remain at the SPV as variable cost because these are long-term debts. That's one thing. Of course, this year, as you also aware, we received a huge benefit vis-a-vis our projections, in terms of our interest cost. What is our projected numbers in the FY 2023, we will continue to receive that benefit next year because that was the cost which was again given for the next year. That should continue. Overall, in terms of the NDCF, as we said, because now in terms of the leasing and also the rentals which are going to come from the leasing that we've seen now, we should definitely see an improvement in our NOI also as compared to FY 2022, which should also add to our NDCF. Sure. Understood. Secondly, on Commerzone four, we have seen traction. Occupancy has moved up, committed occupancy. What sort of levels can we head towards? What is the leasing pipeline over there looking like? Yes. We are constantly looking at picking up on leasing that building out, and we are seeing the traction begin slowly as we approach imminent. We're quite confident we'll be able to lease this asset out soon. Sure. Thank you. That's all from my side. All the best. Thank you. Thank you. Ladies and gentlemen, that was the last question. As there are no further questions, on behalf of Mindspace Business Parks REIT, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.