Good afternoon, ladies and gentlemen, and welcome to the Mindspace Business Parks REIT's earnings conference call for financial results for the quarter ended 31st December 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 the conference call, please signal an operator by pressing star and 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, Mr. Kulkarni. Thank you. Good afternoon, everyone, and thank you for joining this 3rd quarter financial year 2023 earnings call of Mindspace Business Parks REIT. At this point, we would like to highlight that the management may make certain statements 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 our CEO Vinod Rohira, and our CFO Preeti Chheda. They'll first walk you through the business update and the financial performance during the quarter. We'll then open the call to Q&A. I now hand over the call to Vinod. Over to you, Vinod. Thank you, Kedar. Good afternoon, everyone. At the onset, let me wish each one of you a happy and healthy 2023. We delivered yet another quarter in line with our expectations. Our parks continue to witness demand for institutionally managed office spaces. We have recorded a gross leasing of circa 1.3 million sq ft in the third quarter of financial year 23, taking the cumulative number to circa 3.5 million sq ft in the nine months of this financial year. Our Hyderabad project, Mindspace Madhapur, recorded the highest share of gross leasing in quarter three financial year 23, followed by our Chennai Porur asset, and Commerzone Yerwada, Pune. We began the financial year with committed occupancy of 84.3% and achieved circa 400 basis points increase in the first nine months of the financial year to reach 88.3% as at December 31, 2023. The committed occupancy of Mindspace Madhapur, the largest park in the portfolio, now stands at circa 95%. Our parks in Pune and BKC are near 100% committed occupancy. Our park in Malad also has circa 95% committed occupancy. As guided in our earlier calls, we are happy to announce substantial leasing during the year at our Commerzone Porur Chennai park, which has helped us take the occupancy at this park to over 93%. We continue to deliver robust financial performance supported by these tailwinds in the committed occupancy. We recorded an NOI of circa INR 4,551 million, which excluding a one-time compensation of INR 186 million, represents a year-on-year growth of circa 16.8% and quarter-on-quarter growth of circa 4.6%. Our in-place rents have grown circa 9.4% year-on-year to INR 64.5 per sq ft per month. The gradual transition from work from home to work from office continues. If you refer to the recent commentary of the Indian IT companies, more and more organizations are framing definitive guidelines to return to office. As we've been highlighting over the past few quarters, companies have realized the importance of having a dedicated and demarcated work environment. The improvement in productivity from being in a collaborative work environment is quite evident. During this transition, organizations are careful not to lose out on their talent. They are particular about offering top quality office spaces that have the best health and wellness measures in place. As a result, they're observing a discernible shift amongst our occupier segments towards institutionally managed Grade-A office spaces. As envisaged, the physical occupancy in our parks is nearing 50%, as against circa 40% during the previous quarter. While the outbreak of the virus in our neighboring nation had led to some caution, it has not hampered the transition from work from home to work from office in India. Unlike their global peers, Indian office sector has demonstrated robust performance and remarkable recovery in demand in 2022, in spite of the uncertainties with global economic disruptions in the backdrop. Overall, the leasing trends remain encouraging. India continues to be the preferred choice for top tech talent at affordable costs, and in the coming months and quarters, we may see large GCC GICs looking at India to expand their support services network to optimize cost and bring in newer and smarter technologies for their customers across the world. However, with the uncertain economic environment globally, we may see conservative posturing by occupiers in the next few quarters for large ticket size demand. While Preeti will elaborate our debt strategy, let me spend a couple of minutes on how growing debt costs are impacting the sector. With low debt levels, AAA credit profile, and greater share of fixed cost debt, we've been able to achieve tighter spreads on our borrowings. This, however, may not be uniformly applicable to the market at large. High cost of debt, difficulty in assessing debt markets, and a rush towards residential developments is slowing down the potential commercial supply. Also, the under-construction supply is likely to come into the market at higher rents due to the inflationary impact of construction costs and debts. This opens up an opportunity for us to bring in strategic supply in the markets we are present in and further consolidate our position. This quarter, we are also pleased to announce the proposed redevelopment of another strategic cluster at Mindspace Madhapur. This is in addition to our earlier redevelopment that is currently underway. The low-density park has been recently upgraded, and the added infrastructure can easily accommodate further developments in the park. The high committed occupancy of 94.5% of the park is a testament to the strong demand in the micro market and encourages us to bring in strategic supply within our existing park. The addition of the increased area would also offer an opportunity for tenants to expand and consolidate within our park. Within this park, we are proposing to redevelop two of our legacy buildings constructed around 2005, with a collective usable area of circa 0.36 million sq ft. Post redevelopment, we expect the total usable area to grow 4-fold to 1.6 million sq ft, subject to design finalization and necessary approvals. This redevelopment shall be value accretive to the REIT and will also provide a continued supply of new grade A assets within the park. We have completed the demolition of the existing premises of the redevelopment already underway, and is on track to complete by December 2025, and we shall commence demolition of these buildings beginning first quarter of next financial year, and the new development is estimated to be completed by December 2026. Together, the two redevelopment projects incrementally add circa 2.1 million sq ft to the overall portfolio. We are still awaiting clarity on the DESH Bill. In the interim, we have made representations to the government to provide an enabling framework within the existing SEZ policy for partial de-notification. This is the key demand from industry and shall immensely help the revival of demand for SEZ spaces, which are large employment providers. Most of our non-SEZ supply at Mindspace Airoli West is fully leased. Encouraged by the strong demand, we have applied for de-notification of one of the existing buildings of 0.4 million sq ft in the same park. To give you an update on the potential acquisitions, Commerzone Madhapur, Hyderabad and The Square, Avenue 98, BKC Annex Mumbai region, we are nearing completion of our evaluation and intend to soon table the proposal to the governing board. Subject to the requisite approvals as may be applicable, we anticipate closure in the next few months. I would now like to take you through the specific operational updates for Q3 FY23. Of the total portfolio area of 32 million sq ft, 25.6 million sq ft is completed and contributed to circa 93% of our portfolio value. 1.8 million sq ft is currently under construction, and we have another 4.6 million sq ft available in the portfolio for future development. We received occupancy certificate for approximately 0.7 million sq ft area across assets. We have leased 1.3 million sq ft during the December quarter, of which 0.6 million sq ft was on account of re-leasing and 0.7 million sq ft was on account of new and vacant area leasing. Collectively, the gross leasing in the first nine months of the financial year stood at 3.5 million sq ft. During this period, we have successfully re-leased circa 77% of the scheduled expiries of financial year 2023. We have recorded average re-leasing spreads of 26.6% on the 2.3 million sq ft area re-let during the nine months of the financial year. We leased 0.3 million sq ft at our Commerzone Porur, Chennai park during the quarter. With this leasing, the committed occupancy of the park now stands at 93.5%. The overall committed occupancy of the portfolio stood at 88.3%, registering an increase of 140 basis points over the previous quarter. Our in-place rents have grown by circa 9.4% year-on-year to INR 64.5 per sq ft per month. Coming specifically to the ESG updates, at Mindspace REIT, we stand firmly committed to resource optimization, water management, reduction of GHG emissions, clean energy, hygiene and safety. In alignment with our ESG targets, we are on the road to addressing a comprehensive set of critical issues that are significant for us as well as our stakeholders. The quarter saw Mindspace REIT procure 100% green energy across common areas maintained by us at Mindspace Airoli West, Gera Commerzone Kharadi and Commerzone Yerwada. Received LEED Platinum O&M certification from USGBC for Paradigm Malad, Mindspace Mumbai region, and for one building at Commerzone Yerwada, Pune. Commissioned a community need analysis to understand the requirements of people in the vicinity of our projects of our business parks in Airoli. The outcome is likely to point to specific areas of focus, which will assist us in curating our future CSR projects in our markets. We expect the forthcoming budget to support the growth momentum and further augment the business environment for commercial real estate. We hope to see regulatory amendments that help growth of investments in REITs units and consequent rise in capital inflows, both foreign and domestic, into these instruments. With this backdrop, I hand the call over to Preeti to take you over the financial updates. Thank you, Vinod. I'm happy to present our financial performance for the third quarter of financial year 2023. We closed the third quarter with a revenue from operations of INR 5.4 billion and net operating income of INR 4.6 billion. The revenue from operations and NOI both included receipt of one-time compensation of INR 186 million from a tenant for termination of LOI at The Square BKC Mumbai. Adjusting for this one-time impact, revenue from operations and NOI grew at 18.9% and 16.8% respectively on year-on-year basis. We continue to maintain NOI margin at 80%+. We announced a distribution of approximately INR 2.8 billion, which is INR 4.8 per unit for the quarter. The distribution grew by 3.4% year-on-year. The distribution comprises approximately 91%, which is INR 4.37 per unit of dividend, which is not subject to tax in the hands of unit holders, and approximately 9%, which is INR 0.43 per unit of interest. At Mindspace REIT, we have followed the strategy to diversify our debt book and optimize our debt cost. In December 2022, post SEBI's clarification allowing REITs to issue commercial papers, we concluded a commercial paper issuance of INR 1 billion, thus completing the maiden commercial paper issuance by an Indian REIT. We shall continue to explore ways to optimize our borrowing cost through a mix of short and long-term borrowings. In the backdrop of global as well as domestic inflationary pressures, India has seen significant interest rate hikes this year. For most part of the coming financial year, we expect interest rates to remain high before the environment stabilizes. This is expected to cause our borrowing cost to rise in the coming financial year. Our portfolio gearing remains low, adding to the strength of our balance sheet. Our net debt as on December 31, 2022 was approximately INR 48.7 billion. Our ICV as of December 31, 2022 stood at approximately 17.6%. We have a well spread maturity profile of our debt, with only 11%, which is INR 5.6 billion expiring in FY24. Approximately 40% of our debt is fixed cost in nature, helping us cushion some impact of rise in interest rates. We have undrawn committed lines of approximately INR 4 billion from financial institutions. Our low leverage provides us enough headroom for development within the portfolio as well as inorganic growth opportunities. REITs continue to witness demand from retail investors. This has contributed to the total number of unit holders of Mindspace REIT nearing 50,000, as our unit holder base expanded by over 13% over the last quarter, largely driven by the addition of retail unit holders. We expect positive policy developments to further deepen the market for REITs and invest in India. With this, I request the operator to now open the floor for question and answers. Thank you. Thank you very much. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may enter star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Anyone who has a question may enter star and 1. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question is from the line of Adhidev Chattopadhyay from ICICI Securities. Go ahead. Yeah. Good evening, everyone. Am I audible? Yes, you are. Yeah. Okay. A few questions. Firstly, You mentioned about the physical occupancy. I just missed the number. Could you also break it up across cities, how you have seen the trends moving across Mumbai and Hyderabad specifically? yes. Sorry. Sorry, sir. Adhidev, I think I'm sorry to interrupt, sir. We could not hear you at all, because, there was a disturbance from Adhidev's line. Adhidev, when you're not speaking, please mute your line. Sir, could you please repeat your answer? We could not hear anything. Yeah. Hi, can you hear us now? Yes, sir. Now we can. Okay. Some parks are outliers. Our Kharadi park is 90%. The rest of it is between 50% and 60%, in that range. Okay. My second question is on the expiry profile. I think there have been some fresh expiries of 0.5 million sq ft. Could you just help us understand for now, rest of the year, how much you expect to release out of the expiry? Where do you expect the overall portfolio occupancy to trend at, both in terms of physical actual occupancy and the committed occupancy? Thank you. Whatever expiries were scheduled are already done with, and we've predominantly been able to even re-lease the certain expiries that came through. We're not seeing any expiries for the next quarter. Okay. As a just final question on SEZ space, I think last quarter we alluded that it was, I think, around 1.8 million sq ft of SEZ space which was vacant. Now you're planning to convert out of the 0.4, as you mentioned. Could you help us understand the timelines for this? Under the existing guidelines, can we expect some more space also to come up under similar arrangement in the coming few months? In our Commerzone Kharadi, cumulatively, we have 1.4 odd million between under construction and ready non-SEZ supply, which at the beginning of the year had vacancy of approximately 6 odd lakh sq ft. We've completely almost fully leased that out. We have no supply in the non-SEZ space at all in that park. There is an opportunity of a 400,000 sq ft building which we applied for de-notification. We should get it in the next four months latest for us to be able to bring that as a pipeline for further supply in the market. Okay. Thank you, sir. That answers my questions. Thank you. We'll take a next question from the line of Jatin from Bank of America. Please go ahead. Yeah. Hi. Thanks for giving the opportunity. Hi, Vinod. Hi, Preeti. A couple of questions. First for Vinod. You know, it would be great to, you know, get a color on the three things around the expiries and cancellations we saw this quarter. First on the early termination and, you know, the LOI cancellation. If you could help with, you know, what categories these client belongs to, you know, global, domestic, technology, captive, and, you know, what could be the motivation behind these. You know, believe there could be, you know, multiple, you know, either adjustment basis, the layoffs the industry has recently seen. Reevaluating their strategy on, you know, entering or expanding into India, either on their own, you know, versus now thinking of, you know, outsourcing these to some of the Indian vendors. This was part one. Second, the 0.3 million sq ft expiry, which we have seen at the Madhapur redevelopment. Was this a planned expiry or, you know, initiated by Mindspace, you know, to go ahead for the redevelopment in this quarter only? First one had a lot of leases in it, but fortunately, unfortunately, there was an old tenant two years ago that walked away from our BKC asset. We got compensation for it. That is since then long pre-leased, and the fully building now stands occupied. If you ask for that one-time compensation, it was for a client who got hit by COVID at that point in time, didn't have clarity whether to continue or not. They were committed on that space, and they paid us for it. Coming back to the re-leasing of space that got suddenly surrendered in the last quarter, we were fortunate to re-lease that back in the same quarter to a brand-new tenant who took that space for our Hyderabad complex. We saw the vacancy as well as the re-leasing in the same quarter. Sure, Vinod. Thanks. I have another one for Preeti. Preeti, looking at your NDCF, you know, we've generally seen that the CapEx item, then, you know, your net debt drawdown generally typically move in line, you know. This quarter, I think there was some bit of divergence and, you know, if not for that, maybe the distribution, you know, are a bit more higher. Do you expect this to reverse in the coming quarters and incrementally aid our distributions? This time in the NDCF specifically, if you're looking at that CapEx versus debt, numbers not really talking to each other, that's because there's an INR 100 crore item both, which is sitting in the working capital as well as for CapEx, which is, I would say, reflecting, mirroring each other. Therefore, if you remove that, then probably you'll see the debt matching the CapEx. That's where we stand. We should see a similar thing going forward, unless you have anything to anticipate. Understood. Okay. The working capital balance sheet. Yeah. That's. Got it. Thank you. Thank you. A reminder to our participants, if you wish to ask a question, you may enter star and one. We'll take our next question from the line of Mohit Agrawal from IIFL. Please go ahead. Yeah, thanks. My first question is, you know, for the last few quarters, if you see your NOI growth has been pretty robust. Somehow that has not translated into the NDCF growth. NDCF has been flattish. You know, if you look at the NDCF to NOI ratio that is, you know, coming down over the last few quarters. How do you see that going forward? Especially in the light that, you know, last two, three quarters, we have had some sort of inflows coming in from the Pocharam land sale, that will not be there next quarter onwards. How do you look at the NDCF over the next two, three quarters? Hi, Mohit. Just to explain this, we have been able to utilize, you know, the incremental NOI, which has come this year, to reduce our debt support. We had mentioned, I'd mentioned earlier that, because of the shortfall in the rentals, we've not been able to get all the rentals that we had envisaged. We were drawing in some bit of debt support to meet our distribution commitments. That is reduced with the incremental NOI coming in. The Pocharam proceeds have also helped us bridge that gap. Going forward, we are hoping that, you know, because of the robust leasing that we've seen, which should translate to rentals in the quarters as we move forward. The rental which is going to come from there translating to NOI increase, that should further help us, you know, devote the big debt support, then we should be able to independently have the NOI, cater to the NDCF. Okay. for the next- There is one. Of course, I have to mention this, that there is one thing which is also eating up into our NOI, which is the interest cost, right. While in FY23 it has not been very substantial, but obviously some of the loans which we've taken, you'll see transmission of those interest cost hike in the coming year. In this year, we enjoyed some loans where we had resets which were locked in for a period. Once we are out of those lock-ins, we will again see, you know, those rates getting to market. Next year, obviously, while we will see NOI increase, we will at the same time see the interest costs getting higher than what we've seen this year. Okay. If you look at the NOI growth for nine months cumulative, year-over-year, it's about a 14%-15% growth. Should we expect the similar run rate to continue forward? I won't be able to commit to a number, but I would say directionally, yes, with the heavy leasing which has happened, and we expect that the NOI growth should be seeing a similar direction. I won't be able to comment on the number, though. Sure. Second question is, Vinod, you initially mentioned about the denotification on, I think you're talking about the B5 building, 3 lakh, 4 lakh sq ft. With now the, you know, SEZ Bill, the DESH Bill likely to get, you know, looking like it is getting delayed. What is the plan B beyond this 3 lakh, 4 lakh? Is there any other plan to denotify other buildings? You know, and what is the way forward for Airoli in terms of offices? Absolutely. The way we see it is, while DESH Bill may take slightly longer, you're right. They are in the interim allowing for considering unit-wide denotification, and that's come to its final stages. We can then partially denotify spaces within buildings that are vacant. That'll be the next step of unlocking. We want to start that process immediately, that will then allow us for more supply pipeline to come through. Okay. Will that be just through an executive order? Like could that come in the budget or is it just gonna be a simple executive order? According to the [FTD rules.] Okay. Okay, understood. Understood. Any expectation in terms of how much time can that take, that change in the rules? In the next couple of months, we will have clarity on that for sure. Okay. Last one from me. What is happening on, you know, data center demand? I guess, you know, you know, we have been quite positive on both Mumbai and Hyderabad. You know, any movement, any progress there beyond the two data center building that we are doing? A lot of the data center operators wanted to buy land, and we were not too keen doing that unless it was value accretive for us cumulatively. The leasing demand, I think for data centers will come back, where you want the landowner developer to build and lease it to you. We are focusing our attention on those clients. A lot of the data center hyperscalers want to buy land. Okay, understood. Great. Thanks a lot. That's all from my side. continues to be very strong in the Mumbai region. Okay, understood. Thank you. Thank you. Our next question is from the line of Sameer Baisiwala from Morgan Stanley. Please go ahead. Hi. Thank you and good evening, everyone. Preeti, can you quantify what could be the interest cost impact for next year? Is it 100 basis points, 150 on the overall debt? Yeah, Sameer. Hi. So two impacts, Sameer. One is obviously the debt would also rise because of the CapEx that we'll incur. We expect to incur anywhere around INR 1,000 crore of additional cost in the developments which are underway at the moment. So obviously the interest cost from that also will add. On the existing in this coming quarter, in this quarter, we expect about 15-20 basis points hike versus where we are today. In the coming year, depending on how much, yeah, RBI would increase the policy rate. Of course it depends on that, but we do expect 50-75 basis points hike. Also, Sameer, you know, just to explain what I said some time back, that currently we have about 10% of our variable cost debt which has interest rates locked in for a couple of months. Once those lock-ins change, anything those will move to market. What I'm saying will have impact on that as well. Yeah. Thanks, Preeti. 50- 75 basis point increase, does it include the second part, the lock-in which gets opened up? Yes, it does. Okay. That's the overall impact. We need to add INR 1,000 crore more to INR 4,800 crore from debt outstanding right now. Yes, you should. Okay. Okay, very clear. The second question is for the 2.1 million sq ft, D9, D5, and data center, which is getting completed in Q4, what's the sort of rental, you know, accretion that you expect next year? Most of them are actually pre-leased as we speak. The data center is fully build to suit. The Commerzone Kharadi building has probably 50,000 sq ft left. Airoli Building 9 has about 130,000 sq ft left, which we are hopeful before the end of the next quarter we'll be done with that. Yeah. sure, Vinod. What I'm getting, trying to get is, the average rental would be like INR 70-INR 75? Each of the rackets are different. The Pune will be in the region of 80. The Mumbai region one will be between the 58 to the 60 number, and the data center is already pre-leased at between 74 and 75. Got it. Got it. Maybe roughly INR 150 crores, all them put together on that 12-month- Rents will start at different dates, but yeah, you're right. Annualized, you're right. Cool. One final question from my side, and that is for the two acquisition assets. You know, the interest rates have moved up, as you know, over the last six, eight months. You know, so how are you thinking about funding of the same? Has the valuation expectation changed? Are you getting these at, you know, higher cap rates, so a better value for you as a buyer? Just your thoughts would be very helpful. Sameer, Vinod can comment. Let me give attempt to answer that. We will be cognizant of the interest rate hike when we are acquiring these assets. Obviously, you know, when we are acquiring these assets, we'll not just look at short term, but we are looking at adding these assets for long-term asset augmentation in the REIT. We will look at the fundamentals of the assets besides of course, the value accretion and all we will be mindful of. Yeah. Just to add to that, primarily to us, the profile of tenants, quality of buildings, location, and the cumulative value and quality of that asset really matters in the long term. Both these are really strategic and of the quality we want to infuse in the REIT, so we'd be very happy to take them in. Yeah, sure. No, I get that. That's why they qualify, Vinod. Preeti, what you said, does it imply that maybe there could be short-term pain, long-term gain? Is that what you're trying to say? Sameer, it's not about short-term pain. I'm saying that today when we are evaluating an acquisition in the REIT, we are just not going to look at what the short-term interest rate increase will do to the overall acquisition decision. We are willing to look at long term. When we are buying these assets, we will look at accretion for the REIT. Okay, great. Very clear. Thank you so much.