Brookfield India Real Estate Trust REIT (BIRET) Q2FY27 Concall Transcript - Sep-2026 Qtr
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Moderator: Ladies and gentlemen, good day. Welcome to the second quarter of FY 2027 earnings call for Brookfield India Real Estate Trust REIT. Brookfield India Real Estate Trust REIT released its financial results for the quarter ended and half year the ended September 30, 2026. Brookfield India Real Estate Trust REIT had placed the financial results earnings presentation in the investor sections of the website at brookfieldindiareit.in. Please note that the management may contain certain remarks during this call that could be considered forward-looking statements. Actual results may differ from these statements and Brookfield India Real Estate Trust REIT does not guarantee such outcomes nor undertake any obligation to update them. Any financial guidance or pro forma information shared today represents management's estimates based on the specific assumptions and has not been audited, reviewed or independently verified. We caution you against placing undue reliance on this information as there can be no assurance of achieving the results discussed. 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 this conference call, please signal an operator by pressing star, then zero on your touchtone phone. Please note that this conference has been recorded. On the call, we have the following persons with us: Mr. Shashank Jain - CEO and Managing Director; Mr. Rachit Kothari - Non-Executive Director; Mr. Saaket Mehta - Head of Finance; Mr. Haris - Vice President, Capital Strategy for Brookprop Management Services Private Limited; Mr. Shailendra Sabnani from Brookfield. Now, I would like to hand over the call to the management. Thank you, and over to you, sir.
Shashank Jain (Brookfield India Real Estate Trust REIT): Thank you. Good morning, everyone. This is Shashank here and a very warm welcome to Brookfield India Real Estate Trust's FY 2027 second quarter's earnings call.
Shashank Jain (Brookfield India Real Estate Trust REIT): Let me begin with a thank you to all our unitholders, all the analysts who are present on the call and otherwise, and the rest of the participants for joining us today. Let me begin with a brief update on the office market environment. The Indian office market has carried out a strong momentum through 2026. We've completed three quarters. Industry data indicates gross office absorption reaching a record level of 65-66 million sq ft in the first 9 months of the calendar year, with GCCs continuing to take a lead, accounting for 40% to 45% of the total take-up. The demand remained broad-based across sectors like BFSI, technology, flex operators, etc., and you know, some of the other sectors. From a geographical standpoint, Bengaluru continued to take the lead, followed by Hyderabad and Delhi NCR. They led the quarterly activity for the present quarter. Green certified assets represented approximately 80-plus percent of this quarter's leasing, reinforcing occupiers preference for high-quality, sustainable, and institutionally managed campuses. This market backdrop actually is directly aligned with the position of Brookfield India REIT. As of September 30th, '26, we have an operating area of 32.9 million sq ft with a committed occupancy of 93% and an in-place rent of Rs 107 per sq ft per month, with a long-dated WALE of 6.9 years. GCCs for us represent a little over 45% of our occupier mix, and you know, our top tenants are they account for only about 29%-30% of the gross contracted rentals. Our Pan-India presence, high quality and well-diversified tenant roster, sustainability credentials position us well to capture continued demand from global and domestic occupiers. Let me take you through our leasing and occupancy performance for the quarter. During the second quarter, we achieved a gross leasing of 1.6 million sq ft, comprising of a little over a million of new leasing and you know, 500,000 to 600,000 of renewals. The average rent on gross leasing was Rs 98 with a WALE of 9.8 years and healthy leasing re-leasing spreads of around 16%. In addition, we we secured another 0.6 million sq ft of commitments against future expiries within this quarter. The leasing demand remained broad-based for us across product categories with GCCs accounting for a little over 50% of the leasing activity of the quarter, including the advance commitments that we have got. Our portfolio remained commit- with a committed occupancy of 93%, ex- despite some expiries that were due this quarter. 93% represents a 3 percentage point higher occupancy on a year-on-year basis. On very glad to tell you, on the back of NPA conversions and robust demand from blue chip domestic occupiers, our Gurugram properties saw increase in occupancies this quarter. G1 registered an occupancy of 93% with a year-on-year growth of 9%, and G2 saw a 6% year-on-year growth at 84% occupancy. This quarter also reinforced the the confidence GCC and global tenants have in our portfolio and establish their stickiness to our high quality campuses. A few examples for reference. At Ecoworld, a global investment management company took up additional 235,000 sq ft area, in addition to about 224,000 sq ft of renewals that they did. In our Downtown Powai SEZ, Ergo expanded by another 100,000 sq ft in addition to its 136,000 sq ft of renewals. Again, in Downtown Powai, in our IT commercial buildings, a large global financial institution completed an advance renewal of almost 219,000 sq ft for an eight-year term. This is actually in addition to their lease of entire 272,000 sq ft at 1 Downtown Central which we secured last year. So, the the institution continues to to show trust and depth and relationship with us. Our expiry profile remained well-staggered with only 4% of gross rentals due for expiry in the rest of the fiscal '27 and
Shashank Jain (Brookfield India Real Estate Trust REIT): roughly about 27% cumulatively through till FY30. Across the portfolio we've now secured almost 1.2 million of commitment against renewals and re-leasing for future expiries of the second half of '27 and full year '28. This proactive approach enhances cash flow visibility for us and reinforces the strength of our tenant relationships. Now, a little bit on growth and acquisitions. Happy to announce that our G BKC floor transaction under our 50-50 JV with prime office fund of NCW has been closed just towards the end of the quarter on 29th September, and same is now part of our REIT portfolio. We We have almost a 96% commitments, including the commitments that we have, looking at an occupancy of 96%. The asset strengthens our presence in BKC, one of the most established front office markets. Our sponsor group continues to own high-quality properties across gateway office markets. We're excited about the potential of participating in the process as and when they come up. We'll continue to evaluate these opportunities with a disciplined focus on quality, accretion, and balance sheet capacity. Alongside the inorganic growth, continued lease up, contracted escalations, and mark-to-market opportunities across our existing portfolios, provide a strong foundation of organic income and distribution growth to our REIT and unit holders. On the On the ESG and sustainability front, it remains deeply embedded in our operating philosophy. Very glad to inform you, for the fifth consecutive year, Brookfield India received, REIT received a five-star GRESB rating. We received a 100 out of 100 development score for our downtown project in K1, and achieved a standing investment score of 94.9 out of 100 with a recognition as a global sector leader. During this period, our N2 Campus achieved IGBC Green Existing Building platinum rating. Ecoworld was recognized as the best office park for the year at RICS South Asia Awards '26, and a majority of our properties received five-star rating and sword of honor from British Safety Council for occupational health and safety. We'll take you through our financial performance for the quarter now. I'll hand it over to Saket to help us take you through the numbers.
Saaket Mehta (Brookprop Management Services Private Limited): Thank you, Shashank, and good morning, everyone. Let me now take you through the financial highlights for Q2 FY27. Operating lease rentals and NOI for the quarter were Rs. 7.2 billion and 7.7 billion respectively, representing a growth of 52% and 51% year-on-year. The growth is mainly on account of acquisition of Ecoworld, which we completed in December '25. Same-store NOI for the quarter increased by 8%, driven by higher operating lease rental, improved occupancy, contractual escalation, and MTMs. For Q2 FY27, we declared distribution of Rs. 5.7 per unit, an increase of 9% year-on-year. Total distribution for the quarter was approximately Rs. 4.7 billion, taking the distribution of H1 FY27 to Rs. 11.3 per unit. We are very happy to announce that the share of dividend component in our DPU have doubled on a year-on-year basis, from Rs. 0.83 per unit or 16% share in Q2 FY26 to Rs. 1.72 per unit or 30% share of DPU in Q2 FY27. The combined contribution from dividends and shareholder loan repayment represented approximately 69% of DPU. As you're aware, we had earlier filed for capital reduction schemes in N2 and Downtown, Powai. And once these schemes get approved, the dividend share in our DPU is expected to increase to 38%. Post the scheme implementation, seven SPVs in our REIT will turn PAT positive, along with having positive reserves. Further, any incremental growth in income to lease-up escalation and MTM will translate into higher dividend to the unitholders. We would also have additional reserve balance of Rs. 4.8 billion, providing potential to further enhance the dividend component in the distribution over the next two to three years. Our balance sheet remained robust and well-positioned to support disciplined growth. As at September 30, '26, gross asset value was approximately 604 billion, and the net asset value was Rs. 392 per unit. Our LTV, excluding shareholder instrument, stood at 26.7%, providing balance sheet headroom for pursuing inorganic growth opportunities with a dry powder of 34 billion at a threshold LTV of 32.5%. The average interest rate remained at 7.3% for the quarter. Our gross debt comprises of 87% floating rate and 13% fixed
Saaket Mehta (Brookprop Management Services Private Limited): our debt maturity profile remains long-dated with average debt maturities approximately 9 years for portfolio assets and 13 years for Noida Commercial portfolio, providing strong liquidity visibility and limited near-term refinancing risk. We also maintain strong credit profile with dual AAA credit ratings from CRISIL and ICRA. With that, I will hand the call back to the moderator for questions.
Moderator: Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on the 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'll wait for a moment while the question queue assembles. The first question is from the line of Karan Khanna from Ambit Capital. Please go ahead.
Karan Khanna (Ambit Capital): Yeah. Hi. Thanks, team, for the opportunity and congrats on the high-single-digit DPU growth for the quarter. Couple of questions from my side. My first question to Shashank is on the tenant mix. Tech services still account for 18% of rent and accounted for 63% of Q1 renewals and Accenture, TCS and Capgemini combined account for about 14% of rent. In your discussions with them, let's say, over the next 5 years, how much could AI productivity reduce the space each of these tenants could potentially require and are you seeing it yet in this category of tenants' expansion plans, seat density, or these tenants seeking contractual rights at renewals? And on the other side, how sustainable is the GCC demand and could it potentially reach 55% to 60% of the rentals in next few years?
Shashank Jain (Brookfield India Real Estate Trust REIT): Thank you, Karan. Happy to sort of take these questions. Let me talk about the IT services first. I mean if we look at the industry reports, the conventional IT services have accounted for, you know, almost 38%-40% of the total leasing. You know, our assessment and industry reports indicate that IT sector should continue to increase by about 3% to 5% in the current fiscal years. While, yes, AI and and digital technologies, you know, the all all the IT companies basis our discussions with with our key occupiers, they're looking at increasing adoption of some of these newer technologies. They are all looking at these as opportunities for them, as their global clients and enterprises invest in transformation, modernization, infrastructure, cloud, data engineering, et cetera. As far as our conversations with some of our large occupiers are concerned, we haven't got any indications of, you know, any pullbacks that any of them are looking at or, you know, any resets that they are looking at on the contracts that they have with us. You know, having said that, yes, everybody is a little cautious on the way they are approaching this evolving landscape, but we, you know, we haven't got any indications for short to medium term as of now.
Karan Khanna (Ambit Capital): Sure. And then second question Saket is on slide number 23. You know, with 87% share of floating rate debt and 83% of debt coming up for renewal only post FY '30, how are you thinking about interest rate sensitivity towards your distributions in the event we see another 25 to 50 bps sort of a rate hike in coming quarters? You've mentioned that impact is expected post 2Q FY '27. If you can help quantify the same, and is that 32 crore annual or 8 crore quarterly impact a fair assessment of the sensitivity?
Shashank Jain (Brookfield India Real Estate Trust REIT): Okay. Let me let me start and then Saket and Harish can chip in, Karan. So broadly yes, 25 bps increase in interest rate translates to about 29-odd crores of annual impact, which is roughly about 0.08 paisa per quarter DPU impact that we are looking at. Now we are confident that, you know, this potential increase in the interest rate would easily get offset by two things. One, you know, the tax advantages pursuant to the recent change in regulations that we have. We have a saving of MAT saving of almost 100-odd crores every year. Plus our BAU growth in our NOI is that we'll continue to accrue across the portfolio. So we we don't really
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