Q1 21/22

Aug 16, 2021

Good afternoon, ladies and gentlemen, and welcome to the Mindspace Business Parks REIT's First Quarter Financial Year 2022 Earnings Conference Call. 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. Please note that this conference is being recorded. I now hand the conference over to Mr. Kedarakulkarni. Thank you and over to you, sir. Thank you and good afternoon everyone. Welcome to the Q1 financial year 2022 earnings call for Manusys Business Park At this point, we would like to highlight that the management may make certain statements on this call that may constitute forward looking statements. Please be advised that our actual results may differ materially from these statements. Mindspace REIT does not guarantee these statements or results and is not obliged to Update them at any time. We are pleased to announce that the trading loss for Mindspace fleet units has been reduced to 1 from 200 earlier, effective August 11, 2021. This much anticipated move by Sevi is expected to enhance debt and liquidity for the instrument and encourage a wider participation. I would now like to welcome Vinod Rohir, our CEO and Preeti Shera, our CFO. Vinod will share the business update and his view on macro environment and commercial real estate. Preeti will further share an update on the financial performance. We will then open the call to Q and A. I now hand over the call to Vinod. Over to you, Vinod. Thank you, Geera. Good afternoon, everyone, And thank you for joining MySpace Inc. Earnings call. When we conducted our last earnings call, the nation was grappling with a few second waves, which delayed the return to normalcy. During most part of the Q1, various movement related restrictions were in place with those services. However, our parks offer uninterrupted support for our tenants ensuring their business continues. Since then, the vaccination program has seen an uptake Various state governments have announced gradual relaxation of lockdowns and other restrictions as a step towards return to normalcy. We have seen a resurgence of economic activity, a continued rise in employment numbers and robust financial performance within our client delivery. A continued push towards vaccinations at a fast pace is key to tackling the possible 3rd wave. Once we have seen the workforce vaccinated, We will begin to see momentum shift towards return to workplace. We continue to remain optimistic on the long term business outlook of everyday office spaces. Global multinationals are increasingly looking at India as a center for innovation, knowledge and technology. As per the NASSCOM report, The revenue for IT and DBM services is anticipated to grow from USD 190,000,000,000 in 2020 to $300,000,000,000 to $350,000,000,000 by 2025. Top 10 IT firms have exponentially increased their headcount even during the pandemic and the hiring trends are expected to remain strong in the coming year. The pandemic has also fueled the GCC growth trajectory in India With direct employment expected to increase significantly from $1,300,000 at present to $2,200,000 to $3,000,000 by 2025. We anticipate these strong underlying trends to translate into a demand upswing towards the best managed asset ecosystem. We are also confident to achieve significant mark to market opportunities for the vacant spaces at our parks. Globally, employers are seeking to bring their employees back to office As they are putting the return to work plans in motion, we anticipate Indian firms to follow suit as the situation on the ground continues to improve. This is well supported by rapid employee vaccine by India intake. Offices are reemerging as the most preferred places to work, providing an inclusive environment for employees to ideate, collaborate, optimize and grow. We have already facilitated Circa 60,000 and more vaccinations across our parks in all geographies for our occupiers, employees and their families. We achieved a gross leasing of 1,200,000 square feet within the portfolio in this quarter. Additionally, we are pleased to announce that are under construction Zofo assets at Commerce Zone Madharpur at Hyderabad has seen a pre leasing of 1,800,000 square feet. Our collections continue to remain strong at over 99% throughout the pandemic. Our net operating income for the quarter stood at INR 3,596,000,000 marginally up on a sequential basis. Our distributions stood at INR 2728,000,000 or INR 4.6 per unit. In our endeavor to maximize stakeholder value throughout the lifecycle of assets, As announced during the previous call, we have formed our plans to proceed with redevelopments for 2 wings at MineSpace Madapur, subject to requisite approval. This shall potentially increase the leasable area of the building under redevelopment from 0.36000000 Square Feet to circa 1,300,000 Square Feet, subject to final design and approval. On the other hand, we remain focused on reenergizing our parks and maintaining high standards of health and safety to keep them ready for our tenants as they return to office. On the demand side, we continue to see increased activity for evaluation and assessment of new consolidation needs of large technology occupiers. This is a welcome indicator towards pickup in demand activity once substantial workforce returns to office. We continue to see sizable contraction in new grade A supply in most micro markets. With available ready to offer grade A We expect to realize a healthy mark to market opportunity as we fill up our vacancies. Rentals in our micro markets continue to remain stable and we do not see any pressure on the same. We continue to witness strong pickup in demand from flexi office space providers As we move towards offering enterprise solutions, tenants continue to consolidate their presence in most of the micro markets that we are present in. We are focused on ensuring higher renewals from existing footprints of occupancy, leasing out vacant spaces and bringing back employees to the workspace as the situation improves. Reduced interest rates and low clearing of our portfolio provides us with room to pursue asset enhancements and other growth opportunities at our parks, which are long term value of agent to our unitholders. I would like to take you through the specific operational updates for the Q1. We achieved the gross leasing of 1,200,000 Square Feet for the quarter ended June 30, 2021. Of this, 1,100,000 square feet was on account of re leasing and 0.1000000 square feet was new area leasing. Average rent realized on this 1,200,000 square feet Leasing was INR 60 per square foot per month and achieved re leasing spreads of 56.3 percent on 1,100,000 Square Feet Area Re leased. 91% of the leasing during the quarter was to existing tenants, while balance was to new tenants. We signed up 3 new tenants during the quarter. Our Rofo asset at Hyderabad is set to be completed in phases during financial year 'twenty two. We are pleased to announce that 1,800,000 square feet area of The asset is pre leased to a telecom giant. We received occupancy certificate for the hotel building at Madapur. The building is already leased out completely With rent commencing in Q3 financial year 'twenty two, we have also received partial occupancy certificate for our building at Aeroli West. These are area additions and proposed redevelopment at Hydro Park has resulted in our portfolio size increasing from 30,200,000 Square Feet as of March 31, 2021 to 31,200,000 Square Feet as of June 30, 2021. Of the total leasable area, our portfolio had 23,800,000 square feet of completed area, which constituted 91.7 percent of our 1,800,000 square feet is currently under construction and we have another 5,600,000 square feet available in the portfolio for future development. The portfolio is leased to more than 165 market clients with an average in place rent of INR 57.1 per square foot and a weighted average lease expiry of 6.6 years. Our collections continue to remain robust at more than 99% of the gross Contracted rentals during the quarter. Our committed occupancy of the portfolio stands at 84.4%. On a same store basis, Our committed occupancy stood at 84.4% as compared to 86.8% at the end of March 21. Decrease in same store committed occupancy is primarily on account of addition of 800,000 square feet area in Jin Nye, of which we had received Occupancy certificate during quarter 1 financial year 2021. During our previous conference calls, we had guided towards re leasing visibility Of 0.8000000 square feet out of the scheduled expiry June in the first half, we remain on track to achieve the number As we have already leased 0.44000000 Square Feet during the quarter, we remain on track with the development of our 2 under construction projects, 1 building at Zera Como Zone, Haradi, Pune and 1 building at Mindspace, Ironi West, Mumbai region to be completed in a phased manner. We continue to invest in further energizing our parks, providing our tenants with a renewed Experience when they return to the workspace. Our building project Gera Commerce owned Hara received a platinum certification from IGBTC, While our building at Mindspace Madhop received LEED Gold Certification of USGBC. At Mindspace REIT, And we were to emerge as a responsible organization, motivates us to implement sustainable business practices across our operations. In furtherance of our sustainability agenda, we became India's 1st real estate entity to join Cyma Group's RE100 initiative. As a part of this initiative, we have committed to transform 200% renewable energy usage across areas Serviced and maintained by us by 2,050. On a normalized basis, our parks have an annual electricity usage of over 100 gigawatts hours, which represents a sizable opportunity to transform to green energy. Previously, we have also pledged our commitment to the EV100 initiative of Climate Group to transition to 100 percent electric mobility within our past by 2030. We extended our support to construct An additional floor at a government hospital in Hyderabad, the project was completed within a short span of 45 days and is expected to enable capacity enhancement of 120 health. In addition, we also continue to assist frontline warriors and marginalized COVID patients. We continue to work with various stakeholders in this hour of need. At this point, I will now hand over to Priti to walk you through our financial highlights of the quarter and full year. With this, I thank you all for the patient hearing and I hand over to Thank you, Vinu. Good afternoon, everyone. We are happy to announce the financial results of MySpace REIT For the Q1 of the financial year 2022, despite the challenging market conditions, we maintain our net operating income For Q1 FY 2022 at INR 3,600,000,000 our revenue from operations for Q1 FY 2022 So that INR 4,200,000,000 cost optimization measures helped achieve NOI of INR 3,600,000,000 For Q1 FY 2022, this is marginally higher than Q4 FY 2021. We continue to maintain NOI margin at 80% plus. We announced a distribution of approximately INR 2,700,000,000 that is INR 4.6 per unit For the quarter ended June 30, 2021, the distribution comprises approximately 92%, This is 4.23 per unit of dividend and approximately 8% which is INR 0.37 per unit of interest. This translates to an annualized distribution yield of 6.7% on the issue price. On the debt side, our net debt as at 30 June 2021 stood at INR 37,000,000,000 Leverage on the portfolio continued to remain low at 14.9%. Besides, we also have undrawn committed Over the last few quarters, we have achieved substantial reduction in our funding costs from an average cost of debt of 9.2% as of 31st March 2020 to 7% as of June 30, 2021. Over the last 1 year, we have converted approximately 28% of our current outstanding debt to fixed cost debt. We continue to pursue opportunities to further convert part of our variable cost debt to fix cost debt to reduce our overall cost of debt. As stated previously, our strategy would be To deploy a combination of short to medium term and long term debt with different maturities are also a combination of fixed and variable That's all on the financial performance. With this, I thank you all for your patience hearing and I now hand over to Vinod to conclude this briefing. Over to you, Vinod. Thank you, Preeti. Although major part of the last quarter witnessed COVID related restrictions, We are encouraged to see the return to normalcy as various state governments have started relaxing the restrictions. The economic outlook continues to look strong. Our business has demonstrated highly real resilience and we are more confident to benefit from the upcoming demand revival. We shall also continue to partner with the government and other institutions to offer necessary support to augment health infrastructure while tackling the pandemic. With this, I request the operator to open the floor for question and answer session. Thank you very much. We will now begin the question and answer session. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Aditya Chhatrapade from ICICI Securities. Please go ahead. Yes. Good evening, everyone. So my first question is on Slide 15, pertaining to the To the lease expiry profile, just a few clarifications. So we have said we leased 400,000 square feet released in the current quarter in Q1. And it says that we have released area vacated in FY 21,500,000 square feet. So just want to clarify the area which has been released, is that So 80% is net of this re leasing of area vacated in FY 'twenty one, that's number for the portfolio? Sorry, can you repeat that question clearly? I'm just saying, you said we have backfilled, right, out of the area vacated in FY 2020 when you have reached 0.5, right? Yes, that's right. So there is another slide behind which shows the portfolio level occupancy. So there is a current occupancy and a committed occupancy. There are 2 occupancy figures, Right. 1 current occupancy 80% and Comrade occupancy 84%, right. So this 0.5% which we have done, so that corresponds to this 80% or to 84%. 84.4%. 84.4%. Okay. So that is yet be reflected, so the leasing which we have done, right, is yet to be reflected in the coming quarters, right, that area has to go up, the area under It is already reflected here as Committed occupancy, it just translates into a formal lease deed, then it moves into the occupancy bucket. Okay. So, sir, just following up on that, so would that mean that we are almost now nearing the bottom of this occupancy We see the occupancy sorry, let's rephrase, do we see the occupancy bottoming out now and we should see it going upwards? So we are definitely seeing businesses doing very, very well, Actually in the universe of our tenants because of the technology push that's needed and we are seeing them push up the employment Numbers. So we are feeling very confident that coming back to the workspace is going to be sooner than later. We just have to be cautious about making sure that globally we are fine over the next few quarters from a 3rd wave perspective and we are good to go. Okay. Just one more question. Now our Tier one distribution has been fairly resilient. So would you like to share some lower or upper end of distribution guidance for the year or would you like to hold back? So, Vinod, if I may take this. Sure. Adadev, hi. So, Adadev, as you have seen this time, Despite all the challenging conditions that we've gone through, we have given pretty attractive distribution and our 6 0.5%, 90% of that is tax free. So on a post tax basis, it still stands a healthy distribution. But in terms of guidance, we I'd like to see how things unfold. But having said that, as I told in my last conversation as well, We have while we've had some of the leases which have taken longer to lease and the rents have taken longer to start, but we've achieved a very Significant reduction in our interest cost, which has helped us offset a very large portion of our rental, which is not common. So I would maintain at that and we will see as we go along. But Having said that, for the quarter, I would say we've delivered a pretty attractive distribution. Yes. So just sorry to just So adjusting all these working capital and CapEx adjustment, other adjustments, should we at least expect the current quarter's run rate to be ranging for the rest of the year, if not higher? So, Adhdev, again, I would not want to comment on any specific number, but We would, I would say, continue to work towards delivering our performance elsewhere. Okay. Okay. The next question is from the line of Mortuza Raziwala from Kotak Securities. Please go ahead. Hi, sir. Just wanted Sir, if you can speak closer to the handset, please? Yes. So Sir, if you can move to a better reception area, please, your voice is breaking up a lot. The next question is from the line of Mohit Agarwal from IIFL. Please go ahead. Yes, thanks for the opportunity. My first question is on the distribution and the distribution walk down. Could you help us understand Not only this quarter, but last 2, 3 quarters, you've seen that the debt drawdown number is higher than that of the CapEx that you would have incurred. So My understanding was that probably this would be closer to the CapEx is funded by debt and remaining distributions You know, drawdown as is and then they are distributed. So could you explain why? Because from last three quarters, I see the CapEx is about INR 3.75 crores, But the debt drawdown is INR640 crores. So could you explain that better? Yes. Sure. Let me take that. So two things here. 1st and foremost, 1, as you rightly said, CapEx is fully funded out of debt. There has been working capital changes also. In working capital, of course, we have had some cutout costs, which we consider as Okay. Thanks. But from an accounting perspective, it gets classified as working capital. So to that extent, that is also funded by debt. Also what has happened is there have been certain cash flows. Now of course, given the nature of these working capital changes, There is always a timing issue. So that's especially if I have to address this quarter. We've had about INR 35 crores of That prepayments, which were actually expected in this quarter, which we received in the previous quarter itself. Similarly, this being the Q1 of the financial year, We've had several expenses which were prepaid for the entire year and therefore you've seen the working capital being on a higher side in this quarter. So there are these timing issues which will happen. And of course, part of the debt as we had guided in the IPO document also Has been out of debt, but that's a part of it because as it is part of our IPO disclosures as well. But otherwise, the other movements are broadly because of working capital changes as I alluded to. Okay. So over time, do you think these numbers would converge Over the next few quarters as the one offs that is on? Yes, some of these one offs which have happened like I told you some prepaid expenses which have happened in this quarter, Some of the timing issues in terms of the cash flow coming earlier or later, those all I would be normalizing. Okay, sure. My second question is, you mentioned about the ROFO asset, it has now been Fully pre leased 1,800,000 square feet. So the building is now complete and it's pre leased. So is it time that will be inducted into the REIT? Hi, Mohit. Mohit, the asset is really still under construction. So we will manage to pre lease while it is under construction. It gets ready by Q2 next year And the rents are in phases. So at the right opportune time where we can create an accretive acquisition and a yield accretive sequence, we will do that. Okay. So just to understand this better, what would be a good time like typically when the comes in and probably the rent free period ends? Is that the time that you would like to add the asset into the REIT? That's right. Okay. And just last Just one clarification, you've added this redevelopment, you've taken this asset for redevelopment, what would be the time taken typically to bring this asset back into And any more plans to redevelop assets in Hyderabad? So this is a first for us. We are quite excited Subject to all the accruals coming through, we would like to deliver see this asset delivered really quickly. It will take between 27 30 months to bring it in. And we want to see more of these going forward in the future once we've demonstrated this successfully. Okay, sure. Thanks a lot and all the best. Thank you. The next question is from the line of Shashank Salwa from Somerset Capital Management. Please go ahead. Hi, thanks for the call. My first question was on the re leasing spread of 56%, which seems quite high. So I just wanted to clarify whether that's just On the ones which you had leased earlier and doesn't include any vacant space or does that calculation include the vacant space as well? No, it includes both. So it's a combination of assets, some that were lying vacant and some that got released to mark to market. That is what the opportunity we've been always talking about, Because our average rents for those assets, for example, some of them were as low as INR 41 and we were able to get INR 65 when we released In these markets. So that's where the mark to market opportunity really excites. So does that so sorry for clarifying, but Does that mean that it also includes assets where you are not receiving any rent, so the denominator in that case is 0? No, no. So there were certain buildings which had expired and the tenant had just about vacated We were fortunate to get another tenant to fill up that building in this last quarter and when those rents start By default, we are getting this mark to market opportunity. Okay. So I just wanted to clarify that it doesn't include when you say vacant, it doesn't Take 0 into the calculation in the denominator for rent, but previously. That's right. No, And overall, can you also elaborate on in terms of the face trends and also incentives which you have to provide? Have there been any significant changes or are you still seeing positive sales trends increases? So there are no real major tectonic shifts taking place. People have just asked for Longer periods were fitting out because of uncertainty. Otherwise, it's all normal leases. Right, right. And the mark to market potential, which has been trending lower, is there a reason why it's sort of Turning lower now? No, because we then we go on realizing mark to market, the residual mark to market opportunity looks like it's going lower, But cumulatively from 54.9%, we moved to 55% to 57%. So we have gone on realizing our mark to market, which is why the residual mark to market starts looking lower. Right. Okay. And there were a couple of things like for Mallard, your in place rents, that's the only Actually the in place rents have fallen. Is there any particular reason for that? So the rents there haven't Clearly fallen, actually it was there were some which were with the fitted out facilities, their tenures were over. The newer tenants which have Where your committed documents is relatively lower, so IONI, West, Square, BKC, Pochanam and Porur. So what are the sort of plans to improve the occupancy over there? So I really wish the significant weakness was SECs and we are actually quite excited about the opportunity That now SCVs may open up to allow for the non SCV occupiers, that means generally the TPI allow all technology companies to be able to participate in occupying spaces which are reserved for SCCs. Once that comes through, We will see traction of leasing take place there as well. The Polu asset is a new asset that just got completed, which is why it's Taking slightly longer to leave because we entered that asset completed right in the middle of the pandemic and we've seen numbers now start to begin to rise in terms of interest. So these will catch up and they will move on. Right. And finally, you mentioned that as vaccination improvement, you'll see an Improvement in demand and but confidently won't you also see an increase in supply because some of the construction which was impacted by COVID would also get completed. So how do you see the demand trend situation at least for the next 12 months? So as we demonstrated to you in Hyderabad, which Would have been probably likely the market where everyone would feel has the highest overhang of vacancies in incomplete assets, etcetera. There is a big difference between a Grade A asset operator and an asset manager than just a building in a vicinity. And that's how That's what's getting demonstrated time and time again that the client is preferring stability of asset management and quality of the owner as well as the asset management and facility. So those Grade A assets are getting picked up first for demand and you will always see a disproportionate rush towards Grade A. And you will always see the vacancy shrink in really quickly, while the overhang of supply continues to be there in the marketplace. Having said that, the restart of construction we are still not seeing in most micro markets of incomplete or half completed projects. There is very, very limited action there. So we have a strong sense to believe that that supply is not coming in a hurry. Right. Okay. Thanks a lot. Thank you. The next question is from the line of Satinder Singh Bedi from E. ON Infotech Limited. Please go ahead. Yes. Hi. Good afternoon and congratulations on the steps you've taken to Ensure that the distribution doesn't drop much despite the general time, especially on the cost of funding that you've driven out. My questions were first regarding Aeronie West. What we see is that there is a 10% fall Q on Q On the revenues, while the committed occupancy has stayed stable at 68.6% between the last quarter and this one, okay. So any reason to explain this 10% fall in the NOI? Sorry, we are not able to hear you clearly. Can you help us repeat the question because the voice is Yes. So my question is regarding Aeronie West. Q on Q, Aeronie West 10% fall in revenue from operations. While the committed occupancy has paid a cost trend At 68.6 percent in these 2 quarter end periods. Can we reason for this 10% fall in Gunod, if I can repeat that. Yes. So what happens is when we say committed occupancy that also includes The lease agreement which we had signed, but not the proper lease fleet. So the rent of those leases will happen in the months to come. That's the reason you are seeing a betterment in terms of a committed occupancy, but the rent will start in a month to come, that's why you're not seeing the increase in the revenue? Yes. So what I see is that the occupancy has fallen from to 63.8, but the committed stays the same. So normally, occupancy falling would show that Some client has moved out, okay. That's the only way occupancy can fall because the increase in space is relatively small. You've added 100 ks probably. But we committed occupancy stage. So even a client has gone out and maybe another one has committed or something like that. But the revenue has fallen 10%, will you be 15% over just a quarter? Yes. So in terms of the revenue fall, Because there would also be certain exits, which we would have announced in the previous quarter itself. The revenues have not Come in this quarter. So therefore, you would actually see that revenue tapering for this quarter. Okay, okay, okay, fine. Thank you. Another question on the data center. So last quarter you had mentioned about data center, despite the slides you were talking. So we hope the progress It's on track on the data center project? Yes. We continue to see interest in especially in the Navi Mumbai region for data centers. And we continue to be engaged with tenants. That's all that I can tell you right now. And the project that you announced last time, that's on track? Yes, that's right. Okay, okay, fine. One last question on the JP Morgan seems to have dropped out from the top 10, okay. So they're about 3.8 So, now we are out of the top 10, which means, okay, below 3.5%, okay. Can you just share what is this moment look like? So, JPMorgan, right before the pandemic actually had taken 2 build to suit facilities for themselves to consolidate because they were fragmented in each of their markets. And that space that they actually were to vacate a year and a half ago, that project of theirs got delayed, they continue to occupy. They are now vacating and we already have found a tenant to take that space, which we will talk about in the next quarter. Okay. Thank you. This was Erroli West? This was Hyderabad. Okay, Hyderabad. Okay, Thank you. Yes. Thank you very much. I'll come back in the queue in the queue. Thank you. The next question is from the line of Sameer Baisiwala from Morgan Stanley. Please go ahead. Thank you so much and good evening everyone. The question is on the early exit. So is this 200,000 square foot that you show on Slide number 15, is this a new one? And I think that in the previous quarter, we had 0.5. So if you can talk about this, are we at the end of it and who are these tenants who are moving on under stress So COVID or some other reason? Hi, Sameer. How are you doing? I'll go ahead. Thanks, Panos. So this is the additional small tenant about 100,000 square feet in Hyderabad and another miscellaneous 40,000, 50,000 square foot worth of tenants Across the portfolio, which we have visibility, they will leave in the next 6 months. Do you see more of these coming? As of now, so let me tell you about 1,600,000 Square feet of ours is due for terminations and expiry. We have already visibility of 1.2 out of that. So we are not seeing too much hiccups there going forward. And you say you got the visibility For 1.2 out of 1.6, you're saying of there of re leasing renewables? That's right. Okay. No, but what I was asking you was about the Early exits, are we end of that cycle or do you think there could be more coming through? I would be reasonably confident we are at the end of that cycle. But we still have to be careful going forward, but I don't see too many hiccups coming. Okay, excellent. Now, If I were to think through the vacant area in the sense or the task of leasing So next 9 months. So I think the current vacant areas, maybe 3,500,000 square foot, I think I shared below that. And then the excess and the expiries, which are not committed for, maybe that's another 1,000,000 square foot And the new completion that should be, I think, early west 1,000,000. So roughly 5,500,000 square foot It's what we need to do. Is that fair? And second is your gross leasing for Q1 was 1,200,000 square foot. What is it that you can expect in Q2, Q3 just to arrive at therefore the net number? So we continue to see similar traction for transactions of gross leasing going forward at least for the next quarter and hopefully going forward for the other quarters as well. We are seeing grassroots of inquiry begin to happen in different micro markets And we are seeing the necessity of clients who want to continue with their footprint and are already speaking about renewals on their Scheduled expiries. So all of those things are happening. Large lines with large RFPs are still early days, but they've started to begin to talk. So you will see that traction happen in the next few quarters where they will then start talking of hard real estate decisions. Okay. So Vinod, that means that until that doesn't happen, which is large I am pleased by new tenants. Our vacancies are probably going to continue the way they are, if not come off, If not go up even more. So it's like this, there are obviously large vacancies will go with the large kind of clients, but we are seeing small demand Between 50,000, 100,000, 200,000 square feet coming. So we are reasonably confident we'll be able to fill these up. Okay. And you agree with that gross number of 5,500,000 square foot that you probably Would want to lease up by the end of this year. It's not 5.5%, but I mean the numbers are given to you broadly in that presentation, happy to Get those addressed for you separately as well. But having said that, if you see our same store increase, When we added 300 odd 1,000 square feet, even that is pre leased 84.4%. So we are getting traction even on the under construction buildings For pre leasing, which is also a very good sign, including the ROFO asset you saw, which is under construction a year away to complete. We've already pre leased 1,800,000 So it's a combination of demand that's coming for future and present. We don't want to lose any demand in any of the pro market. Okay. Fair enough. I get your point. And I think someone asked you earlier also in the call and I'm trying to get an answer to that, that At 84% occupancy, are we really at the bottom of it? Or do you think there could be another 100 basis points, 200 basis points? And how long can we even if it's stable number, how long this bottom can continue? We feel the market is quite stable now. We are not Seeing too many companies uncertain about their footprints for occupancy. Okay. That's it from a second. Thank you, sir. Thank you. The next question is from the line of Ashwini Agarwal from Ashmore Investment. Hi, I'm referring to Slide 22 and this also goes back to a question that one of the previous participants Hi, Dhar. In Aeroe West, you've written that you received the SEZ denotification. So is that what you were waiting for to bring in non SEZ clients or is there something else because your response seemed to suggest that you're waiting for some more permissions? So you're right, the one building that was independently getting constructed could be denotified. We got that building denotified successfully finally. And we already saw traction there where we leased 250,000 square feet in that under construction building and we are seeing more traction for demand as we go along forward. So we are reasonably confident that the SDPI demand is picking up for that micro market, which is why the residual SEZ, which is in a cluster together. If we get the opportunity to lease that in combination with the SEV and non SEV occupiers, that may change the game for us. But you'll have to apply for more de notifications for those buildings? Yes. That's right. So that's the process we are waiting for clarity from The government and they are moving forward in that direction really quickly. And how long does it take to get this The notification if it's independent building, which you can isolate between 6 9 months. Okay. But it's more tricky for clusters? Sorry? For clusters, it will be more tricky. For clusters, there is a new guideline that they are proposing, which will allow for coexistence. That will make it even more easier. Then you don't necessarily need to carve out buildings. Okay. All right. Because there's a whole lot of Visibility they want to create for long term occupancy of the SCZ parks across of India. So they are cognizant of that fact and they want to come back with a policy Which helps everyone. Okay. And how much of that square How much space is vacant in those clusters, which would benefit from this new proposal, Assuming it were to come through. Within our portfolio? Yes. 1.5 odd 1000000 Square Feet. Okay. And that's already part of the vacant area of 16%. That's right. That's right. Okay. All right. Second question is that, If I read the note number 1, there is 13.45 crores of ongoing projects Expenditure, that's balanced CapEx. Could you break it down as to which projects are these? So these are projects which are in Haradi. So we have one under construction project in Haradi. We have another project that Vinod already mentioned in Aeroli West. So these are the 2 projects which are currently under construction. And then of course, we have just to take this forward, we have upgrade expenditure, which will happen. We are already upgrading to our parks. We've done major work. There's still some work to happen for all of that. So today essentially in terms of under construction is broadly the Idolivay Rajat and on the Harare project. And then of course, there is yes, go ahead please. Sorry to interrupt, but this doesn't include the Madhukuru 1.1 redevelopment, is it? It does. So the entire 17,900, The wake up of that is in note 1, also include the Madhukuru redevelopment. Okay, all right. Perfect. Thank you so much and all the best. Yes. Thank you. The next question is from the line of Manish Agarwal from GM Financial. Please go ahead. Yes. Hi, good evening. So my first question is on the breakup of lease expiry profile slide. So we have 1,300,000 square feet, which is getting expired in 9 months FY 'twenty two, so out of this, how much is expected to be released? So I just mentioned previously on the call, out of the from an annual visibility of $1,600,000 that is coming for Scheduled terminations and expiry, we have visibility for at least 1,100,000 to 1,200,000 out of that. Okay. So broadly 75% on 1.3% also is what we can think for? Out of 1,600,000? The slide mentions 1,300,000. This is 9 months FY 'twenty two. Yes. So I was telling you for the 12 month period cumulation. Okay. Okay. Okay. Sure. And secondly, on the CapEx plan for this year and the next How much do we spend individually here? So this year for the balance 9 months, we will be spending Approximately INR 500 crores on the existing project and some on the newer. And we will have Approximately, I would say next year, depending on when these projects get completed and when the approval for a redevelopment, etcetera, comes in. We would see a slightly higher number next year. Okay. And Madhav, for And Madhav, so redevelopment will take 27 to 30 months starting from June? No. So the Starting will be in the second half of this financial year depending on when we get the approvals. And we expect completion sometime in FY 'twenty Fine. Because depending on when the approvals actually come in. Okay. And we have started work on the data center part? Vinod, do you want to take that? We are waiting to start. We started the early groundworks, etcetera. And how much will be the total spend on that data center? So that will be somewhere In terms of the construction cost, should be somewhere around INR 300 crores to INR 350 crores. And that is included in the CapEx figures in the slide, The INR1700 figure? No. That's for balance yet, it does include. You're talking about the INR7900 of INR7900 of INR7900? Yes, yes. Correct. Yes. Thank you. The next question is from the line of Anirud Jain, an individual investor. Please go ahead. Hi. I have two questions. This one is for Preeti. So first, I wanted to ask what determines the split between The dividend, the principal repayment and the interest from a REIT structure perspective? And the second question is from Slide number 19, in the NDCF buildup. So there are 2 line items. 1 is for working capital changes and other adjustments and one is CapEx including capitalization interest. I mean, if you could please explain the difference between these two negatives? Thank you. So let me take the first one. So you talked about 3 components, which is return of capital, dividend and interest. In our case, we don't have return of capital as of now. All the distribution that we are making currently, 90% of that is dividend and 10% of that is interest. Now if I have to just generally talk about this point, then of course the nature of distribution would depend on the capital structure of the SPVs as well as the REIT. So it depends upon how much is the equity, how much is the debt, What is the profitability of every SPV? So there are numerous factors which come to play in determining what will be the nature of distribution. So therefore, it can change over a period depending on what is the capital structure. But in our case, Some of these SCVs in the portfolio are matured SCVs, which are in existence for a very long period of time And almost a lot of debt is already repaid. So the profit of those SCVs are higher and therefore we've been able to pull out more dividend. And that's the reason in our case, you would see that 90% distribution is by way of dividend and about 10% is by way of interest. So that was on your first question. The second question was what is CapEx and what is working capital? So CapEx is nothing but the construction cost, which we are incurring on our projects. Working capital has a So one is, as I had mentioned, the fit out in some of the cases, the tenants require us to do the fit out for them. For our practical purpose, we treat that also as CapEx for us. But from an accounting perspective, that gets classified as working capital and That's the reason you see that filing placed under the head working capital. But as I had mentioned earlier in the call, given that this is the Q1 of the financial year, There are certain expenses which we have prepaid for the entire year and that's the reason you see the working capital on the higher side. So working capital essentially has put out that certain prepaid expenses, your normal creditor outgrowth. So those are generally The kind of expenses which are sitting in working capital and CapEx is purely construction cost for the project. I hope that answers. Thank you. Just one last clarification. Is there any way to model I mean, do you expect this 90% to 8% to be fairly stable going forward? Or is there Can you model this or I mean do you expect a change? So as I said, this is what we have guided to for our projection period. And then as I said, as we go along, it depends on the capital structure of the SCVs and the REITs. So at least during the projection period, this is what we believe will be the competition. Thank you. Yes. Thank you. Next question is from the line of Satyendra Singh Bedi from E. ON Infotech Limited. Please go ahead. Yes. Thanks again. So this question is for Priti and again it goes back to the NDCF buildup on Slide 19, so, Suji, you had this net debt drawdown of INR256 crores for the quarter. And if we add the CapEx and the working capital, this becomes about INR192 crores. So that still leaves about INR 60 INR 4 crores of debt drawdown, which has not been applied either for CapEx or working capital. So, Vianney, this 64 of course will apply, okay? Yes. If you just look at the NDCF construct, just below the net debt line, you also have 3 other expenditure lines, With the interest cost, then we have in the Hyderabad entities, we have the Telangana government undertaking also, which is one of the shareholders of that is PV Holding 11%. So the dividend which goes to them is subject to dividend distribution tax In their hands, not for the REIT. And then of course, you have certain expenses at the REIT level. So the balance is accounted that way. If you add the other three items, I could get through that number. But Preeti, that 11% of Telangana's state is anyway not our income. So that's not REIT system anyway because we have owners to be spent of 89% in those 3 FTVs. Correct. Correct. So my point is, can you please confirm that all of the debt drawdown has gone Your CapEx and none of the debt has been used for the distribution payment and the distribution payment is a flow through from the actual earnings? So let me put it this way. So what happens is I just explained earlier, some of the working capital changes and cash flows have based on timing as well. So one example which I had given was we were expecting INR 35 crores of Tax refunds in this quarter, but we received it in the previous quarter itself. So to that extent, what happens is when we receive the cash flows earlier, we pay down the debt. And in this quarter, when we actually have to make distribution, we draw that debt back because there's no point keeping that money in a bank account. So we pay down the debt temporarily and then draw the debt again. So therefore, these timing cash flow issues are bound to happen. Similarly, as I said, today we have certain prepaid expense, which we are paying in advance for the rest of the year. And then you may not have those expenses coming in the next Quarter. So it will not be right to say that you're not the debt which you're seeing here is also a function of certain cash flows having come in earlier because of which the debt prepayment has happened earlier and new debt is drawn again This quarter. And also, of course, as I said earlier, also some of this was already factored even at the time of IPO. So that's broadly how the NDCF has been working. Yes. Okay. So, you got experience it. Okay. And one small query regarding the slide of Page 118 of your Your quarterly deck, this is not the presentation, this is the quarterly update document. It talks about 22% With landowner in a JDA, okay. What is that 22% of what project is that? Can you explain? Okay. So that's a Chennai project, Which is Commerce Zone, Porur, which is in Chennai. So in that project, the landowner, the sharing in the landowner In the space, it's not in the JV. So there's nothing 100% of the ownership of the SPV is with the REIT. There is no other shareholder in the STV, but in the overall project in terms of the area, 22% of that area is going to the landowner in lieu of the land, which contributed for the project. Okay, fine. Thank you. I think that's excellent. Thank you very much. Yes, yes. Thank you. As there are no further questions, ladies and gentlemen, on behalf of Mindspace Business Park REIT, That concludes this conference. We thank you all for joining us and you may now disconnect your lines.