Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Brookfield India Real Estate Trust (BOM:543261, Financial) reported a significant increase in committed occupancy, growing by 500 basis points to 85%, driven by strong demand for campus-style developments.
- The company achieved gross leasing of 1 million square feet in Q2 FY25, with in-place rents increasing to INR124 per square foot from INR95 per square foot.
- Sustainability initiatives are a core focus, with 40% renewable power transition achieved for 15.4 million square feet, aiming for 100% green power by 2027.
- The company maintained a dual AAA rating from ICRA and CRISIL, with a stable outlook, reflecting a strong balance sheet and long maturity profile.
- Brookfield India Real Estate Trust (BOM:543261) distributed INR4.6 per unit for the quarter, with expectations for the dividend component to improve going forward.
Negative Points
- There was a noted fall in occupancy and net operating income (NOI) for the G2 site, with expectations for it to ramp up slower than other sites.
- The company faces challenges with fresh expiry notices, indicating potential volatility in tenant retention.
- Despite a strong leasing pipeline, the company needs to achieve a net leasing of 1.3 to 1.4 million square feet in H2 to meet its occupancy targets.
- The dividend component of distributions remains low at 11%, although there are plans to increase it to 20-25% in the future.
- The company is trading at a value lower than its net asset value (NAV), which could impact the attractiveness of issuing new units for growth.
Q & A Highlights
Q: There seems to be a fall in occupancy and NOI at the G2 site. What is happening there?
A: Amit Jain, Chief Financial Officer: The G2 site is experiencing a lag in ramping up occupancy compared to G1 and N1. We have a strong pipeline and expect improvement, but it will take time. The fluctuations are part of the normal business cycle.
Q: Can you explain the leakages from NBCF at the SPV level to the REIT level?
A: Amit Jain, Chief Financial Officer: The difference is due to the requirement to retain reserves for interest expenses at the REIT level. This reserve accounts for about INR20 crore, which impacts the distribution.
Q: With income support ending by 2025, what occupancy levels do you expect to achieve?
A: Amit Jain, Chief Financial Officer: We are confident that the strong leasing momentum will offset the end of income support. We expect to maintain healthy occupancy levels and do not foresee any shortfall.
Q: What is the strategy for the remaining 1.5 million square feet of SEZ space?
A: Amit Jain, Chief Financial Officer: We plan to keep it as SEZ to cater to ongoing demand. As the 1.3 million square feet under conversion is leased, we will reassess the remaining space based on market demand.
Q: Why was the distribution per unit not 100% of the NDCF this quarter?
A: Amit Jain, Chief Financial Officer: The minor difference of 16 paisa is retained for any eventualities. We aim to even out distributions over the quarters, and any excess will be distributed within the financial year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
