Ladies and gentlemen, good day and welcome to Nexus Select Trust Q1 FY 2027 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Pratik Dantara, Chief Investor Relations Officer and Head Strategy from Nexus Select Trust. Thank you, and over to you, sir.
Thank you, Danish. Good evening, everyone, and thank you for joining the earnings conference call of Nexus Select Trust for Q1 FY 2027. Before we proceed, I'd like to highlight that the management may make certain statements that may constitute forward-looking statements. Please be advised that our actual results may differ materially from these statements. Nexus Select Trust does not guarantee these statements or results and is not obligated to update them at any point of time. Specifically, any financial guidance and pro forma information that we share on the call are management estimates based on certain assumptions have not been subject to audit procedures. You are cautioned not to place undue reliance on such information, and there can be no assurance that we'll be able to achieve the same. Joining me today on the call is Dalip Sehgal, Executive Director and CEO, along with the management committee.
We'll begin with brief remarks on our business and financial performance and then open the floor for questions. Over to you, Dalip.
Thank you, Pratik. Good evening, everyone. It's my pleasure to welcome you to the earnings update call for the first quarter of financial year 2027 for Nexus Select Trust, India's first listed retail REIT. Before we delve into quarterly performance, I'd like to take a moment to talk about the current operating environment. We have witnessed a meaningful improvement in consumption trends since early March, with the positive momentum carrying through the first quarter and continuing into July. Despite the ongoing geopolitical uncertainties, consumer demand has remained resilient, underscoring the strength of India's domestic consumption story. Most of our key retail partners have secured inventory well ahead of the festive season, providing strong visibility on product availability and minimizing execution risk. As we approach the peak festival period, this gives us greater confidence in the outlook for the remainder of the year.
Combined with healthy consumer demand, we believe the business is well poised to deliver another strong festival season. Now, coming to our quarterly performance. Consumption trends remained encouraging during the quarter, with tenant sales growing at 17% year-on-year. 17%. Demand was supported by key festive occasions like Akshaya Tritiya, Baisakhi, along with the commencement of the wedding season. The growth was broad-based across categories and reinforces our confidence in the resilience of the discretionary consumption, continued premiumization, and consumers' increasing preference for organized experience-led retail destinations. Now, let me walk you through some of the category-wise trends. Fashion continued its strong growth trajectory, delivering double-digit growth during the quarter. Performance was driven by healthy demand for summer collections, along with robust sale of festive wear during the festival and wedding season. Jewelry maintained its exceptional momentum, with sales growing more than 50% during the quarter.
Growth was supported by higher gold prices, strong festival demand during Akshaya Tritiya, and the addition of new jewelry stores across our portfolio. On Akshaya Tritiya, for example, our malls recorded the highest ever single-day sale of INR 112 crores, 112 crores, representing a 2x growth over last year. Jewelry contributed 32%, almost a third of that sale on that day, underscoring the category's growing significance within our portfolio. The point to note, which is equally important, is that the rest of the portfolio also grew very strongly. So it's not just jewelry, but rest of the portfolio also grew very strongly. Family entertainment centers, including multiplexes, continued to perform well, delivering 16% growth during Q1 FY 2027.
The category benefited from strong footfalls driven by a robust movie slate, including blockbuster releases such as "Dhurandhar 2," "Bhool Bhulaiyaa," "Cocktail 2," and other popular titles. Electronics witnessed robust double-digit growth of more than 24% during the quarter, driven by strong demand for air conditioners, refrigerators, and other summer appliances amid the early onset of summer. Our continued operational momentum translated into another robust financial quarter, delivering 11% year-on-year net operating income growth. We are pleased to declare a distribution of INR 370 crores in the quarter, translating to INR 2.442 per unit, reflecting 10% year-on-year growth. This also marks our 12th consecutive quarter of 100% distribution payout, underscoring our commitment to delivering consistent results to our unit holders.
What's important to note is that cumulatively, since the listing in May of 2023, we have distributed more than INR 4,080 crores, INR 4,080 crores, or INR 26 per unit, and delivered 2x returns to the unit holders. Let me walk you through now our leasing and marketing performance. On leasing, we re-leased approximately 4 lakh sq ft during the quarter at healthy spreads. Of this, around 2 lakh sq ft were strategically churned ahead of lease expiry at a spread of 20%, demonstrating a proactive asset management approach and ability to capitalize on mark-to-market opportunities. Let me share an example of the strategic churn that premiumization strategy at our mall in Hyderabad, Nexus Hyderabad.
During the quarter, we replaced an underperforming hypermarket and fashion anchor with a premium international fashion brand, unlocking a 2x increase in effective rentals and a 3x improvement in trading density. This highlights our ability to proactively premiumize our portfolio by optimizing the tenant mix, even within a highly occupied asset, thereby driving higher productivity and sustainable rental growth. Aligned with our strategy to premiumize the retailing mix across the portfolio, we created a dedicated jewelry zone at Nexus Vega City by onboarding marquee brands such as Taneira, Kalyan Jewellers, CaratLane, and others. This strategic curation significantly enhanced the mall's premium position, delivering 1.5x uplift in rentals and a 4x increase in trading density. Our upcoming lease expiry profiles continue to present a meaningful growth opportunity.
Approximately 44 lakh square feet contributing to almost 54% of the portfolio's gross rentals will expire over the next four years with 20% rental upside, reinforcing our embedded organic growth potential. From a marketing standpoint, we continue to curate immersive and experience-led activations across the portfolio, including music concerts, boxing events, and other engaging experiences, contributing to 5% growth in footfalls during the quarter, which is one of the highest in the last few quarters. In addition, we installed 65 + ticketed attractions like the Panda Land, Ocean World, Dragon Kingdom, Farmland, et cetera, creating a memorable experience for the families visiting our malls. These attractions sold 89,000 tickets during the quarter, generating a revenue of INR 2.6 crores, up 37% from last year.
Turning to the performance of our recently acquired malls, Nexus Vega City Bangalore and Nexus MBD Neopolis Mall Ludhiana, both assets have successfully turned around since acquisition, demonstrating the effectiveness of our asset management and operational capabilities. For example, Vega was witnessing negative consumption growth during the acquisition, before the acquisition. Post-acquisition, it has delivered double-digit sales growth, reflecting the success of our integration strategy and our ability to unlock value through active asset management. Moving to our acquisition pipeline, we continue to see a strong opportunity set with a robust pipeline of eight assets across India. We currently have two assets under due diligence. While the acquisition of Diamond Plaza Kolkata is expected to close over the next 40 - 45 days, we also expect to sign definitive agreements and announce one or two additional acquisitions over the next 60 - 90 days.
Building on this momentum, we remain on track to add two to three high-quality assets to our portfolio during the year, further strengthening our growth trajectory. Now, let me share an update on the construction progress for Nexus Runwal Gardens Mall in Mumbai Metropolitan Region, MMR. Construction is progressing as planned, with around 70% of the foundation work already completed. We expect to complete the balance foundation work as well as the raft and basement slab by September of this year. The project continues to remain on schedule, and we are well-positioned to acquire the asset by March 2028. Last but not least, summarizing our performance. One, delivered robust consumption growth of 17% during the quarter, which is one of the best, with broad-based double-digit growth across categories. Positive demand momentum has continued into July, reflecting resilient consumer sentiment.
Achieved strong financial performance with an 11% net operating income growth and distribution growth of 10% during Q1 2027, underpinned by healthy operating fundamentals. Strategically re-leased over 2 lakh sq ft ahead of lease expiries at positive spreads of 20%. With approximately 50% of our gross rentals expiring over the next four years, we continue to see a healthy mark-to-market opportunity of around 20%. Our acquisition pipeline remains robust with eight identified opportunities across India. We expect to complete the acquisition of Diamond Plaza Kolkata shortly, announce additional transactions over the next few months, and remain on track to add two to three quality assets to the portfolio during the year. Let us now move on to Q&A. Over to you, Pratik.
Thank you. Ladies and gentlemen, we will now begin with the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Parvez Qazi with Nuvama Group. Please go ahead.
Hi. Good evening, and thanks for taking my first question, and congratulations for the great set of numbers. A couple of questions from my side. We have been seeing a very strong consumption growth for the past couple of quarters. Now, specifically with regards to this quarter and the increase in consumption, how much would have been contributed by footfall growth, and how much by increase in trading density?
Yeah, I think, Parvez, good question. Our overall growth is 17%. Footfall growth is about 5%. Assuming that, although averages don't necessarily work, but the underlying value growth would be around 12%-14%, depending on which mall we are talking about.
Sure. I am assuming the strong consumption growth that we have been witnessing over the last couple of quarters, this will eventually translate into higher rentals once the contracts come up for renewal. Specifically, with regards to some of the higher ticket items like jewelry and electronics, et cetera, my guess is that we will not really have that high revenue share in these categories which we would have in other categories. Over a medium-term, what is the kind of, you could say, rental growth that one can see once these contracts come up for renewal?
Sure. Just to put it in perspective, as you know, we have a contracted 15% increase every three years. So you get about 5% increase on rentals every year through the contracted increase. In addition to that, like we have mentioned in our opening remarks, around 10% of our rentals come up for renewal every year, and we get a mark-to-market of about 20%. So that is 2%. 5% + 2% is 7%. With increased revenue share, if growths are good, we get another 1%, which is what you got this quarter as well. So that is about 8%. Then there is another 1% - 2%, depending on the quarter, which comes from the rest of the businesses. So we have 90% of our business comes from malls, 10% comes from hotels and offices, and they have also grown extremely well in the quarter.
So they have contributed to the growth in overall NOI. Overall, if you look at it, and of course, they are cross-selling with them, so on and so forth. Overall, I think the business can deliver between 9% and 10% growth. We have delivered it since 9.5%, 9.6% CAGR since we listed. Our sense is that going forward, this is the kind of growth momentum that we should be able to maintain.
Sure. Thanks. I will come back if there is need. Okay. Thank you.
Thank you. Thanks.
Thank you. Our next question comes from the line of Pritesh Sheth with Axis Capital. Please go ahead.
Yeah, thanks for the opportunity. Just a couple of questions. Firstly, on the consumption side, how much of the growth excluding jewelry and electronics?
Excluding jewelry, the growth is 14%.
Electronics?
Electronics, if you take it out, although electronics is excellent, it is not that we have increased the number of stores. But jewelry we have increased, so that is about 14%. If you took electronics out, it is probably around 11%-12%.
13% excluding electronics.
13%, yeah.
Sure. Got it. Fair enough. In terms of growth, the same sales growth you mentioned that it has continued till July as well. If you can quantify in terms of how much is the growth because of that, any upside you see in terms of our guidance, especially on the NOI side as well as GP if you can just cover up. Yeah.
Pritesh, hi. Perfect. Pritesh, in terms of what we saw in July is an early double-digit kind of growth on consumption. Now, in terms of guidance, I think we will have to wait it out for Q2 and see how it pans out before we think about revising the guidance. As of now, we are ahead. But yeah, we will probably wait out for another quarter before we revisit the estimates.
Sure. Just to clarify, this guidance doesn't include any acquisitions that you do?
No. This is all getting.
Sure. Okay. Perfect. That's it from my side. All the best. Thank you.
Thank you.
Thank you. Our next question comes from the line of Gaurav Khandelwal with JP Morgan. Please go ahead.
Hi. Good evening. Thanks for taking my questions. My first question is, when you talk about the additional acquisitions that you expect to close beyond Diamond Plaza over the next couple of quarters, are those already included in the eight retail assets pipeline that you spoke about? If so, can you give us some sense on which are the geographies where you are looking to close these transactions?
Hi, Gaurav. The eight pipeline that we spoke about includes a couple of them that we are looking to close, at least sign, over the next 45 to 60 days.
These will be primarily in the east of India.
And these are excluding Diamond Plaza though, right?
This is excluding Diamond Plaza. Diamond Plaza we expect to close over the next 30 days. There are a few closing formalities there, which we are looking to iron out and it should close over the next 30 days.
Got it. Thanks. My other question is a housekeeping question. Can you share what was the contribution of each of the categories in the consumption this quarter?
The ratio I had quoted in the opening speech, fashion is the biggest contributor. It contributes about 50% to the overall sales. The other big categories include jewelry, which is about 7% for us. We also have categories like electronics, which is about 16% for us, growing at 24%. F&B is about 10% for us. That pretty much covers the large one, if that helps.
Yep. That's 93%. Okay, perfect. Thank you so much. Those were all my questions.
Thank you.
Thank you. Ladies and gentlemen, anyone who wishes to ask a question may press star and one on their touch-tone telephone. A reminder to all the participants, if you wish to ask a question, may press star and—
Yes, sorry.
A follow-up question comes from the line of Parvez Qazi with Nuvama Group. Please go ahead.
Great. We have mentioned that some of our malls like Elante, etc., Nexus Shantiniketan, they have done quite well. How are some of our northern portfolio, especially Nexus Select Citywalk? What has been the performance there?
You mean to say the assets in the north in terms of consumption growth or NOI growth?
Yeah. Consumption growth.
They've been exceptionally good. They're closer to the overall number that we reported, including what we have at Select. We've obviously called out Elante because that's grown at more than 20%. But smaller malls, like the ones in Amritsar and Udaipur have also grown higher than we gave.
Thank you.
Our next question comes from the line of Jatin with the Bank of America. Please go ahead.
Hi. Thanks for taking my question. Congrats on the set of numbers.
Jatin, I am sorry to interrupt you, but can you please be a little loud? Thank you.
Yeah. Hi. Can you hear me well now?
Yes, Jatin. Go on.
Yeah. Hi. Just one question. I think last time when you had given the guidance, you were probably baking in about 8% consumption growth for the full year in your guidance. You did mention that you will probably reset the guidance sometime later next quarter. Just to understand from a sensitivity point of view, if let us say ex of jewelry you continue to create even if it is about 10%-12% growth, how much upside from a sensitivity point of view, bridging this gap from 8% consumption to let us say about 12%, how much of that can be an upside?
Net of jewelry is 14%, just to set it right.
14%. Growth is 14%.
Yeah. Correct.
Jatin, this we are going to call out because it will be a little bit of pre-ending how consumption trends would be in August and September. At this point of time, I would not want to pre-empt how the NOI growth would change, depending on how consumption pans out. Like I said earlier, we will probably relook at it during the quarter two call, and if there is a change, we will definitely call it out.
Yeah.
I think as of now, instead of looking too far into the year, I think from whatever we've seen so far in the first four months, the sense is that we could be looking at a double-digit growth this year in terms of consumption. Assuming, of course, that everything else is in a sense working well. So for example, inflation under control, et cetera. Overall, I think we could still be looking at double-digit growth, but we have to wait for a quarter. Quarter one has been very good. July has been good. So let's wait and see for another two months, and I think we will then be able to tell you a firmer number.
Understood. Great. That's very helpful. Thank you so much.
Thanks.
Thank you. Our next question comes from the line of Navid Virani with Bastion Research. Please go ahead.
Hello. Thank you for the opportunity. Am I audible?
Yeah.
Yeah.
Yeah. I had two questions. First one was on the distribution guidance that you provided. I think it was somewhere around INR 9.5 - INR 10 per unit. Does that guidance still hold? Do you want to—
That guidance holds, Navid. Yeah, that's the guidance we are looking to achieve for the year.
Perfect. The second one was on the acquisition pipeline that you've mentioned. I think you called it out, but I missed it. You said all the assets or most of the assets that we are currently looking at are in the eastern part of India. Is that understanding correct?
Not all the assets. Out of the eight assets that are there in the pipeline, we were discussing what's immediately available this year, and as we said, we look to sign, and Diamond Plaza is one of those malls that we've already announced. That's in Kolkata. That we look to close over the next 30 days. That's in the east. Then we're looking at a couple of more opportunities, which are also in the east. Yes, out of the eight, in the near term, short term, we'll see about three of them in the east.
Okay. Great. Thank you.
Thank you. Next question comes from the line of Siddharth with Sandpa. Please go ahead.
Hello. Congratulations. I would just like to get some light on what is your category-wise in terms of what has been for jewelry, electronics, and others? I have another set of questions.
Siddharth, we probably will not get into category-wise details because we disclose that only once a year. I think directionally, like I said earlier, about 50% of our business is apparel, accessories, fashion, fitness, footwear, and that is kind of grown in higher and mid-teen. We also have the large categories like electronics, which has grown at about 24%. F&B, which has grown at about 12% for us. Entertainment this quarter, and Dalip called it out, has also grown at about 16%, and that constitutes about 6% of the mix that we have. Jewelry, which is an evolving mix at our end, which is currently at 7%, obviously saw exceptional growth at 75%+. That is how it is kind of growing. I think hypermarket is a category that we called out earlier as well.
It's shrinking in our portfolio, and that from a growth standpoint is also at flat or low single digits kind of growth.
The reason I just want to get some light on the clarification was the consumption growth has currently a bit ahead of what the rental growth or NOI growth has been. When do you expect that gap to bridge and how do you expect it to pan out in the quarters to come?
I think the way we think about it is like NOI for us, at least the retail NOI grew at 10%, while consumption grew at 17% during the quarter. The difference in the growth rates is primarily attributable to a few factors. I think the first one is, we obviously in the second half last year, we started onboarding a lot of these high-value categories, premium brands, which typically operate at low revenue share arrangements. While these categories contribute traditionally less through revenue share, these are strategically important for us, for the malls, to elevate the premium positioning within our malls. So it enhances the overall tenant mix. Unlike Dalip Sehgal called out, it has a rub-off effect on some of the other categories, like we observed within our Shrey Sipya. So that's one factor.
Second one, I think our leasing philosophy is focused on creating win-win situations for both retailers and for us. We aim to provide retailers with sufficient headroom to grow meaningfully their entire sales, and then progressively start capturing the rentals through the revenue share arrangements that we have. So we target revenue share ratio in the range of 12%-14%. Currently, this ratio stands at about 12%, and with some of the upcoming renewals in the leases and the strategic churn that we plan to undertake, we expect to move closer to the upper end of this range. So closer to 13%, 14%. And I think these are the two reasons why there's been a lag, and as business starts growing, the lag should also kind of go down.
Understood. Thank you.
Thank you. That was the last question for today.
Okay, great.
Thank you so much.
Thank you.
As there are no further questions on the behalf of Nexus Select Trust, that concludes today's conference. Thank you for joining us, and you may now disconnect your lines.
Thank you. Bye.