Ladies and gentlemen, good day, and welcome to the Q1 FY25 results conference call of The Phoenix Mills Limited. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Management of the company is being represented by Mr. Shishir Shrivastava, Managing Director, Mr. Kailash Gupta, Group CFO, and Mr. Varun Parwal, Group President, Strategy, Audit, and Head, Corporate Finance. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. At this time, I would like to hand the conference over to Mr. Shishir Shrivastava. Thank you, and over to you, sir.
Good afternoon, ladies and gentlemen. My colleagues and I take pleasure in welcoming you all to discuss the operating and financial performance for Q1 of FY 2025. I will now take you through the key highlights of the results with reference to the relevant slides of the results presentation. Slide three gives a brief financial overview. Consolidated income from operations for the quarter grew by 12% year-on-year to INR 904 crore. Operating EBITDA was up 8% year-on-year to INR 531 crore. Operating EBITDA, excluding the residential business for Q1 FY 2025, is INR 525 crore, up 21% year-on-year. Profit after tax increased 10% year-on-year to INR 295 crore. Turning to our retail business, covered from slide four through slide 13. If I may draw your attention to slide five.
Consumption across all our malls during the quarter grew by 25% to INR 3,215 crore. Like-to-like consumption, excluding the new malls which weren't operating last year the same period, which are Phoenix Mall of the Millennium and Phoenix Mall of Asia, Bangalore. Excluding these malls, like-to-like consumption grew by 7%. Consumption growth across the portfolio was led by strong double-digit growth in Phoenix Marketcity, Kurla, Mumbai, and Phoenix Palassio, Lucknow, and an impressive ramp-up of occupancy consumption in the four new assets which were launched last year. Year-on-year growth in like-to-like comparator malls was impacted due to multiple factors. During the elections, several of our malls were shut for most part of the day on voting days, plus restrictions on restaurants serving alcoholic beverages, which had an impact of between 4-7 days for each mall in each city.
Fewer number of movies and lack of blockbuster movie content impacted the multiplex performance and inadvertently, some footfalls in the mall. The summer was quite difficult in many parts of the country, and the heat wave in lesser footfalls resulted in lesser footfalls, but improvement in four-wheeler traffic. Moving on to the category mix in consumption. On a like-to-like basis, we saw a 22% growth in the jewelry category, which may see further boost post the GST rate cut in the recent budget, and 19% growth in gourmet and hypermarkets. FEC and multiplex posted a weak growth of 4%, while fashion and accessories and the F&B category grew by single digits. Positively, the consumption in electronics has increased in this quarter compared to last year, which is a reversal of trend we have seen in FY 2024. Moving on to occupancy.
The weighted average trading occupancy across major malls in the portfolio improved from 88% in March 2024 to 90% in June 2024. PVR at Palladium, Ahmedabad, will be launching tomorrow, aiming the occupancy to 90%. Retail rentals and EBITDA. Our retail rental income for the quarter was at INR 487 crore, up by 31% over Q1 FY 2024. This was driven by strong performances from Phoenix Marketcity in Mumbai and Phoenix Palassio, Lucknow, and the ramp-up in the new malls. The strong rental income growth translated into a 31% year-on-year increase in retail EBITDA, leading to a retail EBITDA of INR 516 crore for the quarter. EBITDA margin for operational assets remained healthy at 107%. New malls contributed approximately INR 85 crore in rental income and INR 86 crore in EBITDA.
EBITDA margin is slightly lower at 100% in new malls during the initial period of occupancy ramp-up. Our outlook going forward, we continue to focus on retail rental and EBITDA growth. Our like-to-like consumption growth for the quarter was 7%. The retail EBITDA growth was 10%. Especially in our older assets, like Phoenix Marketcity malls located in Bangalore and Pune, the focus is currently on premiumization through enhanced retail mix and category improvements, creating a compelling entertainment and F&B destination, keeping the brand mix fresh by introducing new brands across different formats. The focus on creating specialized clusters to enhance shopping experiences, developing high recall and creating high engagement through live performances, unique curated events, larger-than-life decor and art installations.
Asset enhancements through facade upgrades, change in layout, and working to minimize or maximize customer convenience by redesigning the traffic circulation is also high on our priorities. In fact, we've already carried out the first phase of this revamp at Phoenix Marketcity, Mumbai. Results are looking to a significant extent, with the center reporting a 12% growth in sales and 15% increase in EBITDA. We are confident that this growth will sustain the coming quarters with more asset enhancements, retail category, cluster creation, and high recall marketing events. Moving on to the commercial office business covered from slides 14 to 17. Our operational portfolio in Mumbai and Pune delivered a growth of 20% in total income and 33% in EBITDA, due to an improved occupancy of more than 70%.
We leased approximately 150,000 sq ft during the quarter. Occupancy in our operational portfolio climbed to 71% by June 2024, up from 70% as of March 2024, while maintaining a healthy gross rental level at approximately INR 114 per sq ft. We look forward to the launch of new age commercial office spaces in Bangalore, Pune, and Chennai, which have generated significant interest. As the demand for space is increasing, we are striving to strike a balance between the occupancy rates and the rental rates with the long-term view. But we are certainly seeing a resurgence in demand for Grade A commercial office spaces where, which are vacant, that we have in our portfolio. Moving on to the hospitality portfolio, covered from slides 18-22. The St.
Regis Mumbai, our marquee asset, maintained a steady room rate of approximately INR 16,400, with the occupancy increasing to 85% in Q1 FY 2025. The improved occupancy led to a 3% increase in room revenue compared to the previous year. F&B and banqueting revenue declined by 4% due to factors such as auspicious days, weddings shifting to Q2, the elections, and consequently, the dry days, and impacted corporate and leisure travel through the summer. While operating income is down 2% for Q1, EBITDA remains flat on a year-on-year basis. Despite these headwinds, the St. Regis has shown resilience with a 36% revenue growth in July 2024 versus July 2023. Courtyard by Marriott Agra faced similar challenges during the quarter.
Occupancy dropped to 63%, and the average room rate fell to 4,166. This asset generated INR 9 crore in total income with a INR 1 crore EBITDA, resulting in a 15% margin. As mentioned earlier, the heat wave, elections, and F&B restrictions impacted the hotel's performance. Slides 22, 23 to 24, cover residential. During the quarter, gross sales reached approximately INR 50 crore, with collections totaling INR 60 crore. We achieved an average selling price of approximately INR 26,000 per sq ft. Our current completed and ready-to-sell inventory stands at approximately 0.44 million sq ft. This brings me to the end of our operational and financial updates across verticals. I will now request, our CFO, Mr. Kailash Gupta, to take you through the overall financial results. Thank you.
Thank you, Shishir. Good afternoon, everyone. I will now take you through the financial updates covered from slide 25 to 34. So, between slide 26 to 28, starting off with the P&L updates. On a standalone basis, P&L houses, you know, business of Palladium Mumbai and office, which is called The Phoenix House. The income from operation for Q1 FY2025 is INR 118 crore, which is flattish for the quarter as compared to YoY quarter, and EBITDA saw a degrowth of 6%. On a consolidated basis, income from operation for Q1 FY2025 is higher by almost 10% compared to Q1 FY2024. Our operating EBITDA for Q1 FY2025, we have reported INR 531 crore, with an increase of 8% YoY.
Profit after tax, after adjustment of minority interest and exceptional item is at INR 295 crore for FY24 Q1 FY25, grew by over 10% Y on Y. Come to slide 28, which is adjusted for resi business. Revenue across the annuity portfolio was INR 872 crore, a growth of 24% Y on Y. EBITDA, excluding the residential business, grew by 24% Y on Y, reaching INR 525 crore in Q1 FY25. Retail side, EBITDA delivered a strong performance with a 31% YoY growth on an asset key level. Key drivers including the performance of PMC Mumbai and Phoenix Palassio, along with the ramp-up of our new mall portfolio. On a commercial portfolio, EBITDA grew by approximately 33% YoY on an asset level, driven by improved occupancy, especially at AGH and The Centrium.
On the retail side, Q1 FY25 was a challenging quarter for our retailers due to a combination of factors including elections, F&B restrictions, and heatwave . Despite these headwinds, and retail has shown resilience with a 36% revenue growth in July 2024 versus July 2023. On the retail portfolio, last year, we sold a significant amount of resi inventory of our resi assets in Bangalore, which boosted revenue and profits. Revenue was also boosted due to the OC, which we are expecting for Tower 7. Given that we now have limited resi inventory around 4.04, so around 4 lakh sq ft left at Bangalore. We expect annual sales of residential inventory to be increased around INR 3 billion to INR 400 crore.
We continue to see strong demand for the completed inventory despite a little bit of price increase, INR 6.6 thousand per sq ft. The sales momentum should pick up in FY26 onwards with the launch of new inventory at Kolkata or Tower 8 in Bangalore there. Coming to slide 29 to 32. Now on our debt and liquidity updates, you know, are covering slide 29 to 32. On consolidated debt, consolidated debt as on 30 June 2024, INR 4,398 crore, with an average cost of around 8.79%. On a consolidated cash flow basis, we generated net cash flow from operations of INR 514 crore net of taxes.
Just for perspective, after removing interest paid to, you know, on the debt side, our operating free cash flow net of taxes and interest is INR 429 crore for Q1 FY25, which is lower by 5% YoY. However, operating cash flow from our annuity portfolio was INR 409 crore, up by 20% over the last year's same quarter. Group level liquidity improved to INR 2,343 crore as on June 2024, whereas gross rents were marginally increased by INR 31 crore. Our group level net debt position stood at INR 2,054 crore, and majority of our capital has been funded through internal accruals and this will be increased in this quarter. On slide 33, we have a clear roadmap of where we intend to be by 2027.
We aim to have an operational portfolio of 14 million sq ft of retail, 7 million sq ft of commercial offices, close to 1,000 seats in hospitality, and adding 1 million sq ft to our resi portfolio. We are now busy charting our growth beyond 2027, and have identified our development mix through land acquisition in Thane and Bangalore. We continue to evaluate and work on opportunities to add to our retail portfolio. Last but not least, the board has recommended our bonus share issuance in the ratio of 1:1, and the same is subject to shareholder approval. This brings me to the end of our financial component updates. Now the floor is open for Q&A session.
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 withdraw 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. The first question is from the line of Puneet from HSBC. Please go ahead.
Yeah, thank you so much, and congrats on a nice ramp-up of your new malls. So my first question is with respect to the new mall, Bangalore itself. It is already generating within its third quarter some INR 48 crores of rentals versus your existing Bangalore mall, which is generating INR 50 crores. So on a quarterly basis, does it look like we've already hit the peak here? Because it's still 70% occupied, and how much more do you think it can go in terms of rentals from here?
Hi, Puneet. Thank you for the question. Welcome back, guys. We, your observation on our Mall of Asia is very correct. I think we've seen a fantastic ramp up in this asset, and that is also reflected in the quarterly consumption that we are seeing. And the asset is at 22% occupancy, so over the next to nine months, we should see going up to about 90%, and that should really help us establish a new benchmark as far as consumption at our new malls are concerned. Rent should also continue going up in line with, and maybe not for FY 2025, but if I were to say for FY 2026, we should see this asset nearing, the rentals as we are currently seeing it at Phoenix Marketcity, Bangalore.
I would also, you know, draw a reference back to some comments from Shishir Shrivastava, as well, wherein Shishir spoke about the retail category upgrade, visualization, and the enhancements that we are also carrying out in some of our existing properties. We've already seen the benefits of this from Phoenix Marketcity, Kurla, and we, a lot of these changes are currently underway in Phoenix Marketcity, Bangalore and Pune as well. So Phoenix Marketcity, Bangalore, should also step up from the current rent that we are seeing, the current rental runway that we are seeing right now.
Okay. So, so do you think that benefit will come in this year itself, or is it likely to be FY 2026?
Hi, Puneet, Shishir here.
Hi, Shishir.
So, yeah, these are some interesting ideas, and they will take time to execute in an operating model. So we expect them to start coming in in FY 2026, FY 2026 or towards the end of 2026 or 2027.
Understood. And in the similar context, Citadel, which is still quite young, hasn't grown in this quarter. Anything to read there?
Can you repeat your question, Puneet?
Phoenix Citadel in Indore is still quite young, but that hasn't grown in this quarter. I would have thought it would have had a similar trajectory.
Hi, Puneet. So I think we need another example, quite likely, as far as occupancy is concerned. You know, the retailers are also, I would say, doing well. Compared to the existing malls, compared to the existing assets in Citadel, let me put it that the category mix is quite good for 10%-20%. The asset is also constructed at a lower cost, and that is also reflected in the rentals that we see in the asset that we are generating in there. In fact, if you look at the financial metrics in terms of the returns that we are generating on the cost that we have invested in this asset, we are ranging within our benchmark guidance of 12%-13%. We are at the high end of the guidance.
So from that perspective, it may not be accurate to benchmark Indore against, our Mall of Asia, Phoenix Mall of the Millennium . We have specific question on consumption growth, which are largely-
Rental also, it's flat Y on Y, which is why the question is.
We have special question on consumption growth compared to previous year. There are some, you know, infrastructure improvements that are being undertaken by the government in that area, which has, you know, impacted the traffic flow, et cetera. And this quarter also has the election results. So we don't do a lot of marketing and promotion activity, but we should see that reversing in the coming quarter. Shishir, any comments from your side?
Yeah, it's actually the bridge that's been constructed on the highway right in front of the mall, which has made the access a little difficult, really impacted our footfalls. I think it's another six months or eight months of work where it should get completed. In the meanwhile, of course, we continue to look at various initiatives from our end in terms of, you know, getting more a better model, different brand mix, more marketing events to drive the current profile of the people. That's an ongoing business for us, which we continue to do. We remain confident about Phoenix Citadel in Indore becoming a destination for MP, and it's, I think it's just a blip for a short while.
Understood. On the big picture for your growth, is there anything that you need to do that brings back the consumption growth back in second quarter, or you think second quarter could still, at the margin, be similar to first quarter in terms of the mature malls?
Puneet, for some reason, we are not being able to hear you very clearly. May I request you to repeat that again?
Yes, sure. Yeah, my question is, you know, is the consumption growth in Q1 was a little weak for the mature malls. Is there anything which is changing, which should drive better growth in Q2?
So you are saying, for the stabilized malls overall?
Yeah, for the stabilized mall, yes.
Okay. Again, I would say, Puneet, there is a lot of, there are a lot of activities and initiatives that we continue to undertake on an ongoing basis. Clearly, these, these, you know, take some time to have impact. I don't think there's a structural consumption issue or a reduction in demand as such that we are quite seeing. These are the isolated situation in this quarter, where we may have seen this impact, and mostly in May, April and May quarter.
Okay.
So we are seeing the ramp up in May and June, rather than April was quite impacted. May and June, we're seeing it ramp up and move forward.
Understood. And lastly, your residential business, One Bangalore West has now very little inventory. Is there a plan to launch the next phase there?
Not as of right now. We are still waiting to understand the development potential, and you know, the TDR, et cetera, because the last phase will be dependent on that.
Okay, understood. That's all from my side. I'll come back in the queue. Thank you so much, and all the best.
Thank you very much. Ladies and gentlemen, we will wait for a moment while the question queue assembles. A reminder to all participants, you may press star and one to ask a question. The next question is from the line of Parikshit Kandpal from HDFC Securities. Please go ahead.
Yeah, hi, Shishir. So, Shishir, my question is more on the mature malls. So the trend on decline in consumption, so it has been there for now almost two, three quarters. I know this quarter there could be some exigencies which you highlighted. So large part of growth, what we understand, if we normalize them, are consumption is coming from trading occupancy ramp up and same store. Same growth doesn't seem to be happening, barely below inflation. So you, do you think what could be, I mean, you said that there are no structural reasons, but what would justify this? I mean, because this is not a trend, which is there in this quarter. That's been there for last two, three quarters, actually.
Hi, thank you for your question. I think the answer lies in for each, for each location, especially on the question around consumption growth. Let me explain. Phoenix Palladium, Mumbai, is currently seeing a massive disruption. We are adding 250,000 sq ft of retail space in the next few months, which is bang opposite PVR. As a consequence of that, parking, circulation, all of that has gotten disrupted. This will hopefully settle down during this quarter or early next quarter. So I think that has certainly impacted our consumption, but that was something that we were—this is, we had anticipated and expected a disruption because the gains out of this product enhancement are far superior.
So, in fact, if you look at it, Q1 FY25 , we may have seen a 4% growth in rental at Phoenix Palladium, and while consumption may be down by 2% compared to last year. But this is a catch-up for the previous growth cycle of consumption, where rental is now caught up. It doesn't mean that we are, you know, the occupancy cost is going up significantly or anything like that. We've seen a 3% rental growth in Bangalore versus four percent-
Sorry to interrupt, sir.
Uh?
The management line is being a little muffled. Can you please come a little closer to the device?
Sure. In Phoenix Marketcity, Bangalore, we've seen a 3% growth, despite a 4% decline in consumption this quarter. Right? I think this is just a phase where we are going to start seeing the ramp up again in the coming quarters. We all know what the disruption was, and in some locations, like in Indore, Mumbai, where there's infrastructure work or expansion going on, there is some disruption and-
Hello. Shishir, your voice is actually little feeble, so it has been throughout the call, so it's been difficult to catch up. But I understood you said on our end, this infrastructure work is going on. So I think you have anything else to add, or shall I move to the next question?
I'll just cite two more examples. Phoenix Markecity, Mumbai, we've seen a 12% consumption growth, and this is a result of all the activities and initiatives we have undertaken in the last several months, plus the opening of, you know, the access from BKC. Phoenix Palassio, Lucknow, has been a 14% growth in consumption and a 12% growth in rental. Again, this is cyclical. All malls go through this disruption at some point in time, and it's not related to demand.
So you remain confident on consumption, because seeing that more infrastructure or internal issues which is causing this consumption. So there's no such pattern or change in consumption to some other sectors, besides the malls?
No, we are not, we don't see it that way.
Okay. So my second question is on your, your plans to add new malls, I think, beyond Surat. So, anything else in the pipeline? You've been highlighting locations, you've been evaluating leads. Anything concrete and something in the near term, which may get finalized in this financial year?
Yeah, I think in this financial year, we'll be able to announce one more. We are on the verge of concluding one transaction in South India, and that will be another sizable destination mall for... It starts as a city consumption center and a district consumption center.
... This one is not in Karnataka, right? I mean, south, when you talk about south, so this, is it? So I think in Hyderabad you're looking something, so is it?
I said we'll be happy to announce it as soon as we can.
Okay, sure. This will be like a large layout? I mean, what kind of, like, mixed-use development you're looking at, only mall or office or resi, so it can have all the potential, or like, what?
For the moment, it's going to be, the focus is going to be phase one mall, but a large mall.
Okay, large mall. So large means like you're looking at-
Million plus.
Huh? Million plus. Okay. And just my last question is on so residential business. So you have... So what are the launch pipelines or anything you have firmed up on Thane? What's the update on Kolkata? So I think you mentioned about Bengaluru, so but what about the update on Kolkata, and any plans on what could be the mix on the Thane land? At what stage of planning or design is that, and what kind of mix we'll see there?
Thane, we are not yet ready to announce the development mix because we are going through various iterations and return profiles on different asset classes. So we're not ready to announce the development mix for Thane as yet. In Kolkata, yeah, we are gearing up for launch. I think a couple of quarters, and we'll be ready. Designing is progressing well.
But as a business on resi, so what could be your pre-phase? I mean, what kind of pre-phase number you have in, like, three years, where you've given the plan for next two, three years? So how do you think resi business will contribute, and how will it grow, given that beyond this you don't have any major pipeline on residential side?
Well, I think we've always maintained that for us, resi is a opportunistic, focusing on building 1 million+ sq ft of resi. This was a fantastic opportunity in Kolkata. We saw a mature market with very good, you know, benchmark pricing. And we have the skill sets in our resi team to build couple of million every year. So we're not... Even now, we are not avoiding the resi concept. We will continue to remain opportunistic in the right markets.
Okay. Sure. Thanks, Parikshit.
Thank you very much. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. The next question is from the line of Parvez Qazi from Nuvama Group. Please go ahead.
Hi, good afternoon, and thanks for taking my question. So couple of questions. First, I'm sorry if you had answered this already, but just want to check, any update on the new Bangalore land that we had, purchased last quarter? Have we finalized our plans there, or what's our thought process regarding that?
Yes, that Bangalore land is right adjacent and shares a boundary with our existing Phoenix Marketcity, Bangalore. We are looking at, we are looking at different options over there. We are also looking at the possibility of whether one can amalgamate the two land parcels and expand the development going forward, we should look at et cetera. So this is a, this is an ongoing activity of ours, and we are working at it. We don't have any, any specific mix to announce as yet.
Sure. And, regarding the resi project in Bangalore, any chance of a new tower launch, let's say maybe in FY 26?
I answered that a short while ago. We are waiting for clarity on the RERA policy, pricing, et cetera, before we go one level best.
Sure. Actually, just to bookmark your question, what would be the pending CapEx on our under construction assets?
Parvez, is that question on a per-project basis you are asking, or you're asking for our overall pending CapEx?
Overall would be fine.
Okay. So I think, overall, if we look at, you know, up to June 2024, I mean, during the quarter and quarter one and quarter two, we spent about INR 470 crore on pure construction and CapEx for the assets. And balance amount that we have to spend is at about INR 4,500 crore. And keeping the residential project, in, you know, out of the scope, because that project is completely funded through sales of residential units. So we are also keeping Thane out of this. So these are all, I would say, the way to correlate this number is to refer to our slide on what assets needs to be operational by the end of 2027, and the balance CapEx of INR 4,500 crore corresponds to that period.
As we announce Thane or as we announce expansion plans in Bangalore, we will update and come back, with a revised number.
Sure. Thanks and all the best for future.
Thank you very much. The next question is from the line of Pritesh Sheth from Motilal Oswal. Please go ahead.
Yeah. Thank you for the opportunity. First question is on, you know, the category-wise consumption mix that you have given in slide 10. You know, so, you know, certain categories like jewelry, gourmet and hypermarket doing well, it's, you know, because of, the mix change that you would have done in, you know, your existing malls or something to do with that category itself?
... doing well? And your second question to that is, you know, will there always be this, you know, differential of performance between the categories, like, you know, certain categories not doing well or doing below average kind of growth and certain categories doing well? And or, or you see that, there is certain, you know, structural issues that are, there with, certain categories like electronics. We know obviously multiplexes, we know what kind of, you know, issues that they are going through right now. But, can these categories which have underperformed, we know, now start to ramp, ramp up in terms of like-for-like consumption growth?
Thanks for that, Sir. Let me take this question and address it in different aspects. So first, addressing the gourmet hypermarket, in FY 2023, we have seen this category underperform significantly, and we have seen if we were getting INR 100 in consumption, consumption in FY 2023 has come down to a very low base of, say, only INR 50. From then to now, we have not seen new players enter this category, and we have seen the performance improving, but it is still on a low base. I think we are back to the pre-COVID number in gourmet hypermarket.
As we have highlighted in the past, as our malls, as the catchment around our malls intensify and we see more high-end residential and Grade A offices coming in, we need to optimize the spaces given to some, you know, categories like gourmet and hypermarket. There is a rationalization of the space that's given to them, but they continue to remain an important part of the product mix that we are growing at the mall. After the right sizing and replacement of older retailers by the newer side, I think this category is showing a sustained continued improvement quarter after quarter.
On jewelry, I think in the past we have spoken about creating a wedding cluster, which is according to us, defined by having the representation from the gold jewelry segment, the diamond jewelry segment, the daily wear segment, and then the Indian and the foreign designer. I think that this, our wedding cluster is taking shape, in fact, it's, I would say, more advanced in certain malls, but it's also taking a good amount of shape in existing malls, including in Phoenix Marketcity, Mumbai. And that's why, on a like-to-like basis, we continue to see a good, strong growth quarter after quarter. Structurally, on to your longer question on the underlying trend, I think structurally, Indian jewelry story remains very promising and very exciting, especially in the cities that we are in, all the cities that we are operating.
And, you know, one way to look at it is to look at all the number of foreign brands that are entering into India or the expansion plans of the domestic brands themselves. With so much new retailers coming to the market and demand for space, we also have regional consumption centers. We also need to take some time to reorient the pattern and, you know, redesign the mall for new age consumption. Structurally, we continue to be very strong and very positive on the consumption story. I hope that I answered your question.
Yeah, yeah. It does. You know, second on the office side, so, you know, if you can provide an update on leasing status at all of, I mean, Asia Towers and even for Pune, what's the status in terms of completion, and have you started, you know, any leasing on that front?
Asia Towers, the tower is completed. We are just awaiting the occupation certificate, and we have two circles. We have talked about four transactions which are right now in the advanced stage, and we have leasing interest for the entire asset through multiple tenants. I think once the occupation certificate is received, we will start signing those agreements and including updates as well on a quarterly basis from our side. For Pune, on top of Phoenix Mall of the Millennium , we have three office towers which will aggregate to a leasable area of about 1.2-1.4 million sq ft. One tower is fully completed. We have completed the structure and the facade, and we are right now doing work on the internal finishing of that structure.
The other two towers, the RCC structure is getting completed, and we will move on to the finishing of the tower. Within the next 9-12 months, all three towers will be completed, and as we receive Occupation Certificate, we will start closing the agreements with the tenants and providing an update on our quarterly results as well.
Sure. And just one last on, you know, Surat. So what kind of, you know, rental assumptions that we have built in, when we underwrite it? And, yeah, I mean, if you can help on that. Surat Mall.
Surat, we have just, you know, completed the excavation in Surat, so construction activities are going to commence now. I would say that we are still a bit early, in the sense that we are still three years away from completion. But, just as a guidance, you know, you can consider about INR 140 or thereabout as the starting rentals for the city, for, for the moment Surat.
Okay, perfect. Thank you. That's it from my side. All the best.
Thank you very much. The next question is from the line of Puneet from HSBC. Please go ahead.
... Yeah, thanks once again. If you can also, you know, comment a bit on how soon should we see, you know, the leasing of the big Pune and Bangalore office to start generating rent?
Please, can you repeat your question again? Yes.
Yeah, how soon can your transactions that you're undertaking in terms of office leasing in Pune and Bangalore conclude, and when should we start rentals coming from those offices?
So, Puneet, we are expecting our OC in Bangalore. It can be 45 days, it can be 60 days, that's not our control. But I would think that rental generation, one can expect that from January, we should start seeing rental income in Phoenix Asia Towers, Bangalore. We've done some four transactions, and we are now working actively on marketing that asset. So we'll start seeing some income from the, from January next year. But I would think that FY 2026 is the year, by end of FY 2026 is the year when one can estimate to be close to by 80-85% or 90% occupancy.
Okay. And for the Pune asset?
They say that they will not start generating rent. We're concluding deals. They'll start generating rent in the next financial year.
Next finance... So Bangalore would be earlier than Pune?
Yes, yes, because Bangalore is ready. The entire 800 or 1,000 sq ft tower is completed. Both the buildings, wings are completed.
Okay. Okay. And any reason why they've been pushed out a bit? Because the mall got completed early.
We were continuing with the construction and installation of all equipment, machinery and all for the office, you know? That's the way we always build our composite structures. We launch the mall, we get part occupation for the mall. We continue to build on top.
Okay. Fair enough. Thank you so much. That's helpful, my friend.
Thank you.
Thank you very much. Before we take the next question, a reminder to all the participants that you may press star and 1 to ask a question. The next question is from the line of Pulkit Patni from Goldman Sachs. Please go ahead.
Thanks for taking my question. Just one question. You know, you spoke about Palladium and the impact on consumption because of all the renovation work you're seeing. Can you highlight what is the exact sq ft, directly and indirectly, that has been impacted because of this? Because when I look at your mall GLA in your presentation, there you are assuming that it's basically the same, you know, GLA that's available. What exactly do you think would be the impact in terms of sq ft, both directly and indirectly, because of parking, et cetera, not being available?
So Pulkit, we've not shut down any of our operational GLA for this. It's only the parking infrastructure and the ramps, which are also being used for construction, that we are seeing some disruption in traffic movement, and that is the reason, I think, you know, infrastructure work , coming in and impacting the footfall, impacting the consumption.
Sure. No, I, I'm also asking about the lifestyle renewal, which is under renovation, et cetera. So what exactly is that area?
So that, where the lifestyle structure was, that area was roughly around, I think, 50,000 sq ft of GLA. But we shut that more than a year ago, so it was not operational in the last. It was operational only for April in financial year 2023. FY 2024, sorry.
Yeah. And there's nothing incremental other than that that we are talking?
Nothing, nothing incremental other than that.
Oh, okay.
And of course, we are going to reconstruct a part of the structure and add back some of the GLA. But we are making this a very, very prominent and exciting arrival experience for the massive construction that we're doing with the Project Rise Tower.
Got it. Thank you.
Thank you very much. Ladies and gentlemen, that was the last question for today's call. On behalf of the management of Phoenix Mills Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.