Ladies and gentlemen, good day and welcome to the earnings conference call of Nexus Select Trust for Q2 FY 2026. 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 and 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, Mr. Pratik Dantara.
Thank you. Good evening, everyone, and thank you for joining the earnings conference call of Nexus Select Trust for the quarter ending September 2025. Before we proceed, I'd like to highlight that the management may make certain comments 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 obliged to update them at any point of time. Specifically, any financial guidance and pro forma information that we share on this call are management estimates based on certain assumptions and have not been subject to audit review examination procedures. You are cautioned to not place undue reliance on such information, and there can be no assurance that we will be able to achieve the same.
Joining me today on the call is Dalip Sehgal, Executive Director and CEO, Jayen Naik, President, Operations, and Nirzar Jain, President, Leasing. We will start off 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 quarter two FY 2026 for Nexus Select Trust, India's first listed retail REIT. Firstly, I would like to thank SEBI for their landmark move of classifying REITs as an equity instrument, a move that enhances liquidity, widens the investor base, and strengthens REITs as a mainstream asset class. This progressive step further reinforces confidence in India's REIT ecosystem. Before delving into our quarterly performance, let me highlight some key macro trends shaping the broader environment in our country. GDP growth forecast for FY 2026 has been revised upwards to 6.8% from 6.5% on the back of strong domestic consumption, investments, good monsoons, GST reduction, and improved credit flow, and we are seeing signs of that already in the month of October.
Retail real estate fundamentals are also robust across India, underpinned by favorable demand, supply dynamics, and strong consumption growth. Turning to our Q2 FY 2026 performance. We are very pleased to report another strong operational and financial quarter with 16% year-on-year tenant sales growth and 14% year-on-year NOI growth. On the back of this performance, we are announcing a distribution of INR 333 crore, translating into INR 2.198 per unit. Our ninth consecutive quarter of 100% payout since listing. Cumulatively, you may have seen, we have distributed INR 30.1 billion, which is INR 19.853 per unit, and delivered total returns of over 80% to our unitholders since our listing in May of 2023. We remain on track to achieve our FY 2026 NOI and distribution guidance. Our recently acquired assets continue to perform strongly.
Nexus Vega City Mall in Bengaluru has seen a remarkable turnaround. It was declining in terms of consumption, but post our takeover, it has now grown upwards of 20%, and footfalls are also in the same growth path. Sustainable long-term growth for two quarters post-acquisition has been noticed. Nexus MBD in Neopolis, which was acquired only as late as May of 2025, recorded double-digit tenant sales growth and a footfall growth which was also quite substantial. We expect the full stabilization of the mall by March of 2026. Building on this momentum, our inorganic growth strategy continues to remain on track with a robust pipeline of 10 assets, out of which three are under due diligence, expected to close in the next five to six months. A strong balance sheet and low leverage provide almost $1 billion in debt headroom to pursue these opportunities.
Turning to consumption, we witnessed very strong 16% year-on-year growth despite heavy rains in September and purchase deferment pre-GST cuts. Like-for-like consumption this quarter was over twice what it was in the first quarter, signaling a very positive trend. Growth in this quarter was driven by fashion, jewelry, beauty, personal care, entertainment, and electronics. We continue to see similar double-digit growth momentum in October and expect this to sustain through the second half of financial year 2026. Let me now walk you through category-wise trends. Fashion, our largest category, accounted for almost 46%- 47%, delivered sales growth over 2x of the previous quarter, led by premiumization, festive launches, and improved sentiment. Entertainment grew in double- digits, supported by blockbuster releases such as Saiyaara, Mahavatar Narsimha, Chhaava, Coolie, and Kantara . Our family entertainment centers also continue to do very well.
Categories like Jewelry, Beauty and Personal Care, and Electronics maintained strong during the quarter and continued to demonstrate robust performance. In response, we have been proactively allocating additional space to these high-performing categories, a trend we intend to sustain going forward. Let me now walk you through our leasing and marketing performance. On leasing, tenant demand remains strong with occupancy at 97%. Our leasing pipeline remains strong, and we have a waitlist of over 50 domestic and 15 international tenants. On the back of this strong demand, our re-leasing spreads continue to be 20%. We are confident in our ability to sustain 20% mark-to-market spreads when the leases expire. From a marketing perspective, our pan-India presence enables large-scale AR/VR experiences such as Thrillscape, Velocity, et cetera, driving strong engagement and footfall growth.
Our NexusONE app now has 7.5 lakh downloads and remains India's top-performing mall app. We recently rolled it out at Nexus Vega City to enhance digital engagement. Coming to our balance sheet, our NAV rose 8% to INR 159 per unit, reflecting stable growing cash flows. With 51% of gross debt in floating instruments, our current average cost of debt is 7.5%, and this stands to benefit from any further rate cuts that we might see. On sustainability, Nexus continues to lead the sector. We remain the only mall platform in India to achieve a five-star GRESB rating for two consecutive years, with a latest score of 93, ranked second in Asia among listed retail peers. We are very proud of this achievement. Under our Lakes of Happyness initiative, we have now rejuvenated 10 lakes, the latest being in Chennai and Hyderabad. Lastly, summarizing our quarterly performance.
One, we witnessed robust growth, consumption growth this quarter and expect this momentum to sustain in the second half of the year. Newly acquired malls delivered strong consumption, positive footfall growth, validating our integration and acquisition strategy. Our retail NOI grew by 14% in quarter two FY 2026. We remain on track to achieve the full- year NOI growth guidance. We declared the ninth consecutive distribution with 100% payout. Total payout since listing is now close to INR 20 per unit, giving 80% total shareholder return. We remain on track to achieve the full- year NDCF guidance. Before we go to the Q&A, I would like to share some updates with respect to changes in our board composition. Mr. Tuhin Parikh, Director of the Manager and Chairman of the Board, has decided to step down with immediate effect.
Mr. Parikh has been instrumental in establishing the Nexus platform starting in 2015 and guiding us to expand to 19 malls, culminating in this landmark listing as India's first retail REIT in May of 2023. I would like to extend our heartfelt appreciation for his visionary leadership and invaluable contribution. Consequently, Mr. Asheesh Mohta has been appointed the new Chairman of the Board. Also, Mr. Siddharth Nawal from Blackstone joins us as an Additional Director, bringing strong industry experience to drive the next phase of growth. Now let us move on to the Q&A.
Thank you very much. We will now begin with the question- and- answer session. Anyone who wishes to ask a question may press star and then 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 Adhidev Chattopadhyay from ICICI Securities. Please go ahead.
Good evening, everyone. Thanks for the opportunity. There are a couple of questions. Firstly, sir, if you could just help us understand in the malls, especially in Seawood and Ahmedabad and few others, where we have done quite a strong growth in the consumption in excess of 12%- 13%. What do you attribute that to? That is the first question. Our distribution guidance was around INR 9.1 to INR 9.2 per unit, right, for full- year. Do we still maintain that considering the H1 distribution? These are the two questions. Thank you.
Thanks. Thank you for your question. Let me answer the second one straight away. I think yes. Like I said, we are on course to meet our guidance. As far as your first question is concerned, what has been happening in Seawood and in Ahmedabad. Let me start with Seawood. I think what has happened here is that we have had a very strong focus on premium brands, on jewelry, on electronics and all of that, and that has actually helped bring in better footfalls, more footfalls, and that has led to growth that you see today. It is a mall that is probably one of the best-performing malls in the country today. As far as Ahmedabad is concerned, I think Nexus Ahmedabad One, as we call it, has seen a resurgence in terms of sales growth and footfall improvement.
I would, again. See that this is entirely or mainly on account of the fact that we have new brands like Decathlon, et cetera, bringing in younger people, younger customers, and that is driving growth to some extent. Also, overall, I think if you look at the Ahmedabad market, I think the consumption trends in Ahmedabad are very strong. We do believe that as one of the largest malls in the state, we will lead the consumption growth in not just the city, but in the state as well.
Adhidev, just to add to what Dalip was saying. Like you spoke about the premiumization trend, we are also seeing trading densities go up in these two malls. The year-over-year growth in trading densities on both these malls will be somewhere between 13%-15% in terms of the TD.
Okay.
Trading density increases are on account of the fact that you have higher value categories, higher value brands, and that leads to an increase overall. That is really one of the reasons why both these malls have done well.
Okay, sure. Okay, sir. That is very helpful.
Thank you.
All the best.
Thank you so much.
Thank you. Our next question comes from the line of Mohit Agrawal from IIFL. Please go ahead.
Good evening, everyone, and congratulations on delivering pretty heavy consumption growth numbers. My first question is on consumption. Dalip, you mentioned that you expect second half to be equally good double-digit growth. How would we interpret this? Has there been a trajectory shift post the GST cut getting implemented? How was October, let's say, versus the average in the second quarter? Have you seen kind of a meaningful shift? Probably even after Diwali, is that trend getting? If you could give some color around that. If you could also mention which segments would have seen the pickup, if at all.
Okay. So two parts to that question. One is how do we see the second half of the year? I think let me just focus on quarter three first and start with the month that's just gone by, which is October. October, our growths were actually significantly better than the growths that we had in quarter three. So quarter three, we had 14%, and in October, we have very high- double-digit growth in consumption. Primarily on account of the fact that we've seen growth across categories actually, starting from entertainment to a very good set of movies that have come, jewelry, like I said. Post-Diwali also, we still see the traction happening even as we start November. While Diwali last year, I think was towards the end of October and on the first of November, I think we're still seeing good quality footfalls, et cetera, increasing.
My overall sense is that, yes, a GST cut for sure would have triggered part of the consumption change or increase. The other is that, overall also, I think there is, thanks to the fact that the country is growing at 6.8%, inflation is probably at an all-time low. So there is money in the hands of the consumer, and they are wanting to go out and spend. We are seeing pretty good traction in F&B as well. Weekend footfalls are extremely good. Overall, if one were to look at it, quarter one was, let's say, a growth of about 5% like for like, quarter two was 10%, and October was significantly better than even that. Overall, if you look at it, my sense is that quarter three, all going well, should again be a very robust consumption growth quarter.
As we go into the last quarter of the year, we'll just have to see where this entire consumption trend stabilizes. In summary, if we see it as of today, I think there is a very strong positive feedback in terms of consumer uptake and footfall increase.
Mohit,
Yeah.
A large part of our business, as in almost 50% of our business is fashion, and that, if you recollect, wasn't kind of growing that well last year. It was kind of slow to pick up in the first half. So it's actually now picked up in quarter two, and we expect that momentum to actually continue in the second half as well. Fashion should see strong, I think, resilient growth in the second half as well. Yeah.
I can request Nirzar and Jayen, who are also on the call, to probably add to this.
Mohit, I think Mr. Sehgal and Pratik already answered, but there are three strategic steps that I think we've taken, which I think fueled growth. Number one is, as Mr. Sehgal pointed out, the premiumization that we are doing. I think this process started last year, and we are seeing the green shoots now. I hope that the same will continue in the next quarters to come. This premiumization is across all the malls that are there. The second, I guess, is the strong NexusONE app penetration that we have done, not only in our top malls, but even in our tier two malls. Which has really meant that consumer loyalty is increasing in our malls. That's why you see that consumption, especially in tier two towns, has really done very well for us.
Third, I think is the innovative marketing trust that we have done. So engaging events that actually bring back the customer, not just for shopping, but to spend time at the mall. Our whole trust was that we wanted to give a separate reason for the person to come back to the mall again and again. That's why you see that the footfalls which were rather stagnant have actually shown an uptick in this quarter, and I hope that the trends will continue as we go forward. Okay?
Sure.
I think that's really, in a sense, at the heart of what we do. Which is improve engagement, accelerate stickiness, and ensure that our customers are happy with what we have to offer. So that, in a sense, is the promise that we give to our customers.
That's very helpful. The second question is, on your pipeline, you do mention that 10 assets, and in the presentation, it says, including greenfield assets. Then you say that there are three assets which are under due diligence. Could you give some color across what kind of size or geographical location broadly that you're looking at these three assets, and does these three assets include a greenfield asset also?
Let me request Pratik to take this.
Mohit, I will not be able to give you specifics around this, but we're trying to fill in white spaces in cities where we aren't currently present through some of these transactions. At the same time for something like the greenfield one, we're trying to do it in the existing markets where we have some presence, which are large consumption centers. But again, one mall is not enough, and there isn't anything to acquire. We will give you more details maybe in the second half, quarter three or early quarter four. That's when we'll probably end up announcing the transaction.
Yeah.
Pratik, if I just ask it the way. Sorry. Yeah.
No, go ahead.
Sir, I'm just trying to understand that, fair to say that you had put out a target of about INR 150 crore NOI addition. Are you on track, assuming these three go through? Will you be on track for that by the end of the year?
Yes. We'll definitely be on track.
Okay. I just wonder-
Mohit, the pipeline also looks so-
I think it's a per annum recurring number that we think we can definitely achieve with the strong pipeline that we have today.
Sure. Just one last clarification, the NAV has gone up by about 8%- 9% year-on-year, and this quarter, the first six months it's up approximately 5%. Do we think of this moving up in line with the consumption growth? Typically, is there a different math to it?
Mohit, a couple of reasons why it's kind of gone up. One is obviously the consumption growth having come back. The second is your kind of interest costs have gone down, and therefore your WACC has seen some bit of a dip. The third is because you're seeing very robust vacancies across our malls. So vacancy allowance that we typically keep has gone down in a few of our malls. I think these three broader reasons because of which the NAV has gone up YoY basis, I think about 7%- 8%. I think if we see consumption growing strongly, we should see this number kind of going up, and we'll probably revisit this number with the valuer towards the end of the year when we do the full- year valuation.
Perfect. Those are my questions. Thanks for answering. All the best.
Thank you.
Thanks, Mohit.
Thank you. Our next question comes from the line of Parvez Qazi from Nuvama Group. Please go ahead.
Hi. Good evening, and thanks for taking my question. I have two questions. First is, of our like-to-like 10% consumption growth, broadly, what would have been the contribution of, let us say, higher footfalls and what proportion would have come from maybe premiumization or increase in consumption per square foot or trading density? That is the first question. Second, you mentioned about the reasons behind the strong performance Ahmedabad and Seawood . One obviously doesn't expect all malls to perform equally well, but do we have some plans in place to, let us say, increase consumption in some of the malls like Select Citywalk or Elante, which are relatively lagging compared to Seawood or Ahmedabad or [inaudible)? Thank you.
Okay. Let me take part of these questions. As far as Nexus Elante and Nexus Select Citywalk are concerned, if you see in fact all the malls in the north, including Amritsar, all three of them suffered quite a bit because of the rains. I am sure you remember that there was a period where the monsoon was so heavy in Punjab that people were unable to even move out or travel. If you look at Nexus Elante and you look at Chandigarh as a city, it is basically a city where people would come from different neighboring states for shopping. Shimla, Himachal, for example, roads were shut. If you look at Manali, where again, a lot of tourists go, et cetera, that was shut. Nearby villages, towns, et cetera, also, people were not able to travel.
Amritsar probably has a third or maybe even more of its customer base coming from surrounding areas, and everything was flooded, so they obviously couldn't come.
I am sure, and Parvez. I think the other reason, Parvez, is that in Elante, we probably saw an impact of about 3% on consumption because some bit of strategic tenant churn is happening there. We are creating a jewelry zone in the lower ground floor area, which currently is kind of fully leased out. Fit outs are going on. So that is about 60,000 sq ft of area that is under fit out, and that is to some extent impacted the growth in Q2. Our assumption is that the 5%- 6% number that we had reported for Elante should be at least closer to the overall like-for-like average, and up by about 3% at least, if this disruption wouldn't have happened. So that is for Elante.
Sure.
Parvez, just to add, Nirzar here. Similar on Select and Elante. Select also, a lot of area was under fit out. We have recently opened the first in-country store of COS, Prada beauty opened earlier. We also had new addition, like Polo Ralph Lauren. So there are some more new additions that happened that in fact we will see in Q3. So the premiumization journey continues, and it is just an impact of some of these fitments happening. I think the other question was on in terms of footfall or premiumization. I think, both of these helped because I think last year, the movies were not good. So we also saw categories such as movies doing very well because there were good releases and everything.
Part of that 10% consumption growth is because of footfalls where more people coming in, and part is because of the premiumization, new brands, high focus categories such as jewelry, watches, kind of outperforming. New additions to that space as well.
Roughly to give you a sense, I think anywhere between 35%-45% of the growth actually has come from premiumization. Rest of it is organic growth. Footfall growth, like for like, would have been around 3% after a long time because, and reported would be around 7% odd. If you remember the previous quarter, there was no footfall growth, so footfalls are coming back despite the fact that the North, as I said, did lose footfalls on account of floods. So overall, if you ask me, I think the strategy to premiumize the portfolio is giving us probably anywhere between one-third to half of our growth, and the rest of it is organic as well as increase in footfalls.
Sure, sir. Thanks and all the best.
Thank you.
Thank you for your question.
Thank you. Before we take the next question, a reminder to all the participants, you may press star and then one to ask a question. Our next question comes from the line of Pritesh Sheth from Axis Capital. Please go ahead.
Yeah, thanks for the opportunity. Good evening, everyone. Just on acquisition pipeline, right? Nine malls, plus one greenfield. Just trying to understand how would be the mix of distressed versus a reasonably settled mall in these nine malls that we are looking at. And should we expect similar kind of turnaround that we have seen in MBD Neopolis and Vega City malls that we have acquired till now? Yeah.
Hi, Pritesh. Pratik.
Hi, Pratik.
I wouldn't look at it as distressed versus settled, but I would look at it as grade A and anything that is not grade A. To our mind, what we are kind of acquiring are all grade A assets. Obviously, the way we look at it is on two fronts. If it's an under leased asset, we look at it as how we can increase occupancy. And some of our integration timelines have actually been crunched now. We have been integrating assets, and the two assets that we acquired have been integrated in record time internally, within five to six months. So I think if it's an under leased asset, we look at it from an pleasing standpoint in how fast can we lease it. If it's an optimally leased, the way we look at it is when can we actually make a change.
So looking at the expiry schedule, if there is a way to actually change the look and feel of the mall in the next 6, 8 months, 12 months after we have acquired it, I think that is the other lens that we apply. Integration timelines, like I said, have gone down to about five, six months from 8 to 10 months earlier. So we are integrating assets faster. So hopefully, some of the assets that come into the portfolio, you will see them stabilizing much faster than before.
Got it. Just to understand, you would have some under leased assets in these nine assets that you are looking to acquire or all are optimally leased in?
Yes. Some of them definitely fall in that bucket of under lease.
Sure. Okay. Quite helpful. Second on this gap between like-for-like consumption growth and NOI growth. In our medium-term outlook, we expect incremental growth in NOI versus the like-for-like growth. The gap that we are seeing since last two quarters is just transitionary and probably over a long term it settles down, or how should we think about it?
The way this business typically would work is that your consumption will increase initially, then as the contract gets reset, you will have the ability to take the rentals up, and that is the mark-to-market that we talk about, which will then flow into your NOI. So once the consumption cycles come back and consumption starts growing very strongly, you will see with a lag, the NOI growth also coming back due to improved ability to take rental increases.
Got it. And just one last. This NDCF guidance, just to clarify, it does not include any acquisition-related increase in NDCF, right?
The guidance that we had given included the two acquisitions that we had done.
Yeah.
Last one being MBD. Any future acquisitions that we will do from now till the end of the year, it is not included in that guidance.
Sure. Okay, got it. Thanks for that. That is it from my side. All the best for the future. Thank you.
Thank you.
Thank you. That was the last question of our question- and- answer session. As there are no further questions, on behalf of Nexus Select Trust, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.
Thank you.