Ladies and gentlemen, good day, and welcome to Mindspace Business Parks REIT's Earnings Conference Call for financial results for the quarter ended 30 June 30th, 2023. 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 then zero on a touchtone phone. 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. Good afternoon, everyone, thank you for joining this first quarter financial year 2024 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, 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 open the call to Q&A. I now hand over the call to Vinod. Over to you, Vinod. Good afternoon, everyone. Thank you for joining Mindspace REIT's earnings call for quarter 1, financial year 2024. Continuing the steady performance, our committed occupancy now stands at circa 88.8%. The non-SEZ demand continues to remain strong, with over 96% of our non-SEZ portfolio being now leased. Our assets in Pune, Chennai, and Malad, and BKC, Mumbai, are over 98% leased, while our asset in Madhapur is also 96% leased. Anticipating this scenario, we have strategically brought forward non-SEZ supply in our key markets of Pune and Hyderabad, with 2.5 million sq ft under construction. During the quarter, we have leased 0.4 million circa, of which 0.2 million sq ft was on account of re-leasing, and 0.2 million was on account of new and vacant area leasing. We have achieved a re-leasing spread of 10.1%. Revenue growth of our portfolio continues to be led by core portfolio growth. In quarter one, financial year 2024, revenue from operations grew by 14.1% year-on-year to INR 5,604 million. The net operating income grew by 13.8% to INR 4,570 million. As envisaged, India, like its Asian peers, has seen a strong preference for work from office, the office footprint continues to grow, unlike the West. This trend augurs well for office demand in India and would lead to rise in physical occupancies from the current levels. Acceptance towards returning to office further aids the attractiveness of India as a global destination for GCCs and GICs, et cetera. The normalization of attrition rates and compensation across the technology sector has resulted into favorable employee-employee dynamics, which is aiding a faster return to office. Majority of the tech companies continue to announce return to work plans. The number of days employees are expected to be in office is rising. Occupiers and employees are both becoming selective about where they want to work. This is leading to opportunities for creators of Grade A aspirational ecosystems like us. We are developing ecosystems that aid work-life balance and promote employee wellbeing and safety. Our parks have been upgraded to offer easy navigation, hassle-free connectivity to transport nodes, avenues for recreation and entertainment. Occupiers are able to distinctly identify the value added by the institutionally managed spaces. A very strong endorsement of our value add is demonstrated by the fact that over 62% of the expansion space leased since financial year 2021 has been leased to existing tenants. We value our occupiers and understand the importance of establishing a strong connection with their employees. During the quarter, we have conducted multiple tenant engagement activities across our parks, like food festivals, music and sports events, along with various recreation and entertainment activities. These events attracted massive participation from over 40,000 employees across our parks. In addition to demand from GCCs and GICs, large domestic institutions have begun to desire institutionally managed Grade A ecosystems for their growth requirements. This is a very encouraging trend. As the Indian economy moves in the direction of becoming a $5 trillion- economy with a focus on indigenization, this demand from domestics would fuel the growth of Grade A ecosystems in the coming years. At Mindspace, we take ownership of creating sustainable workspaces that inspire excellence. To this end, we have adopted a robust ESG strategy with initiatives that are implementing across our portfolio. Our approach goes beyond our operations as we partner with our tenants in reducing our combined carbon footprint. This enables us to create workspaces that foster harmony with the external environment and provide a healthy ecosystem. Over 95% of our portfolio is now LEED or IGBC certified with a rating of platinum or gold. We have begun our journey towards green leasing as we actively engage with occupiers to include ESG clauses in our lease agreements. I would now like to take you to specific operational updates for the first quarter. We have leased circa 0.4 million sq ft quarter, of which 0.2 million sq ft on account of re-leasing, and the remaining was on account of new and vacant area leasing. Re-leasing spreads stood at 10.1%. The average rent achieved for the area leased during the quarter was INR 68 per sq ft per month. The committed occupancy of our portfolio stood at circa 88.8%. The occupancy of our portfolio stood at circa 87%, recording a growth of over 480 basis points year-on-year and 355 basis points quarter-over-quarter. The in-place rent of our portfolio grew by 7.4% year-on-year to INR 66.2 percent per square foot per month. Our revenue from operations for the quarter grew by circa 14.1% year-on-year to INR 5,604 million. We continue to demonstrate steady growth in our net operating income over the past few quarters. Our NOI for the quarter by circa 13.8% year-on-year to INR 4,570 million. Our distributions for the quarter stood at INR 2,846 million or INR 4.8 per unit. The physical occupancy at our parks stood over circa 57% at the end of. The physical occupancy at our parks at BKC and Malad was circa 90%. At Kharadi, the physical occupancy was about 78%. At Porur, the physical occupancy was about 65%. We remain hopeful that the government will soon bring in suitable amendments to the current SEZ framework to allow floor-wise denotification. Demand for non-SEZ remains strong in our micro markets, which is reflected in the occupancy of these spaces in the portfolio. This is a testament of the inherent strength of the micro markets and our asset quality. We believe this regulatory change would go a long way in channeling the non-SEZ demand in our markets into the vacant SEZ spaces in our portfolio. With this backdrop, I hand the call over to Preeti. Thank you, Vinod. Good afternoon, everyone. I'm happy to present our financial performance for the first quarter of the financial year 2024. In the first quarter, with from operations of INR 5 billion, registering growth of approximately [inaudible] percent year-on-year. Our net operating income stood at approximately INR 4.6 billion, recording a strong 13.8% YOY growth. Excluding facility management business and distribution licensing business, the NOI margin stood at 87%. We announced a distribution of approximately INR 2.85 billion, which is INR 4.8 per unit for the quarter. The distribution comprises approximately 90.2%, which is INR 4.33 per unit of dividend, which is not subject to tax in the hands of unit holders. Approximately 9.6%, which is INR 0.46 per unit of interest, and approximately 0.2% of other income. Our cost of debt stood at 7.7% at the end of Q1 FY 2024. We continue to follow the strategy of optimizing the mix of fixed and variable cost debt to reduce our overall interest cost. During the quarter, we raised INR 5 billion through fixed coupon NCD at the REIT level. The issuance carried a fixed coupon of 7.7% and was used to repay the variable cost NCD at SPV level, helping us achieve 100 basis points saving in interest cost on this borrowing. We expect the interest rates to remain stable in the near term, which should help us keep our interest cost around these levels during FY 2024. While REITs are gaining traction among investors, more particularly domestic investors, there is still a need to improve awareness among retail investors. We are working with other REIT participants and regulators towards this, and also for the growth of this product. Mindspace REIT has continued to see its domestic investor base rise quarter on quarter. We added over 3,000 new unit holders during the quarter, taking the total unit holder count to over 55,000. To conclude, we expect NOI growth for this financial year to be driven by rent commencement on areas which are committed but not operational yet, leasing of new and vacant areas, and contractual escalation. ACC policy changes, when implemented, should help leasing of the ACC spaces in the portfolio, which should add to the future NOI growth. With this, I request the operator to now open the floor for question and answer. Thank you. 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 the touchtone telephone. If you wish to remove yourself from the question queue, you may press 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. Our first question is from the line of Mr. Kunal from Bank of America. Please go ahead. Sure. Thank you. A couple of questions from me. You know, the first one is that on the increase in exits for FY 2024, Vinod, would you still say that this is mostly the periodic recalibrations that your tenants do, or is it a different driver? The follow-up there is that, you know, a good amount of these exits seem to be coming in your Madhapur assets. Would you think that leasing here is much easier than maybe in other parts of your portfolio? Because one generally hears that Madhapur market is quite tight in terms of supply. Hi, Kunal. Yes, absolutely. I think this is part and parcel of business. A lot of this keeps coming through. Obviously, there's a lot of highlight when there's a lot of uncertainty when you're looking at the Western markets, et cetera. You start to believe that physical occupancies are not there, offices are going to get surrendered. We don't see this at all as anything different from part and parcel of business. You're right, Hyderabad, Grade A is very tight supply, and the demand for 50, 100 thousand sq ft is very strong. We are very confident of using this and happy we're getting churn because we have no supply for the next 18 months. We have very small supply left, which is vacant. We're 96% leased in Madhapur. Got that. Thanks. The second question is, you know, directionally, is the kind of leasing you've seen in Q1 is what you would expect for the rest of the year, or you think that, you know, as we go into later part of the year, the momentum around leasing could also shift? ... I think for the next two quarters, we will continue to see stable demand as we are seeing right now. First quarter, calendar year, next year, you might see grassroots of larger demand coming on the table for discussion, which I think will be the start of the next cycle for growth. Understood. Just the last one is, just as a, you know, quick hygiene check, what could be the rationale behind a smallish deal like 0.25 million sq ft for a developer? Is this an operational convenience or, you know, does it clear the decks or, you know, something else? Just wondering, why is it a small deal? No, I mean, for us, nothing is small or big. It's the client that matters. The client was already there in that building, and he wanted to scale up. Are you saying that 23,000 sq ft is a small demand? I mean, I was wondering that if it's two floors were left out earlier, right, there must have been a business reason behind it. You know, if that's sort of coming to the REIT now. You're saying acquisition. You mean acquisition of space? Correct. Exactly. The two floors that you have indicated in Koramangala asset. For us, it's strategic because we want to own the full asset, and we want to control the asset. Understood. Okay. All right. We like pick up in terms of asset, which is why we are very keen to look at this asset. Got it. Thank you very much. Thank you. Our next question is from the line of Mr. Vivek from DSP Mutual. Please go ahead. Good afternoon. In terms of the SEZ, a clear dichotomy between SEZ and non-SEZ zones. My question was, what percentage of the SEZ leases are coming up for expiry, or how many million sq ft, any which way you want to answer it, and how confident are you of re-leasing those? Different markets are behaving differently. The Bombay and Pune markets don't seem to be seeing too much demand for SEZ footprint, but a very high demand for non-SEZ footprint. BFSI primarily is the client, so they are looking at more non-SEZ spaces. While in Hyderabad, we are seeing more demand for SEZ. Whatever vacancies are coming are actually getting leased out. We've continued to see leasing happen in Hyderabad, for example, for whatever space has got vacant in the SEZ footprint, and we're continuing to see that trend going forward. Great. Could you just then clarify on Mumbai and Pune alone in terms of, I mean, what is the area that you expect to come up for re-leasing and- For us, in Pune, we have 99 point odd% that will be fully leased out. We have no SEZ vacancy at all. Cumulative portfolio is 99% leased out almost, and we have no SEZ vacancy. In Bombay, in the Airoli Park, we have vacancy in the SEZ, but fortunately for us, we are able to denotify individual buildings that are vacant, and that gives us pipeline for leasing, and we are seeing demand for those assets. The minute we get the relevant building denotified, we'll be able to lease it quickly. By then, hopefully, we will be having the SEZ partial denotification formula in place, which we hope to kind of see in the next couple of months latest, then we will be able to bring that supply in as well for leasing for non-SEZ. Thank you very much and good luck. Thank you. Thank you. Our next question is from the line of Adhidev Chattopadhyay from ICICI Securities. Please go ahead. Yes, good evening. Am I audible? Yes, absolutely. Just a couple of questions from my side. At a portfolio level, when I'm referring to the committed occupancy, do you expect this number to be higher than what it is by March 2024? I'm just asking directionally, I'm not pinning you on a number, but just directionally wanted to understand. We are hoping for that. Is it contingent on this, SEZ denotification coming in, lot of your, whatever is built into your business plan? Some part of it is, yes. Okay. The second question is on our NDCF distribution. I know we don't give a formal guidance, on the current run rate and the expected scale-up between the physical, then the actual occupancy and the committed occupancy, should we expect a higher distribution in the second half of this year? Hi, Adhidev, Preeti here. You know, as we had mentioned last time as well, that our endeavor in this financial year is to do away with any form of debt support to the extent we are able to. I think that will be our primary focus. The incremental revenue which you see coming because of, you know, rent commencing on some of these areas, we would rather use that to taper off the debt support. Okay. Are we seeing a flattish sort of distribution year-on-year is a reasonable assumption on that base? I won't be able to give a guidance, but at least I would say we would try to retain what we are giving today. If there is any upside which comes along our way, then we can look at more. Sure, sure. The final question is on the hiring of GCCs. There have been some media reports that the GCC hiring seems to have again picked up. The initial signs are being seen. In the context of third-party IT service providers versus GCCs, could you give us over the medium term, how are you seeing the pickup based on discussions with our tenants so far? The space pickup, we kind of get translated, I think, two or three quarters from today. Yes, you're right, hiring has seen pickup in these quarters. Okay. Fine, fine. Okay, that is on my side. Thank you, and all the best. Thank you. Our next question is from the line of Mohit Agrawal from IIFL. Please go ahead. Thanks. My first question is, you know, of the completed area of 25.9 million sq ft, how much is the SEZ space in total, and what will be the occupancy there or vacancy levels? We are about two million odd vacant in the SEZ footprint. Cumulatively, I think anywhere between 83%-84% of our SEZ is occupied. And if- The ratio would be 55, 45. SEZ 55, non-SEZ 45. Okay. Vinod, you mentioned just now that in Airoli, you are denotifying buildings. Right now, as we speak, how much of the space would be under this process of denotification? 400,000 sq ft. 400,000 sq ft. When do you expect this to come to be available for leasing? I think by the end of next quarter, we should have that building hopefully denotified so that we can start marketing to, in the subsequent quarters. Okay, understood. Really my next question is, you know, you mentioned about two comments. You know, one is about the NOI growth you mentioned. In your presentation, you mentioned that B9, B10 has started contributing. Could you quantify what kind of NOI addition we can see in this year for the remaining part of the year? If you could quantify that. The second question is: you also, I think I heard that you mentioned that you expect the interest costs to remain at these levels. Is that correct? In that case, do we see that the distribution growth could happen? Because if NOI goes up and interest cost remains the same, you know, I'm just trying to link the two. Yeah. Thanks, Mohit, for this question. To answer your first question, while I can't categorically give you how much the NOI would grow by, since we are having a decent amount of area which is going to start generating rent, we should definitely see an upside on the NOI. Not all of this NOI is going to translate to NDCF growth, because while the interest costs will remain at these levels for the year to go, but versus the last year, we are definitely seeing the interest costs having gone up. That's going to eat up some part of it. As I had said earlier in the day, that we would be taking this opportunity to, you know, minimize our debt support, and therefore, to that extent, we'll be using those extra revenue numbers to normalize and make sure that at least we are able to maintain. As I said, if we have positive upsides that come along, then we could look at our NDCF growth. Okay, understood. My last question is, you know, on the debt numbers, so while your net debt has gone up by INR 250 odd crores, which is exactly the CapEx number, the gross debt has moved up by about INR 600 crores. Anything, any particular reason for that? No. We, you just need to look at the net debt numbers, because we have almost close to INR 600 crore, which is aligned in, you know, liquid instruments, like fixed deposits or so. We had some unwinding, which we did between the SPVs, the borrowings between SPVs, because of which, towards the end of the quarter, we landed up with surplus funds in the SPVs which got the money back. Those will be deployed, you know, in the quarters to come, that's why you are seeing the gross debt being higher. If you look at the net debt numbers, then the margin, the growth in the debt is equivalent to the CapEx. This will normalize going forward, right? Yeah, yeah. Okay. Okay. It's the borrowing unwinding which we did. Okay, understood. Thank you. Yeah. Thank you. Our next question is from the line of Pradyumna Choudhary from JM Financial. Please go ahead. Yeah, hi. The first question is, that there was a slight decline in occupancy in the current quarter, so, what would be the reason for that? It's part and parcel of business. I mean, obviously, we will look at it from a fraction and a percentage point of view. To us, areas are coming back, and we are able to get mark-to-market opportunity. If it is in markets where there is demand and there is no real supply for Grade A, we are happy to actually see the churn come through. Okay. Like, my concern comes more from the broader global slowdown we are talking about and seeing, like, generally now, most of the IT companies have also started reporting significant slowdown. Is there any clear visible signs of slowdown affecting us in general? Are we getting requests from our clients for the incurred launch? No, not at all. Absolutely not. I don't see this as an indicator of slowdown for India at all. No issue with regards to the demand for our space as such? No. For Grade A spaces, you will continue to see demand, because if you want to attract talent and you want to be in the right quadrant of space, then these are the very few Grade A asset opportunities which quality tenants that we cater to are looking for. For that, there is always a need for quality space, which is getting filled up by whatever vacancies come through in the non-SEZ footprint. Okay. Any particular sector where we are seeing strong demand from? Like, I think last time you mentioned third-party IT service providers, so is it the same segment or something? While BFSI and technology footprint is growing, what is interesting is the need for domestic demand of BFSI is actually starting to take a strong participation in Grade A assets. We are seeing domestic India's growth represented in Grade A occupancy, and that I think will be an increasing trend, which you will continue to see over the years to come. Which was earlier not really visible because you were catering to the global tech footprint alone, and 90% of India was really catering to that. I think very strong domestic growth is starting to become visible in Grade A spaces. Understood. Thank you so much. Thank you. Our next question is from the line of Pritesh Sheth, from Motilal Oswal. Please go ahead. Hi, thanks for taking my question. Just one question. Since you have had experience of, you know, converting an SEZ space into a non-SEZ, how much time it's generally taking for, you know, this denotification? While I understand we are doing it for whole towers, if we do it like by floor, by floor, would it be any different than the usual denotification process in terms of timelines it takes? Generally, a building to denotify would take anywhere between four to six months. Once this rule comes into place, I think it'll be much, much faster. Once they set a process in place, in a few months, we may be able to get unit-wide denotification, and you will do it in reasonable chunks of units, so you don't have to wait for a single floor or two floors. You might do a cluster of floors together to denotify, so that you're taking care of your pipeline of demand. Sure. That's helpful. Any timeline, you have in mind of, you know, this denotification amendment coming to in the sort of discussions that you are having in the market? Sure. We are hopeful that by the end of this current quarter, we should have clarity on that, and then start moving forward towards actually processing the denotification applications. Got it. That's helpful. That's it from my side. Thank you. Our next question is from the line of Kunal Lakhan from CLSA. Please go ahead. Yeah. Hi, good evening. You know, just again, on the denotification side, right? I mean, it's the part by part or floor by floor denotification has been in the fray for some time now. I mean, I'm sure industry is lobbying for it. Just wanted to understand, like, what's the holdup? What's holding back here? Like, I mean, what is causing the whole process to get like delayed? Because as such, you know, industry is not really asking for any tax benefits here, right? It's a very straightforward amendment to be done in the SEZ Act. What's causing the delay? Actually, you know, there were multiple stakeholders, and each stakeholder has had their own understanding and agenda. Now, between finance and revenue, both have understood that this is cumulatively a benefit where there is no advantage being passed on to the developer or the SEZ park holder. It's actually initiating employment. It will get occupancies, you will get indirect employment, and you will get revenue in terms of taxes, et cetera. All departments are completely aligned. They are just making sure that there are no hiccups in the future, so they're realigning the rules, which will allow this to become an enabler for debonding, denotification, however you might phrase it, on a floor-by-floor basis. Because, for example, infrastructure, support services, all of these in an SEZ were catering to an SEZ. They have made sure now they have covered all of those aspects also, so you don't have any other hiccups. I think time is much longer taken than what it should have. Yes, I think it's moving in the right end. Sure, sure. Just, you know, like, kind of, picking your brain on the same topic. Like, you know, are there certain tax stops, you know, that, you know, the custom duties and, you know, excise benefits that we enjoyed would also need to be returned, or, you know, to the government back, if once, you know, once... Yeah. Would that be a material amount for developers? No, considering the cost to vacancy, it doesn't stack up. Mm-hmm. It's fine. Okay. Yeah. Correct. Correct, correct. Also, lastly, again, on the denotification bit, how would there be any logistic hassles in terms of like, you know, denotifying to certain floors in an SEZ? You know, when you look at the whole, the whole compliance burden, right, you know, the whole compliance logistics that one needs to follow, you know, the ingress and egress of, like, you know, people and materials, also, do you think, you know, partial denotification can be successful in terms of managing the logistics? It certainly can be. Actually, that's exactly the right question, Kunal, which is the reason why they have taken longer than usual to close this, because they want to stitch up all of those things. Okay, perfect. On a physicality of asset basis, we don't see a challenge. Sure, sure. Lastly, on the demand, you did mention that, you know, the larger guys have now started to become a little more active. Can you give a little more color on this, like, in terms of like, you know, what is driving this positive sentiment now and, you know? You mentioned that in Q1 of next year, next calendar year, you'll see this demand getting converted, right? Can you just elaborate a little on that? The way we see it is that the large occupiers have started to rehire, and most of their employees who are working from home have in some shape or form been asked to start coming back to office. The office footprint is becoming active, and that office footprint has not catered to in the last three, four years for any growth, including the growth you saw in the spike of hiring 12 months ago that has not got translated to space. As they are insisting on employers asking their employees to come back, they are figuring out what they need to do with their footprint. The questions about consolidation, immediate need for space for growth within the vicinity, scaling up contiguity, all of those aspects have been. Now we are beginning to see larger occupiers start the discussions around that subject. That is the reason why we believe in the first calendar year, first quarter calendar year next year, you will start seeing more interest for those occupiers to come and look for space. Sure. This trend in, you know, pickup in physical attendance, are you seeing that both in GCCs as well as IT players, or it is more prominent in GCC? It was more prominent, in fact, earlier in the third-party service providers and the smaller occupiers. In this last quarter, you are seeing a spike in the GCC physical occupancies as well. They have started to take the call of asking people to get back to work. The physical attendance number would be very different, say, for GCCs and third-party service providers, or they are broadly similar? No, it used to be. Now it's kind of bundling in the same basket. Different markets are working differently. If you see Bombay, it's almost 80%-90% in most places. Pune, we are at 70% odd. Chennai, we are 75%. Hyderabad, we are 52%-53%, moving up towards 58%. You're seeing occupancies move in the positive direction. You must remember that in the pre-COVID era, when we said full occupancy, it meant 80%-83%, because you had 10% absenteeism, and there was some bench strength left for growth. There was never a 100% footprint occupancy ever. It was 100% really when you reach 80, 85, you're 100%. Correct. Which is 57 current, 57%. Which is 57% across parks average. Correct. Correct. Great. Great. Thanks so much and all the best. Thank you. Our next question is from the line of Murtuza Arsiwalla from Kotak. Please go ahead. Yeah, I have just two questions. One, just to clarify again, the SEZ, the non-SEZ piece, occupancy stands at about 96%. Is that correct? In that sense, what would be the SEZ vacancy today? If I were to think of 2.9 approximately being vacant area, how would that break up between SEZ and non-SEZ? That's just the first question, and the second one. I think we have about, close to about, 2.2 odd million will be SEZ. Okay. 400-600 will be non-SEZ. Okay, fantastic. The second question I wanted to ask is, you know, when I look at the trend of the mark-to-market that you have been sort of putting in your presentation over the quarters, between 4Q 2022 and 1Q 2024, you know, it's gone from high double digits, more like 15%-16%, down to about 7%. Obviously, it's a good thing that your in-place has moved up, but have market rentals for the portfolio largely been stagnant, or it's something that we need to or the market needs to recalibrate? No, I wouldn't say stagnant. I think whatever demand is coming for Grade A, they are paying you market rents. Okay. Your portfolio now is reached. We still have a mark-to-market opportunity going up, but obviously there was a much larger opportunity when the churn was from the original lease that expired or the sudden vacancies we witnessed 18, 24 months ago. Those spaces, we were highly opportunistic to be able to get a much higher pop in the rent when we re-leased them. Okay. Would it be fair that at least in the near term, that, pop would be more limited from here on? You know, the way I see it is, if you're to look at it slightly more largely, there is no new supply coming in most micro markets of the category of Grade A that clients would be looking for. With inflation, densities, the time of delivery of those assets has also gone in longer. The minute you start seeing demand stabilize and start rising, there will be a frantic rush towards Grade A, and I don't see too much vacancy or available space in the Grade A, which is certainly going to see a rise in rentals for the prime assets in prime markets. You'll certainly see that. Sure. Thank you. Thank you. Our next question is from the line of Pradyumna Choudhary from JM Financial. Please go ahead. Thank you for the follow-up. Just another thing which previously you answered to one of the participants, was that in Bombay and Pune, we are not seeing good demand for SEZ, whereas in Hyderabad, the demand for SEZ is also quite strong. What would explain this difference across areas? BFSI are the primary large space takers that have shown interest in real estate, for commercial real estate in the last six, nine months. Those guys, for some reason, prefer non-SEZ. The tech guys are still looking at SEZ. We are seeing a different combination of tenants in Hyderabad looking at SEZ. Not that it's the same volume and scale of what non-SEZ demand is, but you're certainly seeing demand in the SEZ space in markets of Hyderabad, but you're not seeing them in Pune, in Bombay to the same degree. There is some demand. It's proportionately very small compared to non-SEZ demand. ... any particular reason why BFSI guys prefer non-SEZ and why tech guys prefer SEZ in particular? No, it's more about guarding their information protocols and the restrictions that SEZ would bring in terms of data sharing and all of those aspects. They don't want that. BFSI will always mostly stay out of SEZs. Understood. Understood. Thank you. Thank you. Our next question is from the line of Abhinav Sinha from Jefferies. Please go ahead. Hey, hi. Just a couple of quick questions. Preeti, ma'am, you were saying that, you would like to reduce the debt support, for the payout. Now, if I see the current quarter's NDCF, the CapEx is slightly higher than the debt that we have drawn down. Are we already in this situation, or you would like to even make this number go towards zero or something like that on the debt drawdown? Sorry, Abhinav, hi. Today, obviously, this time we were a little surplus, but what happens is your working capital movements keep changing quarter-on-quarter. I think you should be looking at a full-year picture as it unfolds going forward. Our endeavor is to minimize the debt support this year. What you're seeing this quarter is also, you know, moving in that direction. As I said, it's not necessary that you will see the same surplus situation in the next quarter also. It all depends on the working capital movement, but over the year, our endeavor will be to minimize that. Sure. For the year, for example, if the CapEx is say, INR 1,000 crores, then debt drawdown should also be INR 1,000 crores, assuming- Yeah. Working capital is neutral. Is that right? Yeah. Yeah. That's what our endeavor would be, to have our CapEx and debt broadly aligned. This quarter, obviously, as you are seeing, we've not taken any debt support. Rather, we are in a surplus situation. Okay, that's fairly clear. Yeah. Just, and second, quick one on the acquisition, of the 6th. What is the timeline for that? In the next few months. In the next few months. We should conclude in the current fiscal, basically. Yes, that's right. That's. How much area does it give us? I mean, we have the 0.9 million there built out, I thought. 200,000 odd sq ft. 200 odd. Okay. Thank you. That's all. Thank you. Our next question is from the line of Tanvir Suresh, who is an investor. Please go ahead. Yeah, hi. Thank you. Am I audible? Absolutely. Okay. My first question is regarding the revenue from operations in the MMR region. The Square BKC, it's remained kind of flattish. Just wanted to understand, why, I mean, why is it not, you know, like the other, the Airoli and Malad that has done much higher? This was a single tenant occupied building lease. That's the reason why. There's no variable areas for variable leasing. Okay, got it. It was a one deal done with one client. That rent continues to come. Got it. My second question is around the vacancy trend that you guys have shown in your presentation. The only two regions that are showing an uptick in vacancy is Pune and Hyderabad, if I'm not mistaken. Is that like regular business churn that you're saying or, I mean, any particular reason for that? No, absolutely not. Regular business churn. It's like 97,000 sq ft on a four million portfolio in Pune, so I count that as a rounding number. In any case, we are seeing demand for that space. Okay. Okay, great. The last question actually was, you know, Preeti also mentioned this regarding awareness about REIT as a product. You know, I mean, since I'm an investor, I look at stock prices. Of course, that is not your focus, but I've seen a lot of pressure, you know, currently for REITs as a product. I mean, everything on the ground is looking, you know, everything is hunky-dory, it's all looking good. What do you feel like, why is there so much pressure? We are right now almost at, you know, 19% or 18% discount to the NAV. Any thought you can maybe throw some light on it as to what you think? You know, it's like this, obviously, under the larger horizon of the western part of the world, seeing lots of vacancies and people not coming back to work, that's kind of haunting us in our mindset to assume that the same story will pan out for India. That's truly not the case, and it's shown to be demonstrated in India and the other parts of Asia, which are actually robustly back on the footprint of office. That is playing out a lot. Obviously, there were some hiccups on the legislative piece, which kind of disrupted the understanding on tax implications, et cetera, during the time of the budget, which kind of created some confusion. We are behind that right now. If you can see, a disproportionate amount of time on this call was spent on SEZ. All of those things are. Right. kind of distracting from the core, and we continue to see a stable, growing economy for India, with adequate demand for Grade A office, driven by tech and domestic footprint. If you look at the larger picture, I think that's what we believe will continue to pan out. Okay, great. I mean, what are the kind of efforts that, you know, you guys are taking from your end to promote this REIT and REIT as a product? REIT for you, mainly. REIT-... Yeah. We are, as I said, working with all the other REIT participants as well as regulators, you know, to roll out programs to have a better reach to the retail investors. Some of them, of course, are well aware of this product, but there's a lot of them who still need to be educated about the product. I think collectively, we are working towards rolling out quite a few programs in the year to come, which would help improving the knowledge of this instrument. There are other things also which we can jointly work, you know, with the regulators and see what are the other ways and means and by which we can help growth of these instruments. I think it's a collective effort, and we would be doing a lot of it as the year goes. Okay, I, so that's great, Preeti. I think, you know, there was an effort in the middle that REIT and which should be a part of, you know, the frontline indices as well. Probably that, I don't know what happened to it later on, the whole use just fizzled out. If, if you could push that, you know, that would also increase the liquidity overall for these kind of products. It will be really helpful for a retail investor, especially. Yeah. NSE has made the first move by forming a REIT index within index. Yeah. We are hoping that, you know, in the quarters of the years to come, we should be able to find a space in the mainstream indices. But as I said, it's an effort, and we will be working with the regulators for this. Okay. Thank you. Thank you so much. Thank you. Thank you. Our next question is from the line of Shirish Waje from Moneylife Advisory Services. Please go ahead with your question. Thank you, sir, for the opportunity. My question, first question pertains to our SEZ de-notification strategy. I just wanted to understand, like, as and when, like, vacancies come up in our SEZ space, is there a strategy to sort of wait for the entire building to get vacant and then apply for de-notification? Are you also looking at leasing vacant space in SEZ, even if, sort of, it fetches a lower rent? Thank you. It'll be a combination of everything. First, primarily, we are hopeful that the partial de-notification will come through really quickly, and that then solves for all of these questions. Having said that, in some of our parks, most of our buildings are single occupier and are smaller in size. We have that opportunity in case this gets slightly more delayed and we are seeing some vacancies, we can turn around our portfolio of occupancy within the park to unlock buildings at a time and de-notify them. We are watching that space as well very closely so that we can bring in more of our vacant supply in a clustered manner by de-notifying smaller blocks of buildings, each of being 350, 400 or 1,000 sq ft. Fortunately for us, a lot of our portfolio is of that size. We are able to then de-notify quicker and start offering that also as part of the non-SEZ offering. Got it, sir. My second question pertains to the Pocharam property. This, so the occupancy here has been constant and low for a while now. I just wanted to understand the reason behind that. Like, is it because of the micro market dynamics or something related to the property itself? Thank you. It's completely to do with the micro market of that micro market and the demand dynamics in that micro market. Fortunately, in a weird way, because that space now stands fully vacant in a few months, we will have the opportunity of denotifying that block and then finding out alternative uses for that asset. In fact, we are happier now that it's kind of vacant. We are able to apply for denotification and unlock that asset completely as a building and then decide what we want to do going forward. Got it, sir. Thank you. That was all from my side. Thank you. Our next question is from the line of Karan Khanna from Ambit Capital. Please go ahead. Hi. Thanks for the opportunity. Vidhu, my first question, just continuing on from one of the previous participants. If I look at slide number 47, where your portfolio in-place rentals are INR 66, and, in slide number 10, where you've mentioned that, the mark-to-market potential is around 6.5%-7%. Is it possible to understand the breakup at a more granular level, say, Mumbai region, Pune, Hyderabad, and Chennai? We may not have that instantly available for you. We can get someone to reach out and give you that information. Broadly, I think, if you look at the portfolio, the Airoli rents are in the range of between INR 58-60. The Pune rents are, for the churn spaces are, between INR 60-65, markets are between INR 75-80. When you start stacking up, in some markets, you'll have a higher mark-to-market, in some you may have a lower, but you will average out with these minimum and more. Sure. As a follow-up, what I'm curious to understand is, if I look at the Hyderabad market, where in the last 6 months, we've seen 5.3 million sq ft supply and 18% vacancies. In the last 3.5 years, the suppliers continue to outpace demand. How should one think about the realistic mark-to-market potential for this market? I think Grade A, you will see a much higher rent spike, because there is not enough Grade A. While you will continue to see an overhang of 18% supply vacancies in the micro markets, primarily, if you break this up, you have INR 30-odd million in the financial district, where customers are not liking to go there. In Madhapur, which is the prime market, where 80% of the demand is actually shaping up, in that Grade A space is very limited. If you actually break down the micro market analysis and understand Grade A versus cumulative supply, and then Grade A in Madhapur as a market, which is preferred today compared to anything else in whole of Hyderabad, you'd probably realize that there is hardly any vacancy, and the rents might even further firm up. Sure. Just a follow-up, you know, you did touch upon this point earlier during the call, but I think in the last call, you mentioned that in two-four months' time, you are likely to see larger ticket RFPs to circulate in the market. If you can highlight any trends that you're picking up in terms of the size of the RFPs, how is that today versus what it was one or two quarters back, and say, before COVID, what were the trends that you were seeing in terms of the sizing? I mentioned at least two quarters more before we start seeing grassroots. Having said that, the demand this time around, I see will be a combination of consolidation, growth, and offering a new work environment and experience to the cumulative set of employees. Because in the last four, five years, as high as 60% and 70% of their old footprint of employees has got churned. With people now coming back to the office, unlike earlier, which was really hiring online, and you could be wherever you wanted to be, it's a very different dynamic panning out, where you want to be in locations which get you top talent, where your last mile connectivity is high, where the infrastructure is very robust, and you're able to offer them well-being, wellness, recreation, entertainment, all of that. Those assets will get an exponential demand, and that's really where the game is going to change. All of those demands, which will come in the beginning, will be a combination of consolidation and some growth, as well as primarily rejigging your portfolio. You will see that as the first step. Then you will continue to see GCCs, GICs, who are now actively looking at India again. The minute they unfreeze CapEx, you will start seeing them asking for space. That should begin within the calendar year, first quarter, second quarter next year. Sure. My last question, when you talk about the renewals that you're seeing, I think post-COVID, we've seen a lot of discussion around de-densification, by tenants, because of COVID. Is that a trend that you're seeing in terms of new, or renewals of leases that you're seeing with the tenants? Yes, absolutely. Everyone that's fitting out new is working on a much lower density than what they used to be. What we had envisaged is actually panning out. Sure. That's, that's it from my side. Thank you. Thank you. That was the last question of our question and answer session. 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.