Brookfield India Real Estate Trust (NSE:BIRET)
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Q3 23/24

Feb 13, 2024

Operator

Ladies and gentlemen, good day, and welcome to Brookfield India Real Estate Trust Q3 FY 2024 earnings conference call. As a reminder, all participants in line will be in listen-only mode, and there will be until the floor is open for questions. 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 call is being recorded. On the call, we have following persons: Mr. Ankur Gupta, Managing Partner, Brookfield Asset Management, and Director, Brookprop Management Services Private Limited; Mr. Alok Aggarwal, Director and Chief Executive Officer, Brookprop Management Services Private Limited; Mr. Sanjeev Kumar Sharma, Chief Financial Officer, Brookprop Management Services Private Limited; Mr. Ankit Gupta, President, Brookprop Management Services Private Limited; Mr. Reji Kothari and Mr. Shailendra Sabhnani from Brookfield. I now hand the conference over to management.

Alok Aggarwal
Director and CEO, Brookprop Management Services Private Limited

Good morning, everyone. This is Alok. On behalf of the Brookfield India Real Estate Trust, extend a warm welcome to all participants joining us today for this conference call. At the outset, I'm happy to say that we continue to witness an increasing interest of GCCs into the country, resulting in demand for high-quality offices. 100 GCCs are expected to be added every year, almost till 2030. So another about 700 GCCs are expected in next seven years. The recently announced SEZ reforms are expected to provide a big boost to our portfolio, especially because our 80% portfolio in terms of area is SEZ. Over the last few years, we have seen IT firms and IT services firms have significantly ramped up their headcount while optimizing their office requirements.

With easier return to office, we are poised to witness a sharp growth in demand for offices. Over the last six months, these trends have resulted in growing demand from GCCs, multinational companies, and also Indian companies. I'm delighted to report that we have achieved a second consecutive quarter of record new leasing since IPO, at 500,000 sq ft for the quarter. This has resulted in our gross leasing for the quarter surpassing 1 million sq ft, about 1.05 million, I would say, reflecting the increasing demand for our high-quality Grade A office assets. We have witnessed robust demand from GCC and IT/ITES tenants, and 54% of our new leasing was to GCC tenants. Multinationals such as Accenture, Amdocs, Genpact, Iron Mountain, L&T Hydrocarbon, Newgen and Wipro, who took up space with us across our assets.

Additionally, we renewed space with Deloitte, CRISIL, and Evalueserve, among others. Our SEZ portfolio has seen robust demand over the last few quarters, and we are continuing to see this demand momentum continue. The new leasing that we achieved in our SEZ portfolio during the quarter at 440,000 sq ft, was more than twice the historical average. We believe that the portfolio rebalancing and rationalization by our SEZ tenants is behind us, and in fact, some of our tenants who had rationalized space are now increasing their footprint at our campuses as their employees return to office. With no scheduled expiries of 300,000 sq ft in FY25 in our SEZ assets, we expect the occupancy to show substantial improvement over the course of next 12-15 months.

We expect the recent reforms to further boost the demand for our SEZ assets and have applied for conversion of 1 million sq ft of SEZ area into non-SEZ area across our portfolio. We are hopeful of receiving the relevant approval to complete the process over the next few months. We also have a healthy pipeline of 0.8 million sq ft and growing from tenants looking to lease the converted space at our campus-style office park. Discussions with select tenants are at advanced stage and are expected to close, and we expect, we expect to close the term sheets shortly, approvals too are expected shortly.

With favorable leasing dynamics and the attainment of increasing physical occupancies, we are well poised to continue the recent leasing momentum and are providing a new leasing guidance of 2-2.4 million sq ft over the next 5 quarters, therefore by March 2025. With new leasing expected to remain robust and limited scheduled expiries in the near term, we foresee substantial occupancy improvement for our portfolio and in the range of about 88% by March 2025. We have displayed strong organic growth with our existing leases, having delivered a 7% average escalation on 1.3 million sq ft during the quarter. In 9 months, FY 2024, we achieved an average escalation of 7% on 5.2 million sq ft. We are continuing to progress on our development projects with a mixed-use commercial development at K1, which is Calcutta, progressing well.

The 75,000 sq ft under development area in Downtown Powai has been completed in February, with OC received. 18,000 of which was pre-leased to Croma, and the rest is under advanced stages of discussions and closure. We continue to explore additional avenues to convert office areas into high street retail in Downtown Powai, to unlock further value per unit holder. Our high quality portfolio has an embedded growth headroom of 14%, which will be realized through further leasing and the growing physical occupancy, adding margin recovery. We continue to have access to almost 30 million sq ft of the sponsor group's assets in key gateway cities in India, which provides a strong medium to long-term growth potential for our REIT. Now, I would like to invite Sanjeev to provide the financial updates.

Sanjeev Kumar Sharma
CFO, Brookprop Management Services Private Limited

Thank you, Alok. Good morning, everyone. This is the first full quarter of earnings after the acquisition of Downtown Powai and Candor TechSpace G1, which has led to a significant increase in our scale. We have witnessed a growth of 90% in our operating lease rentals to INR 393 crore, compared to INR 207 crore in the same period last year. The Adjusted NOI grew by 89% to INR 453 crore, as compared to INR 240 crore in quarter three of financial year 2023. For the nine months period, we have seen an increase of 43% in our operating lease rentals to INR 878 crore, and a 46% increase in our Adjusted NOI to INR 1,045 crore.

The increase is primarily due to the addition of Downtown Powai and G1 to the portfolio, as well as our recent leasing performance and contractual escalations. We continue to have significant organic growth potential of 14% in our portfolio, which can be achieved through the lease up of vacant areas and margin recovery. We have achieved an NDCF of INR 209 crores this quarter, which translates to INR 4.76 per unit. We are distributing INR 4.75 per unit this quarter. As disclosed in the last quarter, we have filed capital reduction schemes in some of our SPVs, which are at various stages of processing at the NCLT. The dividend component of distribution should get enhanced significantly post the implementation of these schemes.

We are pleased to report that the ICRA has assigned a long-term rating of ICRA triple A with a stable outlook. This is on the back of our strong balance sheet, a long-dated maturity profile, and limited refinancing and amortization over the next few years. As we continue to lease our properties in the wake of recently announced SEZ reforms, we will target to distribute in the range of INR 4.50-INR 4.75 per unit per quarter over the next two to three quarters. With that, I thank all of you, and now I would request the moderator to open the floor for Q&A.

Operator

Thank you very much. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from question queue, you may press star and two. Participants are requested to use handset 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 Gulati from HSBC. Please go ahead.

Puneet Gulati
Director of Equity Research, HSBC

Yeah, thank you so much, and congratulations on, you know, good leasing once again this quarter. My first question actually is with respect to the unexpected expiries that you faced in Q1, and how do you think about re-leasing this space? And do you see further risk in Q1 going into FY25 as well?

Alok Aggarwal
Director and CEO, Brookprop Management Services Private Limited

Yeah. So let me take this question, Puneet. Yeah, I mean, we have seen, you know, space being vacated by companies, but I think the good news here is we are, if you see, we have applied for almost 0.6 million sq ft of space for de-notifying in K1. And with this SEZ reforms, this K1 asset has totally got re-rated. It was fully SEZ area. Now we can offer space to SEZ tenants as well as non-SEZ tenants. Last four years, we had a good demand for non-SEZ tenants, but we could never offer them.

Puneet Gulati
Director of Equity Research, HSBC

Mm-hmm.

Alok Aggarwal
Director and CEO, Brookprop Management Services Private Limited

We're in advanced stage of discussions with non-SEZ tenants for closure and signing of term sheets. You know, we see no risk of any kind of showstopper. Rather, we are hopeful that in a very kind of a foreseeable future, we should be able to backfill the vacant space at much better rentals and much better lease profile.

Puneet Gulati
Director of Equity Research, HSBC

... Oh, interesting. That's very good to hear. Second, on the downtown Mumbai, also about 334,000 sq ft is due for renewal in FY25 as well. So, how is that shaping up in your discussions?

Alok Aggarwal
Director and CEO, Brookprop Management Services Private Limited

See, downtown Mumbai, if you see, we already have said, you know, CRISIL got, you know, kind of, renewed, Deloitte got renewed. And whatever tenants are there, they are keen to renew, so some turnover could happen. But otherwise, momentum is pretty good. We are able to. And wherever we are renewing, we are able to get good after market rentals, and escalations we are able to get.

Puneet Gulati
Director of Equity Research, HSBC

Understood. If I can ask two more, one was on the CapEx. In your CapEx projects, there is a mention of tenant improvement. Now, can you comment on what exactly are you doing for tenants? Is it more in the nature of interiors, or is there something else as well?

Alok Aggarwal
Director and CEO, Brookprop Management Services Private Limited

See, what happens is we come at a budget of maybe, let's say, for a particular tenant, we come at a budget of INR 100 per sq ft or INR 150 per sq ft. This could be about, you know, a month or two months of rental. And tenants are free to utilize where they want to put it. It can be both for upgradation of lobby, upgradation of toilet, you know, and generally, we are okay with that because, you know, that adds to our, adds to our, you know, the value of the asset. So generally, it goes in a kind of, the area which I mentioned, lobby, toilet.

Puneet Gulati
Director of Equity Research, HSBC

Okay. So common areas, not the tenants specifically?

Alok Aggarwal
Director and CEO, Brookprop Management Services Private Limited

Generally, yes, common area, which remains with us.

Puneet Gulati
Director of Equity Research, HSBC

Okay. Thank you.

Alok Aggarwal
Director and CEO, Brookprop Management Services Private Limited

We will start that these are more exceptions, these are not norms for us. Generally, when a large tenant comes through, you know, these are, these are finishes that we'll end up doing anyway.

Puneet Gulati
Director of Equity Research, HSBC

Sure.

Alok Aggarwal
Director and CEO, Brookprop Management Services Private Limited

So that we sometimes, you know, add it as a sweetener to the tenant, but we would have incurred it anyway.

Puneet Gulati
Director of Equity Research, HSBC

Right. It should be categorized as asset upgrades rather than tenant improvement, is what I'm trying to understand.

Alok Aggarwal
Director and CEO, Brookprop Management Services Private Limited

Yeah, I mean, that's, that's a fair way to look at it. Yeah. I mean, it's just common later, but, that's really, that's really the nature of it.

Puneet Gulati
Director of Equity Research, HSBC

Understood. Lastly, on your NOI margin, especially for N1, that seems to be down. How should one read that?

Sanjeev Kumar Sharma
CFO, Brookprop Management Services Private Limited

Puneet. Sanjeev here. The NOI margin in N1 is 94% in this quarter.

Puneet Gulati
Director of Equity Research, HSBC

Okay.

Sanjeev Kumar Sharma
CFO, Brookprop Management Services Private Limited

This has happened because of one of the exception in this particular quarter. I will say it's not a recurring, or permanent down.

Puneet Gulati
Director of Equity Research, HSBC

Uh-huh.

Sanjeev Kumar Sharma
CFO, Brookprop Management Services Private Limited

What happens in the cycle of CAM true-up? We do CAM true-up once in a year, which normally comes in either in the September quarter or in December quarter. In the current year's true-up, we landed up with some of the expenses, which were exceptional in nature, which could not be recovered from the tenant. That's why a dip in the CAM recovery in N1 has come and resulted into the OLR to NOI percentage is down in this particular quarter.

Puneet Gulati
Director of Equity Research, HSBC

Okay, but they were not capitalized?

Sanjeev Kumar Sharma
CFO, Brookprop Management Services Private Limited

No, they were not capitalized.

Puneet Gulati
Director of Equity Research, HSBC

Okay.

Sanjeev Kumar Sharma
CFO, Brookprop Management Services Private Limited

They were in the nature of, I will say, a repair, but towards more towards asset upgrade, which, by accounting terminology, we could not capitalize.

Puneet Gulati
Director of Equity Research, HSBC

Okay, and same from cash flow perspective also, it has negatively impacted your [increative]?

Sanjeev Kumar Sharma
CFO, Brookprop Management Services Private Limited

Yeah, but, but it is too small a number.

Puneet Gulati
Director of Equity Research, HSBC

Okay.

Sanjeev Kumar Sharma
CFO, Brookprop Management Services Private Limited

If you just see as of the current numbers are INR 299 million, and that means INR 29-30 crore-

Puneet Gulati
Director of Equity Research, HSBC

Yeah

Sanjeev Kumar Sharma
CFO, Brookprop Management Services Private Limited

of NOI, and that number was about INR 7.5 crore. So on the overall, NOI of INR 405 crore pre-income support, INR 7 crore is not very significant number.

Puneet Gulati
Director of Equity Research, HSBC

Right. Understood. That's, that's it. That's all from me. So thank you so much.

Sanjeev Kumar Sharma
CFO, Brookprop Management Services Private Limited

Thank you.

Operator

Thank you. A reminder to all participants, you may star one to ask questions. Next question is from the line of Kunal Tayal, from Bank of America. Please go ahead.

Kunal Tayal
Director of Equity Research, Bank of America

Hi. Thank you. My first question is on your new leasing. You know, it looks pretty interesting to see quite a few IT services names in there. So could you just talk about what exactly is driving the new space takeup by the IT services companies? And if you think that we should extrapolate this therefore to potentially being a trend from here, and at a bare minimum, the fact that, you know, this lot should not be at least giving up more space from current levels.

Sanjeev Kumar Sharma
CFO, Brookprop Management Services Private Limited

Kunal, I will take up this question. Yeah, I think this is interesting observation, Kunal, and if you see this trend, this is continuing from last 2 quarters and will continue, it will keep continuing now. And this is what, you know, when we said that if you really see pre-COVID and now, the employee headcount is anywhere between 40 to, I would say, 60 to 80%, depending on which company you're talking about. And if you see their real estate portfolio, they are down. And in fact, every company, the real estate portfolio is down. And as employees keep coming back to offices, they will be, as of yesterday, we get calls when people want a floor, and they want to close in 5 days. And that has happened first.

And we'll see lot of demand is there. So that's a trend which is continuing. We can't neglect this sector, and we continue to see momentum here, and that's very much visible.

Kunal Tayal
Director of Equity Research, Bank of America

Understood. Very interesting. The next one is, you know, just in the same spirit in which you've shared the leasing outlook for FY25, I was wondering if you also have a view on what could the renewals of, you know, the projected expiries look like in the forthcoming year? I know it was on the lower side in FY24, but your historic trend has been closer to 60%-70%.

Sanjeev Kumar Sharma
CFO, Brookprop Management Services Private Limited

Yeah. So I think again, you know, we are in the next 6, next 15 months, we have about-

... one point one million sq ft expiries, on a kind of a, you know, we are taking assessment that 50% would get vacated, 50% is something we'll be able to renew. We are being slightly conservative considering the last year, what we saw. Hopefully, November could be better, but, you know, our estimate is 50% would get vacated and 50% would get renewed. That's how we are considering.

Kunal Tayal
Director of Equity Research, Bank of America

Got it. And then final one, just two data points. Just a general timeframe you are expecting for the dividend component to get enhanced. You know, now that you've applied for it, you know, is there better visibility on the timeline of that coming through? And likewise, you know, what would the physical occupancy stand as of end of the quarter, or, you know, if you have any view on, let's say, the month of December or January?

Sanjeev Kumar Sharma
CFO, Brookprop Management Services Private Limited

Kunal, let me take the first question. Sanjeev here. As far as the dividend component announcement is concerned, we are expecting the NCLT to approve these schemes anywhere in the September quarter, around September and thereafter. The quarter ending on December, we will be seeing the increase in the dividend component. As far as the physical occupancy is concerned, I think Alok, you can-

Alok Aggarwal
Director and CEO, Brookprop Management Services Private Limited

Yeah. So Kunal, physical occupancy has changed about 77%, 74%-78%, and it's kind of growing, you know, every month, every quarter, it's kind of growing.

Kunal Tayal
Director of Equity Research, Bank of America

Got it. All right. Thank you so much.

Operator

Thank you. Next question is from the line of Satinder Singh from Eon Infotech Limited. Please go ahead.

Satinder Singh
VP, Eon Infotech Limited

Yeah, thanks for the opportunity, and congratulations on a strong leading. You indicated that, okay, we are working towards-

Louder, yes.

Sanjeev Kumar Sharma
CFO, Brookprop Management Services Private Limited

We are unable to hear, can you speak a little louder?

Satinder Singh
VP, Eon Infotech Limited

Yeah. So, it's like you mentioned about a capital reduction scheme which would lead to enhancement in dividends. So, based on the plans that you have, what percentage of distribution could, let's say, be in the form of dividend, let's say, one year out or maybe March 2025? What could be a rough figure we could model into our projections, please? So is it fair to say 30%? Yeah.

Sanjeev Kumar Sharma
CFO, Brookprop Management Services Private Limited

No, Satinder, Sanjeev here. You can model it in the range of 15%-20% of the total distribution is going to be flowing through dividend post approval of these schemes.

Satinder Singh
VP, Eon Infotech Limited

Okay. Okay. Fine. And when do we expect the approvals to come in, please?

Sanjeev Kumar Sharma
CFO, Brookprop Management Services Private Limited

It will be anywhere, maybe if earlier approval comes in the quarter of September, but otherwise, as I mentioned, it will, it should flow in December quarter.

Satinder Singh
VP, Eon Infotech Limited

Okay. So we've had a committed occupancy of 80%, as of now. Is it fair to say that this can be assumed to be the bottom, given the leasing momentum that we are seeing, okay, and inquiries that you have in the pipeline? Is it a fair assumption to say that 80% committed, while obviously economic is 88, but this 80% committed is the bottom line, and things hopefully should look up only from here?

Alok Aggarwal
Director and CEO, Brookprop Management Services Private Limited

Yeah, definitely. 80, 80% is bottom. Actually, if you really see, this quarter also, you know, we could very, very marginally, you know, kind of, the occupancy has only gone up very marginally, not, not importantly. So this is definitely the bottom, and definitely it's going to go up, from here. We already have said that in the next 15 months, we expect the occupancy to be 88%, and it could be plus, so definitely that is where we stand.

Sanjeev Kumar Sharma
CFO, Brookprop Management Services Private Limited

So, Satinder, I'll add to this.

Satinder Singh
VP, Eon Infotech Limited

Yeah.

Sanjeev Kumar Sharma
CFO, Brookprop Management Services Private Limited

Just, just adding here. So we've spoken about the gross leasing guidance of 2-2.4 million sq ft. And we've spoken about half a million sq ft of effective expiry. So if you do the math there, it effectively gets to high 80, high 80s, by the end of March 2025 in terms of the effective occupancy that we see the business going towards.

Satinder Singh
VP, Eon Infotech Limited

No, of course, it clearly helps. I think this, this guidance of INR 2-2.4 clearly helps, kind of, build confidence, okay? We talked of INR 6 per unit of embedded growth headroom. So I just wanted to understand, what are the assumptions in arriving at these figures in terms of, let's say, vacancy, the rental increases, and the timeframe by which we expect this INR 6, annualized, okay, to flow into the distributions? Okay.

Sanjeev Kumar Sharma
CFO, Brookprop Management Services Private Limited

So, Satinder, as far as components are clear, there, those are already mentioned there, the lease up and, the margin recovery. As far as lease up is concerned, and we have not considered any escalations in this lease up. This is at the current, rates which we are seeing in the market. And as far as timeframe is concerned, it should be anything between 2-2.5 years.

Satinder Singh
VP, Eon Infotech Limited

Okay, okay. About two years for us to recover this. Okay. Okay, okay, fine. And you mentioned about INR 4.5-INR 4.75 as the guidance. In given all this, okay, is there a case for INR 4.75 to really go down from here, given that, okay, we expect the leasing momentum and whatever, okay, and the interest cost repricing would have already happened by now? Okay. So is there a case for this INR 4.75 to come down?

Sanjeev Kumar Sharma
CFO, Brookprop Management Services Private Limited

So, Satinder, we...

...As I mentioned, that it is going to be in the range of INR 4.5-INR 4.75, and we are very confident that this current quarter, which is going on, which is March quarter, should land up around INR 4.75, and thereafter for one or two quarter, it should be in the range of INR 4.5-INR 4.75. But thereafter, definitely it should improve upon, considering the lease which is going to happen, which will flow ultimately into the NDCF and DPU.

Satinder Singh
VP, Eon Infotech Limited

Yeah, right, right, right. Thank you. One final question, if I could squeeze in. So, sir, G2 and K1 have seen no renewals, this year. So, while you've, you've already amplified that K1, you are seeing lot of, non-SEZ demand, and okay, this should pick up. Any views on, on G2 per se, okay? But, what is the challenge, specific to this, this property that, okay, renewals are not happening, okay? And, and, and, and is there a case for us to apply for greater area, under non-SEZ out of the 0.8 million? We've applied for about, I think, 0.2 so far, okay.

Alok Aggarwal
Director and CEO, Brookprop Management Services Private Limited

G2 has actually no challenge. It's a great property just on the border of Delhi and Gurgaon. We have seen existing tenants take more space. Accenture has taken more space. We have seen that number.

Satinder Singh
VP, Eon Infotech Limited

Yeah.

Alok Aggarwal
Director and CEO, Brookprop Management Services Private Limited

You know, there's another tenant which has really, if you see that, it has really grown up there. And if you see, you know, page number ten. You know-

Satinder Singh
VP, Eon Infotech Limited

Yes.

Alok Aggarwal
Director and CEO, Brookprop Management Services Private Limited

So this is, okay, this tenant is not mentioned here, but we have seen Amdocs taking more space. Every quarter, Amdocs is taking more space, and this quarter also discussions are going on. There should be no challenges with the property. Right now, we applied for 2.2 million. I think that's, we are comfortable with that. And see, every month we can apply. Now the, now the flexibility is every month you can apply. Every month there's going to be a DoA meeting. That has been mandated by government. So I think we have to be strategic, you know, apply, get it leased out, and then again, apply, because there's a lot of demand for SEZ tenants also. We can't lose out on them. We can't kind of apply and then lose out on SEZ tenants.

So, we'll see strong recovery in this also. K1 I already talked about.

Satinder Singh
VP, Eon Infotech Limited

Okay, fine. Thank you, very clear, kind of all the answers. Okay, thank you very much. All the best.

Operator

Thank you. Next question is from the line of Pritesh Sheth from Motilal Oswal. Please go ahead.

Pritesh Sheth
VP and Equity Research Analyst, Motilal Oswal

Yeah, thanks for taking my question. Good morning, everyone. So first is on, you know, our leasing or occupancy guidance, which you said in the initial commentary that by March 2025, we should be at 88%, which is where the economic occupancy is right now. So, I mean, does that mean that, you know, including the adjusted for income support, I mean, you know, there won't be much increase in the total rental or NOI income? I mean, you know, how should we look at that math? Or are we a bit conservative on, you know, stating that 88% kind of committed occupancy?

Alok Aggarwal
Director and CEO, Brookprop Management Services Private Limited

Pritesh, let me answer, you know, this question two ways. Now, of course, we hope to, you know, we are giving a leasing guidance, and you'd appreciate that we want to achieve this guidance. So, you know, I can say that I would not say we are conservative, we are aggressive, but we, you know, we want to achieve this and do better than what we guide. So that's one thing. Having said that, you know, your economic occupancy will be much higher, because today you have economic occupancy at 100% of, you know, vacant space of G1.

You know, so there on, on the balance, vacant space in G1, that would still get added, and we can work that number out and share that with you, you know, but economic occupancy will be much higher. I hope that answers the question.

Pritesh Sheth
VP and Equity Research Analyst, Motilal Oswal

Yeah, sure. I mean, so, you know, we are already getting the income support for N2 and G1 for that economic occupancy, right? And, and, you know, as you said, I mean, 88% committed occupancy, you know, by end of FY 2022, FY 2025, I mean, would eventually lead to your income growth, or rental growth as well, right? That should be the direction we should look at?

Alok Aggarwal
Director and CEO, Brookprop Management Services Private Limited

Of course. I mean, because your 88 is average, and G1 will be at 100.

Pritesh Sheth
VP and Equity Research Analyst, Motilal Oswal

Okay.

Ankit Gupta
President, Brookprop Management Services Private Limited

Just to the pickup in occupancy, Pritesh, will be across assets, right? To the extent that increase is not in G1, you will see it translate to income growth. You know, so today, if you think about our occupancy or vacancy area, you know, it's about 3.8 million sq ft across assets, right? It is distributed in 4 or 5 assets, you know, except G1, wherever we are able to lease things up. So for a minute, if we assume that 2 million sq ft was to lease equally, across-

Pritesh Sheth
VP and Equity Research Analyst, Motilal Oswal

Yeah.

Ankit Gupta
President, Brookprop Management Services Private Limited

The 4 apart, you know, about 1.5 million sq ft of growth will be visible in the income. You know, and the 0.5 million sq ft that let's say we end up doing in G1 will replace the income support. So where you'll not see pickup in G1's income growth, you know, unless it's on account of higher rentals, everything else will straight translate into NOI growth for us.

Pritesh Sheth
VP and Equity Research Analyst, Motilal Oswal

Sure, sure. Got it. That's helpful. And second, on, on Kolkata, you know, since we are applying 0.6 million sq ft to be denotified into non-SEZ, you know, how do you see the rental growth there, which is at 45 now? You know, would our initial targets be to, you know, first lease that out, or, you know, we would equally focus on, you know, increasing the rental potential there?

Alok Aggarwal
Director and CEO, Brookprop Management Services Private Limited

... See, when we are buying 0.6 million sq ft, we have kind of a discussions or a, you know, hard and soft pipeline for that kind of a area. Of course, rental and we are expecting a rental growth. And with this, lot of vacant space going out from ACG to non-ACG. Our ACG area also will reduce, which means we have a better ability to increase rentals in ACG space also. So we are expecting rental growth in ACG as well as non-ACG space.

Pritesh Sheth
VP and Equity Research Analyst, Motilal Oswal

Okay. If you can quantify, I mean, you mentioned that the asset can get de-rated. You know, how much should one expect that increase to be? You know, around 10, 15%?

Alok Aggarwal
Director and CEO, Brookprop Management Services Private Limited

I think in Calcutta we can, we can consider about 10%-15%. Calcutta, yes, for this particular asset.

Puneet Gulati
Director of Equity Research, HSBC

Got it. Got it. Those were my questions. You know, thanks and all the best.

Operator

Thank you. A reminder to all participants, you may press star and one to ask questions. The next question is from the line of Vasudev from Nuvama.

Vasudev Ganatra
Research Associate, Nuvama

Yeah, thank you for the opportunity, sir. So, sir, what will be our LTV for this quarter, if you can just quantify?

Alok Aggarwal
Director and CEO, Brookprop Management Services Private Limited

Same as last quarter, Vasudev, at 34%.

Vasudev Ganatra
Research Associate, Nuvama

Okay, for including the shareholder date and excluding. So we've given two numbers last quarter, so both of them are the same by and large?

Alok Aggarwal
Director and CEO, Brookprop Management Services Private Limited

Yeah, broadly.

Vasudev Ganatra
Research Associate, Nuvama

Okay. Sir, out of the 0.5 million sq ft of the fresh leasing that was done in this quarter, how much of it would be towards the re-leasing?

Alok Aggarwal
Director and CEO, Brookprop Management Services Private Limited

Sorry, Vasudev, could you repeat the question?

Vasudev Ganatra
Research Associate, Nuvama

Sir, I was saying that out of the 0.5 million sq ft of fresh leasing that was done, how much of it would be towards re-leasing?

Alok Aggarwal
Director and CEO, Brookprop Management Services Private Limited

It's about INR 320,000.

Vasudev Ganatra
Research Associate, Nuvama

Okay, sure, sir. Those are my questions. Thank you.

Operator

Thank you. A reminder to all participants, you may press star and one to ask question. Next question is from the line of Pritesh Sheth from Motilal Oswal. Please go ahead.

Pritesh Sheth
VP and Equity Research Analyst, Motilal Oswal

Yeah, thanks for the follow-up. Just couple of, you know, questions. So, for N2 income support, was this the last quarter or there's some, you know, some amount still left for Q4?

Alok Aggarwal
Director and CEO, Brookprop Management Services Private Limited

So, Pritesh, there is an amount left for Q4, so it is more or less ending in the middle of this Q4.

Pritesh Sheth
VP and Equity Research Analyst, Motilal Oswal

Okay. So, okay, got it. And just lastly on, you know, re-leasing at, you know, Crisil House that we saw this quarter. You know, and you have mentioned in presentation about INR 180 per sq ft of rental for those renewals. Is that reading right? I mean, was it renewed to INR 180 per sq ft? And, you know, what is your sense, you know, you know, could we have managed the better rentals with some other tenant or, you know, what, this was the amount that was expected anyways? So just your comment on that.

Alok Aggarwal
Director and CEO, Brookprop Management Services Private Limited

Crisil House, yes, leased at INR 187.

Puneet Gulati
Director of Equity Research, HSBC

187.

Alok Aggarwal
Director and CEO, Brookprop Management Services Private Limited

INR 187.5. Now, I think that's, that's good rental for Powai as well. And, you know, some of the leases happening at depending on which, which location, what are terms that, you know, around 170, 175. So INR 187 is a good number, I would say.

Pritesh Sheth
VP and Equity Research Analyst, Motilal Oswal

This is for three-year term again or, they're signing now little longer?

Alok Aggarwal
Director and CEO, Brookprop Management Services Private Limited

So this is for a shorter term. This is for a shorter term.

Pritesh Sheth
VP and Equity Research Analyst, Motilal Oswal

Okay. Okay, got it. That's helpful. Thanks. All the best.

Alok Aggarwal
Director and CEO, Brookprop Management Services Private Limited

Thank you.

Operator

Thank you. Next question is from the line of Puneet Gulati from HSBC. Please go ahead.

Puneet Gulati
Director of Equity Research, HSBC

Yeah, yeah, thank you so much. On Crisil House, can you remind us what was the rent previously, now that's INR 187?

Alok Aggarwal
Director and CEO, Brookprop Management Services Private Limited

INR 140 was the rent earlier.

Puneet Gulati
Director of Equity Research, HSBC

So 140 is versus 187. And also, can you give some color on what are you seeing on the market rentals for all of your core markets? Are you seeing any growth there or still largely flattish?

Alok Aggarwal
Director and CEO, Brookprop Management Services Private Limited

Yeah, so, Puneet, this is really the, depending on which asset we are talking about. And if you see, last year, top seven cities had maximum leasing, you know, almost about gross leasing was almost about, you know, top eight cities, almost about 70 million sq ft. And while supply is equal, but supply is coming in the fringes, whereas, in core markets, in multi locations, you know, there's limited supply, and that's why the rentals are not only holding out, they're also kind of moving up. And that's the trend across most of the properties.

Puneet Gulati
Director of Equity Research, HSBC

Can you give indicated market rentals for your property?

Alok Aggarwal
Director and CEO, Brookprop Management Services Private Limited

Oh, let's take example of Powai. You know, Powai, Powai downtown, you know, let's take example of their, you know, their rentals are almost about INR 165-INR 185. That's the range, depending on which building, how much area you're taking, commercial, IT.

Puneet Gulati
Director of Equity Research, HSBC

Okay.

Alok Aggarwal
Director and CEO, Brookprop Management Services Private Limited

Retail could be much more. So we are able to convert office to retail, again, 40%-50% rental upside, we can get. That's where we are in terms of Powai. When we talk about, you know, G2, we are signing some of the new leases. Again, their range is about around INR 90-95. That's the kind of rental in N2, it's around INR 65-67. N1 is about INR 62-63, but N1 saw phenomenal growth in last, I would say, you know, it got re-leased from INR 50 to mid-60. So probably it will consolidate at INR mid-60.

Puneet Gulati
Director of Equity Research, HSBC

Okay.

Alok Aggarwal
Director and CEO, Brookprop Management Services Private Limited

... we have moved up. Now, we are probably looking large leases, some of the large leases, we are looking at INR 50. You know, we might go at lower number also, but we want to do at least non-ACG space, we can do at INR 50. ACG space, we can do at INR 45. And with better terms, and which one? I think I've captured all of that.

Puneet Gulati
Director of Equity Research, HSBC

Yeah. No, that's very helpful. Thank you so much.

Alok Aggarwal
Director and CEO, Brookprop Management Services Private Limited

Even if somewhere, you know, in mid-teens.

Puneet Gulati
Director of Equity Research, HSBC

Mm-hmm. Okay. Super, that's very helpful. Thank you so much, and all the best.

Operator

Thank you. As there are no further questions, I would now like to hand the conference over to management for closing comments.

Alok Aggarwal
Director and CEO, Brookprop Management Services Private Limited

Thank you everyone for joining today's call. We look forward to connecting with you all next quarter.

Operator

Thank you.

Alok Aggarwal
Director and CEO, Brookprop Management Services Private Limited

Thank you.

Operator

On behalf of Brookfield India Real Estate Trust, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.

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