Good afternoon, ladies and gentlemen, and welcome to Mindspace Business Parks REIT's earnings conference call for financial results for the quarter ended June 30, 2022. 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 this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this call is being recorded. I now hand the call over to Mr. Kedar Kulkarni. Thank you, and over to you, sir. Thank you, and good afternoon, everyone. Welcome to the first quarter financial year 2023 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. I would now like to welcome Vinod Rohira, our CEO, and Preeti Chheda, our CFO. Vinod will share the business update, growth opportunities, and his views on the macro environment. 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. Over to you, Vinod. Thank you, Kedar. Good afternoon. Welcome to Mindspace REIT's first quarter financial year 2023 earnings call. Our financial results for the first quarter reflect the start of our return to normalcy and gradual return of employees to their workplaces. We continue to see the rise in demand for institutionally owned Grade A office spaces with the best asset management ecosystems. We had recorded one of the best ever years of leasing in financial year 2022, and the tailwinds witnessed during the previous financial year continue to grow. We recorded leasing of circa 0.9 million sq ft during the first quarter, and committed occupancy of the portfolio has jumped up by 130 basis points quarter on quarter, from 84.3% at the end of quarter four financial year 2022 to 85.6% at the end of quarter one financial year 2023. If you analyze the leasing activity, the best parks are capturing a significant share of market demand. During this quarter, Madhapur was the best performing market in the portfolio, followed by Airoli West. We have highlighted on previous occasions that vacant spaces in these parks will witness heightened traction when the demand returns, and the strong leasing activity in these parks is a testament to that. Occupiers across most segments are progressing well with their back to office plans. Our physical occupancy in our parks have been improving each month since March. The current physical occupancy at our parks has increased from circa 23% in April to over 36% in July. The trends are much stronger in Mumbai region, where average physical occupancy at our parks was circa 47% for July, followed by Pune, where average physical occupancy stood at circa 30%, and Hyderabad at circa 28%. During the previous financial year, we had witnessed strong demand from large occupiers who were leasing up spaces to cater to their long-term back to office strategies and consolidation needs. This quarter, we saw demand pick up for smaller office spaces as well. We expect this trend to further accentuate as the demand recovery becomes more widespread. Fragmented vacant spaces in our parks are witnessing demand from the expansion of large occupiers as well as mid-sized companies to cater to their new hiring over the past two years. We're seeing a greater preference for ready spaces which can be taken for fit-out on an immediate basis, and this is helping us lease up the vacant spaces. As highlighted over the past two years, Grade A occupiers are gravitating towards institutionally owned office spaces with the best quality asset management practices, and this trend has become profound. Occupiers today are clear about who they want to be associated with. Strata sold assets are no longer considered to be at par with institutionally managed Grade A spaces, as institutionally managed Grade A spaces have best-in-class asset management practices, are upgraded frequently, and adopt some of the best health, wellness, and safety practices. There is a discernible shift in demand towards institutionally managed office spaces in the occupier segments that we target. Our efforts of using the downtime to upgrade our offerings, improve our asset management practices, ease navigation within our parks, and create experiential asset ecosystems have helped us attract this demand. The ability of Indian services sector to deliver even during the peak of pandemic has won it accolades globally. This, coupled with the vast availability of STEM talent at lower costs, has aided the entry of new GCCs, GICs into India. India had 1,430+ GCCs at the end of financial year 2021. This count is expected to grow at a CAGR of 67% to reach 1,900+ GCCs by financial year 2025. The existing GCCs, GICs have also hired a record number of new people to widen the bouquet of services offered to their onshore counterparts. As more managers and organizations realize the importance of offices in fostering teamwork, collaboration, creativity, and transmission of organization culture and strategy from senior management down to all levels of the organization, they are calling employees back to their base cities with a defined plan of bringing them back to desks. The return of employees to their base cities and eventually to office is keeping pressure on occupiers to hasten the office space take-up to cater to their increased headcounts. Both these factors are providing further fillip to office demand, as physical offices offer an excellent ecosystem to nurture and build best talent. Globally as well as domestically, central banks are increasing the policy rates to contain rising inflation. Domestically, stricter lending norms stipulated by the Reserve Bank of India and rising interest rates are expected to impact the speculative development of non-institutional developers, and would lead to deferment of certain upcoming supply. The institutional developers may be able to adhere to their delivery timelines, but they are likely to bring the new supply at higher rentals to compensate for the increase in costs, which is likely to add upward pressure on market rents, further improving the mark-to-market opportunity in our portfolio. We are excited to hear about the progress being made on overhaul of the SEZ Act, as we have been reading the proposed law, Development of Enterprise and Service Hubs, or DESH, is intended to convert existing SEZs into engines of economic growth and employment generation. To promote this objective and aid the growth of current SEZs, the government is expected to allow partial denotification and permit leaseholding, thereby allowing SEZ occupiers to sub-lease to multiple clients as well. The government is also intending to provide a single window mechanism for easier denotification of SEZ space. We are eagerly tracking updates on this front, as this should provide massive support for demand in SEZs. This instills remarkable confidence in leasing out most of the vacant SEZ spaces post the change in law, accelerating the trajectory of occupancy movement. I would now like to take you through the specific operational updates for the first quarter. We have leased circa 0.9 million sq ft during the first quarter of financial year 2023. 0.4 million sq ft was re-leasing, and 0.5 million sq ft was on account of new and vacant area leasing. The committed occupancy of the portfolio stood at 85.6, recording a jump of circa 120 basis points on a sequential basis. We have achieved an average re-leasing spread of 36.4% on the circa 0.5 million sq ft area relet. The average rent achieved on the 0.9 million sq ft leasing was INR 63 per sq ft per month. Our in-place rents have grown from circa 9.3% year-over-year to INR 62.4 per sq ft per month. Our revenue from operations for the quarter grew by circa 16.3% year-over-year to INR 4,916 million. We've continued to demonstrate steady growth in our net operating income over the past few quarters. Our NOI for the quarter grew by 16.9% year-over-year to INR 4,014 million. Our distribution stood at INR 2,811 million or INR 4.74 per unit, up by circa 0.3% on a sequential basis. The weighted average cost of debt stood at 6.9% at the end of quarter one financial year 2023. Our portfolio is now further diversified with over 175+ tenants. We are proud to announce that Mindspace REIT featured in India's Great Mid-size Workplaces 2022 in our category. To summarize, we look forward to another year of strong growth, setting up new benchmarks as we continue to be among the most preferred asset manager partners for the growth needs of tech-enabled workspaces. We continue to upgrade our offerings and create experiential workspaces necessary for attracting the millennial workforce of India. We are proud to announce that the share of green buildings in our completed portfolio has increased from 77.3% in the March quarter to over 90% now. We received LEED Platinum and O&M certification across 6 new buildings, and LEED Gold O&M certification across 5 buildings during the quarter. We also continue in our endeavor to develop the ecosystem we operate in, and strive to improve it. As a part of our community outreach initiative, we have partnered with the local government in Telangana and built a new school in Gambhirpur. The school, spread over 10,000 sq ft, has been designed to accommodate 400 children. It is equipped with well-designed classrooms, a library, dining area, training rooms, and an outdoor play area. With this backdrop, I hand the call over to Preeti to take you through the financial updates during the year. Thank you, Vinod. Good afternoon, everyone. I'm happy to present our financial performance for the first quarter of the financial year 2023. We closed the first quarter with a revenue from operations of INR 4.9 billion, resulting a growth of approximately 16.3% year-on-year. Our net operating income stood at INR 2 billion, recording a strong approximately 10.9% year-on-year growth. We continue to maintain NOI margin at 80% plus. We announced a distribution of approximately INR 2.2 billion, which is INR 4.74 per unit for the quarter. The distribution grew by 3% on a sequential basis. The distribution comprises approximately 93%, which is INR 4.41 per unit from leasing, which is not subject to tax in the hands of unitholders. Approximately 6.8%, which is INR 0.3 per unit of interest, and approximately 0.2% of other income. We have concluded the sale of approximately 40 acres of land at Pocharam, Hyderabad for a consideration of INR 1.2 billion in the previous quarter. The consideration is not envisaged for an immediate reinvestment opportunity. In view of the same, it is proposed to pay out this consideration as per the terms of the lease regulations. Accordingly, NDCF for the quarter ended June 30, 2022 includes INR 300 million of distribution of part of such proceeds to unitholders. On the funding side, our leverage for the portfolio on a consolidated basis continued to remain low at approximately 16.6%. Our net debt as on June 30, 2022 was INR 44.4 billion. We have undrawn committed lines of INR 3.8 billion from financial institutions. Our strong balance sheet provides us the flexibility to pursue organic and inorganic opportunities for growth of the portfolio. During this quarter, we refinanced INR 4.9 billion of debt through issuance of listed non-convertible bonds at SPV level, and raised another NCD of INR 5 billion at the REIT level towards the quarter end. This NCD raise around 41% of our net debt is now at fixed cost. Our borrowing cost remains low at 6.9% at the end of this first quarter, though we expect the changing interest rate scenario to move our cost of debt higher in the coming quarters. We continue to foresee opportunities to optimize our borrowing cost in the current macro environment. Our evaluation of the potential acquisition of the ROFO asset, Commerzone, Madhapur, Hyderabad, for which we received the ROFO notice from sponsor, is in progress. We hope to complete our evaluation and present the opportunity to the governing board soon. In furtherance of the memorandum of understanding executed between Gigaplex Estate Private Limited, an asset SPV of Mindspace REIT, and K Raheja Corp Private Limited, in relation to the transfer of MIDC land measuring approximately 16.4 acres at Mindspace Airoli West by Gigaplex to K Raheja Corp Private Limited, which was subsequently reduced to approximately 5.7 acres. We have decided to retain the 5.7 acres in Gigaplex to explore development of a data center or office space. REITs have demonstrated steady performance and have witnessed growing interest from all category of investors. The product is continuing to gain traction among retail investors, which is very encouraging. Our investor base expanded by over 8,000 unit holders in the quarter ended June 30, 2022, largely driven by the addition of retail investors. We expect positive regulatory reforms to help enhance liquidity in the instruments. It gives me immense pleasure to announce that we published our first sustainability report in the first quarter of this financial year. The report presents our commitment to drive a responsible business with high standards of governance and transparency. We are committed to investing in initiatives which benefits all our stakeholders and the communities around. To conclude, we expect the growth in NOI and distribution in the current financial year to be led by improving leasing environment, revival of demand for our SEZ spaces, post-implementation of DESH Act and the rules thereunder, and as Vinod mentioned earlier in his speech, tenant preference for institutional high quality asset managers. With this, I request the operator to now open the floor for question- and- answers. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Our participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have our first question from the line of Shashank Savla from Somerset Capital. Please go ahead. Hi there. Thanks for the call. I had a couple of questions. First, can you elaborate on the SEZ vacancy? How much of the total vacancy is related to that which you will be able to fill now? Hi, Shashank. In our portfolio about 1.6 odd million sq ft is SEZ, which is waiting to get leased in terms of vacant spaces in the Navi Mumbai area. The other part combined I think should be about 2 odd million sq ft. Is everything based in Bombay, only Bombay? Yeah. Predominantly Bombay, Navi Mumbai. That's right. Okay. The second question was on the net operating income margin. If I compare it, this quarter it was around 82%. First quarter of last year it was around 86%. Is there any reason for the fall in that operating margin? Shashank, essentially what's happening is, you know, with the occupancy in the past increasing, our maintenance expenses are going up. Rather, I would say returning back to the normalized levels. We enjoyed the benefit in the last few years of, you know, lower CAM expenses. Obviously not a present situation, but because of the lower occupancy. Now since Now since the occupancy is getting better, the expenses are getting back to normal. We still continue to maintain 80% plus, which we were doing previously. Okay. More general question is regarding the inflation. We've seen the inflation numbers higher. With that your cost would be increasing, but your annual rent escalations are almost fixed at, I think 5% per annum. How do you manage in this environment when the inflation is very high? There are two things that happen. One is whatever is leased in any case is leased, so there is no inflation impact on construction leases. What it does is moves the needle up towards increase on the base rent in markets where inflation for new assets becomes higher. Cost becomes higher to build, rent goes up. All your vacancies gain dramatically because they start catching up mark-to-market at higher rentals. Supply diminishes because more supplier speculative in nature does not come if costs are going up. Fortunately, the inflation has calmed itself down now, and we are seeing it under control levels. Yeah, it's been higher than what it was. I think at these levels, we will see firming up of rent, and we are comfortable with building. Okay. A final question on the interest rate outlook. I think around 40% of your debt is fixed. Is there any plan to refinance more of your debt? What's the impact on your equity or the market value of your properties? Shashank, we continue to look at opportunities to see if we can fix some more debt. If it's making economic sense, we will go ahead and do that. As far as, you know, the overall impact would obviously in this financial year, we don't see a very great impact because obviously 40% of our debt is fixed. Of course, we have fixed even some variable debt, so it's not necessarily all of it will increase. Of course, we will see an increase versus where we are today. We've already seen that in Q1. We moved up from 6.6% to 6.9%. We will see directionally the interest rates will move. We don't see I would say a very substantial impact, you know, on distributions at least in this financial year. Right. Okay. Thank you. Yes. Thank you. We have our next question from the line of Kunal Dayal from Bank of America. Please go ahead. Sure. Thank you. Vinod Rohira, my first question was on the rental rates. Are you already seeing those go up for, let's say, the new supply, you know, when you rent them out in advance? Or will this be contingent on, let's say, the occupancy of existing assets start crossing a particular threshold, and it starts to go up after that? Hi, Kunal. No, we've already been seeing rents move up. It's like Hyderabad we did, the new area that we leased is now in the range of INR 68-INR 70, and the earlier areas were between INR 58-INR 59. We've already seen rents come up. Okay. Just to follow up on the SEZ part of it. We now heard you that you know, so far so good in terms of the drafts that have come out. Would it, does it sort of make you stay with the existing plan as to from when the SEZ spaces start incrementally getting leased out? Or, you know, could, do you think you can lease it out faster now, or it still takes time? Any thought there? It's like this. While in each micro market we've seen demand rise, we were not able to offer the SEZ space because we didn't see SEZ demand. Now, with the DESH policy, that opens our doors to any tech player, domestic or otherwise, to buy within the SEZ infrastructure. That will push the demand and move the demand into these parks. We're kind of very bullish on filling that space up. If you take a phone trajectory, how you fill up each micro market depending on the demand supply dynamics there, certainly it helps, because you bring in infused supply where there's no supply in markets, and you're seeing demand come. Broadly timing, is that an expectation for sometime within fiscal 2023 or most likely for next year? Most likely next year. We may just about start getting the tailwinds in January-February based on when the DESH policy comes in. You'll see the real traction in the next financial year. Got it. Okay. Thank you so much. Thank you. Ladies and gentlemen, to ask a question, please press star and one on your phone now. We have our next question from the line of Tanvir Suresh, an individual investor. Please go ahead. Yeah. Hi. I had a question about REITs in general, but you could also answer it from Mindspace perspective. I understand that you know, assets are being acquired by REITs, but is there any lifespan of the asset that is acquired? What is the decision or what makes the management get rid of an asset? I know how they acquire it, but in case of you know, if an asset has to move out of the portfolio, what are the things that the management would be looking at? There are two, three things. Primarily, we are too early in our cycle, I think, for us to start evaluating whether we want to exit from an asset or not. It all depends on how the value translates. Currently, what is happening in most of the environments we've developed, we have become dominant players, and those micro markets have emerged from suburban business districts to primary business districts in most of those cities. We still see a very strong upswing in the way those assets are going to be perceived in the coming years. I think there's a lot more that assets can give back to the marketplace. Probably we are 5-10 years away from thinking about any of these assets that we may want to exit or not. There is a process that is involved, and we will obviously follow that process by taking the requisite approvals. If at all we think of deciding to exit from assets in that micro market, we will certainly look at what the process is. Okay. Are there any parameters, specifically, that you all are looking at in case of exit of an asset? No, nothing really. If someone's really paying me two times my value now, very happy to exit. Obviously keeping it more rational throughout the market. It depends on where the asset is in the cycle. What we believe is the future of a particular type of asset and micro market, whether it is strategic for us or not, and it continues to be value accretive or not, we will take a call based on that. Okay, thank you. Just one more question. I think that the occupancy level in Mumbai is slightly on the lower side. Is that because of the whole SEZ thing that you just spoke about? Actually, you're saying occupancy in terms of vacant area or occupancy in terms of physical occupancy? No, vacant area. That was primarily the SEZ footprint. The SEZ demand didn't pan out the way we were hoping SEZ demand would pan out, which is why it's vacant. The minute it moves and merges with the DESH policy, then suddenly that becomes a quality offering for the non-SEZ occupiers. We've seen demand traction of the non-SEZ occupiers in some of our non-SEZ assets in the Navi Mumbai region, which has seen a lot of leasing traction. Okay, great. Thank you so much. Thank you. Reminder to participants to press star and one to ask a question. We have our next question from the line of Abhinav Sinha from Jefferies. Please go ahead. Hi, a few questions. First of all, can you update us on where we are on the ROPAR discussions currently? Hi, Abhinav. Abhinav, as things stand, we are in the process of evaluating, and we almost reaching, I would say the closure of our evaluation. I guess in the next few months we should be able to go to the governing board to present the opportunity. Any thoughts on its likely financing mix between debt and equity? Abhinav, we are still under discussion and hopefully, you know, when we conclude, we should be able to come back to you with the exact structure. Okay. That remains to conclude within current financial year, right? As you had mentioned. Yeah. Absolutely. Okay. Secondly, you know, on the CapEx part, can you guide us on the pace that we've seen in the current quarter? Is it sustainable or do you see tapering down as some of those buildings come up? The way we see it is, in the current financial year, 2 new leasing projects have started. One is a 1.3 million sq ft in Hyderabad, and the other is 1 million sq ft in Pune. We see similar trajectory continuing to be there in the coming quarters and years, as in when we get to opportunity to develop more assets. This will continue in the same trajectory that you're seeing. Okay. Roughly the same part of CapEx I think should be broadly what you put in another $1 million. Yeah? Yes, that's right. Okay. Just going back to the SEZ discussion, can you just remind us what is the total portfolio area that you have in the SEZ side, and is there a number for occupancy there that you were referencing? The total size of our SEZ portfolio is 13.4 million sq ft. Okay. Okay. That is, currently 86.2% leased, occupied. Okay. Not much of a difference overall that. No. Do you see a rental difference here? No, no. See, what is happening is the minute you create the right ecosystem, and you're in the right quadrant of space, and you've done the right experiential offering, these are similar office spaces, whether it's SEZ or not. It becomes an active ecosystem, then it attracts the top talent to come and work there, and that's why top companies want to lease. Right. You know, your excitement on then, you know, converting from SEZ to say a normal sort of an office space, is it because of incremental demand or, you know, is there any other reason? One is the SEZ policy had an expiry date. By default, after that expiry, most clients had no clarity on the continuity of wanting to take an SEZ occupancy and continue with that. This policy, they were all waiting for. Because it was quite defined in terms of dollar billing and 100% EOU dollar income only, et cetera, companies didn't want to be in a regimented environment. What this new policy will do is allow them to subsume in the DESH Act, continue to grandfather the guys who are doing the exports, and bring in all the new, domestic players or tech companies that don't necessarily want to be under the framework of the existing SEZ law to occupy and be in this environment where their focus is really employment and economic growth. It's nothing to do with a regimen of dollar earning and stuff like that. It just changes the game. Okay. This will give more flexibility to your occupiers, and you find that to be the right way for this to go. Completely. Absolutely. Okay. Just you know one sort of last question from my side. On you know we have seen this encompassing committed occupancy, which is quite you know good to know. Now I mean when does the actual occupancy follow and you know what should be the trend say for the next nine months there? What happens is whatever you lease, generally the period between closing the transaction and signing a lease is a couple of months. Then you have between 6-8 months of rent free, depending on size, client. If it's a smaller client, it could be even 3-4 months. The minute that period is over, you generally start seeing the rent coming in. Okay. That is when we will basically call it actual occupancy. Okay. By 24- At that point in time, the lease commencement is when you sign the lease deed. You have a rent commencement date and a lease commencement date. The lease commencement is really six months prior to actual rent commencement date. Got it. Thank you. Thanks a lot. Thank you. Participants who wish to ask a question are requested to press star and one on their phone now. We have our next question from the line of Samar Sarda from Axis Capital. Please go ahead. Hi. Good evening. Don't mind the background noise. I have three questions. One, the 123 expansion you've taken to the ROFO, like, Preeti did mention that she's been evaluating. What is the possibility that it might be extended further because it's, from an acquisition perspective, like, given the SPV, the occupancy seems to be pretty straightforward thing. Any likelihood it might get extended further? Samar, we don't really at this stage envisage, you know, this being extended further. We should, I think, within the time we've asked for, be able to present the opportunity pretty soon. Okay. My second question was on the area you decided not to, like, take up a RTP group. Given the vacancy at Airoli West, any particular reason you want to keep back the area right now or not monetize it? If I'm not wrong, there is some sort of encroachment of occupancy or possession not being there at the property. What's the rationale behind keeping the property back? Hi, Samar. Most importantly, 2 things have happened in the last 12 months. One is we've seen a surge in data center demand. In the same piece of land, about in this piece of land, we are now doing 2 independent buildings of data center. We believe there will be an opportunity to do a third if we can retain this land back. Secondly, coming back to the STPI demand, which is the non-SEZ demand, we had a 1 million sq ft building which we had denotified. We have significantly leased out. I think I wouldn't be surprised if before the coming quarter end, we come and tell you we've fully leased that building out, and we have no STPI supply. That also gives us a heads up if we want to add more supply to that micro market in that park, then we should retain the land for that. We are right now toying with opportunities, and which is why we want to retain it to ourselves. Okay. My third was a follow-up basically on Airoli West itself. The 0.9 million sq ft, which is like complete, more or less leased out. For the area you've retained, would we also see a possible new start to construction by the end of this year, possibly for a third data center building? What's the timeline of denotification? Because we are still in draft stage of building D5 to be denotified and that 0.5 million sq ft to be leased out. What is happening is, I'm glad you remember the asset and the building. It's very happy to note that you're aware of the asset, and I'm glad you asked that question. What is happening under the new DESH policies, we may have to not be required to denotify. Because DESH is allowing new occupancy of non-SEZ profile of customers directly to come in. We may save the complete time of denotification, and from the day DESH is activated, we will be able to lease these spaces. That's a big game changer that is envisaged in the new act in the way currently the draft bill has been represented. Great. The query on, like, possible construction start to another data center building since you've retained that land. Okay. Right now we are exploring opportunities. We'll be very happy to lease as fast as we can. We see potential, which is why we want to retain the land. Great. Thanks for taking two of my questions, and all the best for the rest of the year. Thank you. Thank you. We have our next question from the line of Shashank Savla from Somerset Capital. Please go ahead. Hi there. Thanks again. One follow-up question on the data center. In terms of the actual returns, how does the data center compare to the office segment? It depends on mark-to-market compared to market at least 10, 15, 20% pop in terms of value we can achieve if it is a BTS data center in this market environment. I'm just trying to understand, if you have a vacant plot of land, how would you decide whether to sort of build a data center or an office in that area? We will not build speculative data centers. We will always build the data center if it is a pre-committed BTS transaction. Right. Right. Till then it is, it's pure land, unless you want to transact in a future leasable buildable area, kind of an arrangement. But otherwise, you would build only if you had a customer for the data center. The existing data center project, is that complete or is that yet to be completed? There are two blocks committed by the customer. The first block is under construction, which is 315-odd thousand sq ft, which is going to be delivered by December this year. We're about 15, 20, 30 days ahead of schedule, so we might hand over earlier. The second building was to be built within 12 months of handing over the first building. Most probably we might see the tenant ask us to build earlier, but otherwise that's the schedule. Great. Okay. I had a question for Preeti on the NDCF. I just wanted to understand a few of the items in that. One is in terms of the redraw of the forward sales. I think last quarter there was an amount of INR 1.2 billion in there, about plus or minus. There's a plus of INR 300 million. Is that something which you're not using for your existing purposes, so that's why you're paying it off? Yeah. Currently we are not contemplating any immediate in-reinvestment opportunity. That's the reason we chose to pay a part of it in this quarter. The balance we'll evaluate as we go along and decide in course of the year if we have something to invest in. Otherwise, we may decide to distribute the interest. We'll take that call as we go ahead. Is there a limit, in terms of period as to how long you? Yeah, in a year's time we need to decide as per the REIT regulation. Okay. I also wanted to understand in terms of the debt drawn, there's a plus and a minus of around INR 5.5 million. Is that just refinancing of existing debt? Yeah, that's right. Is it both at the REIT level or at the SPV level? The repayment happened at the REIT level. As I said earlier, when we had taken this loan at the REIT level, the proceeds had gone to use to repay the SPV loan. Now we are just drawing at the SPV and repaying at the REIT. We obviously, as I said, have subsequently raised another debt in July for the project. Is there any tax impact or difference whether you raise at the SPV or the REIT level? No, it doesn't really matter. It only does, you know, in terms of the rate. We get better rate at the REIT level because, of course, of the AAA rating. So that's why preference is to raise at the REIT level. But depends. The capital structure also plays a deciding factor. But otherwise, normally if it's a fixed cost debt, we generally prefer to raise at the REIT level. As you know, as I had said even earlier, we would like to retain some of the NCDs at the SPV level as well. Because those are long term, and even some of financial risk management, we prefer to have some long-term debt at the SPV level. Finally, assuming that there are no new assets coming in, the quarterly distribution, is that expected to remain at these levels because your higher income might be offset by higher expenses or interest costs? As I said, this year we don't expect a material impact on account of the interest rate on the distribution. We hope, you know, that the current distribution we should be able to maintain or do. Okay. Thank you. Yes. Thanks. Thank you. We have our next question from the line of Rahul Marathe from ICICI Prudential Pension Fund. Please go ahead. Congratulations on a very good set of numbers. As we could see, like during the course of last year, a new thing happened Hyderabad micro-market. Could you please provide some more color on the visibility you will see there? Thanks. About 45%. Currently we are at 44%. How has this been the change in the last six months? We were about 23 odd percent. It's moved from 23 to between 36% and 45%. Okay. How does it compare to, say, your Mumbai micro-market? Mumbai micro-market is actually same and slightly higher. It is in the region of about almost between 45% and 50%. Okay. Some, just a few parks in Bombay. It is even 60%. In the Hyderabad market, do you see this stabilizing at current levels or do you see it improving from here on? We see it improving from here on. Thank you. We have our next question from the line of Sameer Baisiwala from Morgan Stanley. Please go ahead. Hi. Thank you and good evening, everyone. Actually, just a quick one on the previous participant. INR 1.2 billion from Pocharam sales. Why do you say that you don't have any investment requirement? Because you are doing CapEx. You have a ROFO asset which may come on board very soon. Why are you using that money for distribution? Sameer, generally, as you know, I've been saying earlier that the most of the CapEx is funded out of debt. Most of the CapEx is at the SPV level and that gets funded out of debt. You know, in terms of distribution, in ROFOs since you have specifically mentioned, we have still to work on the capital structure to finalize that. If it happens by way of prop, we generally don't need any capital for the ROFO. That's the reason we have taken a call to distribute cash. As I said, as we go along in course of the year, depending on the requirement of funds, we'll take a call whether we need to retain this money or distribute. Okay. Really going by the logic that you're giving, that CapEx will be debt funded and ROFO in a certain manner. It looks like you will be using this money for distribution. I don't see where you can use this, which investment can you use this for? Yeah. Sameer, if in the course of the year, if any new investment, you know, or any other acquisition opportunity comes our way and we're able to use this, well and good. Otherwise, as you said, we would look at distributing this money. Okay, fine. The, you know, any number that you have in mind or you can take a guess at what could be the exit committed occupancy by the end of this year? Hi, Sameer. We have 1.1 odd million sq ft cumulatively that comes in for expiry this year. At the beginning of the year, if you remember, I'd given a visibility of 600 odd thousand. The way I see it now, we have more than 800,000 visible as renewals for sure, and the rest of it we'll tackle as it comes along, at that point in time. That's where we are committed at. We don't see any hiccups there at all. Okay. For the vacant area, would you not have some number and therefore occupancy? For the vacant area, what we discussed also, we are moving towards the target to reach that 90%+ occupancy by the end of the year. If I've understood correctly, 85.6% that you had for this quarter may move up to 90% by end of this year. That's what we are hoping for. That's it. Okay. No, that's fine. The last question is on the ROFO asset. When does the tenant, you know, rent generation begins? Is that something that's important for you to, you know, to decide on the timeline? No, actually we are, mutually exclusive, but the rent will start between October and November, this year, and we should be ready by then to look at the asset to be brought to the board for taking the next steps to closing. Okay. Got it. Thank you. Thank you. We have our next question from the line of Satinder Singh from Geon Infotech Limited. Please go ahead. Yeah. Congratulations on a stable set of numbers. I've got two queries. One for Vinod. Vinod, so besides the return to office, what are the top three challenges that you see for yourself as you drive this business? I see challenges more as opportunities, honestly. After a 2-year lull, we are seeing a hybrid environment, and that hybrid is quickly changing towards physical occupancies moving up. Everyone's watching that space, and we are seeing tenants slowly inch up towards physical occupancy. What that does is two things. One is the minute they reach that 50%-60% occupancy number, they will suddenly come back with need for more real estate. At that point in time, we are not seeing so much supply in most micro markets. We are fortunate we have vacancies in some of our parks which we can quickly fill up. We just want the DESH policy to come as quickly as it can so that we can infuse that supply in the marketplace. Otherwise, we are focused more on trying to even bring our under construction supply quicker than what our estimates are. That's an opportunity we want to encash by bringing in supply at the right time so that we can further lease as demand moves up. Essentially inflation seems to have capped out. We are quite comfortable now, compared to what it was earlier. Interest rates hopefully will find a stable, even plateau soon. I don't see any other roadblocks into our targets and our posturing for moving forward. Okay, fine. Thank you. Preeti, while we are about 35-40% fixed debt, from your Slide 45, it appears that if one were to look at the weighted average debt, then the fixed component goes down much more because most of the fixed component expires early. If you were to refinance today, what are the kind of rates that you are able to refinance today at? We just did one transaction post the quarter end. We have done that at a 7.95% coupon fixed for five years. That's the kind of pricing we are seeing currently. Of course, the prices have moved up in the last three to four months because of the policy rate changes. That's where we are. This is before the last repo movement. Is it right? That's right. This is before the last repo movement. Okay. Fine. Thank you. I think it would be good for you to point out so we can understand that the sponsor is also, even now, going to do distribution. I think that should be fine. It would, I think, help also to kind of maybe include that as a part of your visibility. If the sponsor is to support distribution for this year, I think it'd be great just to build that up front only. Otherwise, I can base certain numbers and conversations. Sure. Thank you. That's all. Thank you. We have our next question from the line of Manish Aggarwal from JM Financial. Please go ahead. Yeah. Hi. Good evening. 2 questions. Firstly, on commercial portfolios, if you could highlight what sort of expected occupancy rate may we have for FY 23 or what sort of traction are we seeing in the asset? Action has been slightly slower, but we still maintain we will be able to significantly lease out these assets by the end of the financial year. Okay. Secondly, on the taxation part. In the P&L, the taxation seems to be slightly on the higher side. What exactly is it happening over there? You know, generally when you are going to look at PBT, you're gonna have some SPVs which are obviously not profit-making because they have a lot of under construction component. Therefore you'll see it higher because those losses are setting off those profits, and that's the reason the tax will be looking higher. That's clearly one of the reasons. It will not be right to straightaway do a tax on PBT. That's clearly one reason. Then of course, there are certain deferred tax provisions which have also led to a little bit of higher notional tax to look there. The deferred tax is actually not paid out. This is being used currently, right? It's not actual cash. Yeah. It's a notional tax. It's not an actual cash payout. Thank you. It will remain at elevated levels going forward in FY 2023, 2024? It's not actually at elevated levels. It will remain at the levels at which it is. It's just that you are seeing this higher because of some assets which are loss-making, which are cutting off the profit. Once those start moving, you know, into the profit entry, you'll start seeing those effects in tax get moved. Understood. Got you. Sure. That's all from my side. All the best. Thank you. Thank you. We have our next question from the line of Puneet from HSBC. Go ahead. Hi. Thank you so much for the opportunity. My first question is, you know, you talked about your rental momentum in your portfolio. Can you give some more color on what is the magnitude of rental momentum that you are seeing in the marketplace and specifically for your assets? We've seen stable firming up of rents, and we continue to see that gradually because supply is thinning out. Grade A supply is not there. Each micro market will behave in its own way, but we are all micro markets, we are seeing firming up different degrees, pressure moving upwards because the quality supply is thinning out. When we started a year ago, everyone will run for Grade A, and Grade A will get a lion's share of the demand. When that lion's share of the demand comes forward, rents for Grade A will firm up significantly higher than the market average. That's what's happening. Is that applicable for Hyderabad as well? Because there was some fear. Our average rent of what was vacant was at INR 58-INR 59. We leased at INR 68.9 or to that vacant area. Or we were envisaging actually happened, and we are now getting the rent for it. The new supply which was in the pipeline in Hyderabad hasn't come to the expectation? New supply, Grade A is not there. See, there's a big difference between experiential real estate, asset managed with the quality of the experience you provide to your tenant, will decide what profile your tenant wants to come to you. That tenant is willing to pay a price for the experience and the quality of asset management, and that's exactly what is making a significant difference to asset quality and preference. Understood. My second question is if you have any plans on whether you want to lease out your spaces to managed workspace provider or co-working space providers, and what kind of rental agreements are those that are currently working with you? Most of the players who we would engage with are guys who already have a back-to-back client, which is an AAA grade tenant who is looking for flexibility but is signing a back-to-back contract. We are happy to do transactions with those kind of arrangements. The rents are in line with what rents we are charging. There are no special freebies or advantages passed on to any of those occupiers. For us, it's business as usual. There are fixed rentals, not revenue share kind of contracts there? No, not at all. These are vanilla leases with the rents that we want. Okay. All right. That's clear now. PP, are you on your variable costs? What is the, you know, cost of borrowing being? Is it more MCLR linked, more repo rate linked? How should one think about that for the variable cost? Puneet, generally the way these interest rates or variable cost rates moves is they move with a lag. It happens both ways. When the cycle is the other way also we've seen the rates decreasing with the lag. Now, when the cycle is reversing also we are seeing the rates decreasing, increasing with the lag. Also what happens is sometimes we have debts which have annual resets. Some of them have quarterly resets. Even if the repo rates move up or down, generally they stay on reset. We do have the benefit of some loans where the reset is, say, a year later. To that extent, for a year at least we enjoy the benefit of lower rates. Not everything will move exactly in tandem with the repo rate. Directionally, that's the way it will happen, but not necessarily it will translate to exactly the same proportion of change. It will not be in line with repo, or do you think it will largely be? No. It will, I would say eventually it will be in line with repo, but not immediately. In the short term, it will not be. Generally, it's not necessary the banks will transmit those interest rates exactly the way repo moves. Okay. Underlying is not necessarily repo for your case. No, not necessarily. Directionally, yes, Puneet, that's the way it will move. Directionally, if the repo rates on the rise, you will see the interest rates moving up. But it's not necessary that a 50 basis point change here will immediately lead to a 50 basis point change in the, you know, variable cost, debt cost also. That's not the way it will work. Understood. That's very helpful. Thank you so much. All the best. Thank you.