Brookfield India Real Estate Trust REIT (NSE: BIRET) Q4 2025 Earnings Call dated May. 06, 2025
Corporate Participants:
Alok Aggarwal — Chief Executive Officer and Managing Director
Amit Jain — Chief Financial Officer
Unidentified Speaker
Analysts:
Puneet Gulati — Analyst
Pritesh Sheth — Analyst
Pradyumna Choudhary — Analyst
Parvez Qazi — Analyst
Abhishek Khanna — Analyst
Sarvesh Gupta — Analyst
Ankit Minocha — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to Brookfield India Real Estate Trust Q4 FY’25 Earnings Conference Call. [Operator Instructions] On the call, we have: Mr. Alok Aggarwal, CEO and MD; Mr. Amit Jain, CFO of Brookprop Management Services Private Limited; Mr. Rachit Kothari; and Mr. Shailendra Sabhnani from Brookfield.
I now hand the conference over to the management. Thank you, and over to you.
Alok Aggarwal — Chief Executive Officer and Managing Director
Good afternoon, everyone. On behalf of the Brookfield India Real Estate Trust, I extend a warm welcome to all participants joining us today for this conference call. Let me start with some updates on India and its office markets. India’s economic outlook remains strong, and India is projected to remain one of the fastest-growing large economies, reaffirming its dominance in the global economic landscape.
Stabilizing inflationary trends have enabled the Reserve Bank of India to cut the repo rates twice in the past few months, and this would help boost liquidity for the businesses. The Indian office market witnessed record-breaking leasing performance in 2024 and is poised for sustained momentum in 2025 as well, cementing India’s reputation as the office to the world. As per the ICICI reports, Q1 of calendar year 2025 witnessed gross leasing activity of over 20 million square feet.
Space taken up by GCCs played a key role in strengthening office adoption where GCC is contributing a share of over 30% in the overall office space leasing in Q1 of calendar year 2025. India’s abundant skilled talent pool continues to attack MNCs seeking to establish or expand their GCCs. This coupled with Indian companies expanding their office footprint backed by sustained revenue growth projections augurs well for commercial office leasing in 2025 as well.
Turning to Brookfield India REIT, I’m delighted to report an outstanding year of growth for us in financial year 2025. We delivered on our occupancy guidance and exceeded our DPU guidance for financial year 2025. We achieved 3 million square feet of gross leasing, with a re-leasing spread of 18%. Out of this 3 million square feet of gross leasing, over 50% leasing happened in our SEZ property.
Some of the key large wins for us this quarter are Teleperformance, 111,000 square feet in N2, Noida; Barclays renewal of 172,000 square feet in N1, again, Noida; and Fidelity, 65,000 square feet in G1, which is Gurugram, among others. We had given a guidance of 1.5 million to 2 million square feet of new leasing at the start of financial year 2025 and have closed the year with approximately 2.2 million square feet of new leasing with a spread 19%. Our occupancy increased by over 6% from 82% in March ’24 to 88% in March ’25. The occupancy of our SEZ properties increased from 79% to 84% in the same period, and the occupancy of our non-SEZ properties increased from 91% to 96% in the same period. During financial year 2025, we raised over INR4,700 crores from marquee investors through QIP and preferential allotment.
The preferential allotment in Q1 2025 of INR1,200 crores was to fund acquisition of 50% stake in North Commercial Portfolio, a portfolio of 3.3 million square feet of prominent Grade-A properties in Delhi NCR, designed and built to high specs. This highly accretive acquisition also saw the Bharti Group becoming a cornerstone unitholder in Brookfield REIT. The occupancy of North Commercial Portfolio increased from 91% at acquisition to 95%, and in-place rent increased by over 8% to INR150 as on March 2025. In Q3 financial year 2025, we successfully raised INR3,500 crores through QIP. The QIP issue saw strong demand from our marquee long-term investors, likes of IFC, LIC, SBI Mutual Funds and IP Mutual Fund among others.
As a result of the QIP, our LTV has come down from 34% to 25%, which gives us enough headroom to pursue strategic inorganic growth opportunities for the deal. We are in conversation with our sponsor group to evaluate acquisition opportunities in Bangalore. Currently, the sponsor group is working on carve-out of these assets to our NCLT-approved merger — demerger process, and we will have further updates on this by next quarter.
On the ESG front, we continue to make significant strides towards our net zero carbon goals by 2040 or sooner. In recognition of our efforts, we received many accolades and awards, and some of the key notable ones are: received five star rating from GRESB for the third consecutive year; recognized as Global Sector Leader for Sustainable Mixed-use Development for Baytown, Kolkata; ranked number one in Asia for Management Score with 100% governance score; achieved 40% renewable energy transition for 15.4 million square feet across Gurugram and Noida assets via Brookfield’s Bikaner Solar Project; completed Phase 1 of green energy transition at Noida campuses reducing 11,000 metric tonnes of carbon dioxide emissions annually; received the EDGE certification in Downtown Powai SEZ for more than 20% savings in energy, water and embodied energy from benchmark; received WELL Equity Rating for North Commercial Portfolio, demonstrating strong sustainability focus.
Looking ahead, we expect leasing momentum to remain strong in the financial year 2026 as well. There are 12 offerings of SEZ and non-SEZ spaces across our campuses. We are well-positioned to tap the diverse tenant base and accelerate our journey towards high occupancy.
Let me now invite Amit to take you through the financial updates.
Amit Jain — Chief Financial Officer
Thank you, Alok, and good afternoon, everyone. Our operating lease rentals have grown to INR460 crores in Q4 FY’25, 4% higher Q-on-Q compared to INR443 crores in the previous quarter and 14% higher Y-o-Y compared to INR405 crores in the same period last year. The NOI for Q4 FY’25 is at INR488.5 crores, 3% higher Q-on-Q compared to INR475.5 crores in the previous quarter and 16% higher Y-o-Y compared to INR422 crores in the same period last year. The Y-o-Y growth is primarily on account of new leasing and contractual escalations in rentals offset by expiries and acquisition of MIOP, which we concluded in Q4 FY’25. With sequential occupancy improvement in the last four quarters, we have seen an increase in the same-store NOI by 15% from Q4 FY’24 to Q4 FY’25. This was also supported by the contractual escalations as well as the spreads achieved on re-leasing and renewals.
On the distribution front, we are distributing INR5.25 per unit this quarter, translating to a total distribution of INR319 crores. With this, we have distributed a total of INR1,054 crores in this financial year, taking the DPU for FY’25 at INR19.25 per unit, which is an increase of 8.5% over the DPU in FY’24. Valuation for Brookfield India REIT as of March ’25 stands at INR38,000 crores, which translates to an NAV of INR336 per unit. As you are aware, our portfolio assets, where we own 100% stake with G2, K1, N1, N2 in sectors and assets where we have 50% ownership with G1, Kairos and North Commercial Portfolio.
If you were to consider 50% share of the annualized NOI from 50% ownership assets and 100% share of annualized NOI from 100% ownership assets based on Q4 FY’24 run rate, our total NOI run rate per annum comes to INR1,820 crores. We can expect a growth of 14% in our NOIs if we were to consider the full-year NOI potential of areas currently contracted and assume a steady leasing recovery that is lease up of existing 3 million square feet of vacant area at current market rents with a 2.5% vacancy allowance on the portfolio. This growth in NOI, along with the impact of reduction in repo rates of 25 bps in April 2025, will lead to approx 21% growth in distributions. This would translate towards distribution per unit on a stabilized basis of INR25-plus without accounting for any impact on account of rent growth, contractual escalations, MTM and any future changes in the interest rates.
We continue to maintain a Dual AAA Rating from ICRA and CRISIL on the back of our strong balance sheet, a long-dated maturity profile and limited amortizations over the next few years. As you are aware, RBI had reduced the repo rates in February and April. The impact of February rate reduction has happened in our consolidated portfolio ex-NCP. The impact of rate reduction on NCP, that is 50 basis points repo rate reduction, and the impact of 25 basis points rate reduction, which happened on nine April 2025, will start flowing in from the next quarter. A majority of our loans are linked through the repo rate, and we will be benefited as the benchmark rates begin to trend lower.
With that, I would request the moderator to open the floor for Q&A.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] We’ll take our first question from the line of Puneet from HSBC. Please go ahead.
Puneet Gulati
Yeah. Thank you so much for the opportunity. My first question is, what are you hearing from your tenants in terms of future leasing opportunities? Are they worried about what’s happening in the globe, any decisions on hold? Or are you still seeing eagerness to close deals?
Alok Aggarwal
Yes. Let me take this question, Puneet. And, of course, this is a pertinent question, but I’m happy to say, at least we are not hearing any uncertainty or somebody saying, I want to wait and wait for some more time to close the space.
Tenants have seen that most of the institutional Grade-A properties’ occupancies have moved to around 90s, and this availability is getting a bit of a challenge, while space is available, but if you want continuous space in one go, you want a space what you want, that’s becoming a challenge. Landlords are not willing to wait very long for signing of leases, and tenants are aware of this phenomena. So we are not seeing any slowdown. And there’s an urgency to grow space.
Except large deals, they will take their own time. So that’s fine. But for smaller deals, if tenants want it, they’re closing. And today, landlords aren’t willing to wait. A year back, it was different. Today, we are already at around 90%, deal momentum is strong. So if you want a space, you want to close it fast, then you got to close it without a lot of deal.
Puneet Gulati
And that’s helpful. Thank you so much. My second question is on the financials. If I look at your net debt number, that seems to have grown up by about INR270 crores Q-on-Q, but capex has been closer to INR107 crore. How should one read this gap?
Amit Jain
Sorry, what’s the question? What has.
Puneet Gulati
The net debt has grown by roughly INR270 crores, but your capex for the quarter — this is Q-on-Q, but the capex for the quarter is INR107 crores. How should one read this gap?
Alok Aggarwal
Which slides are you seeing, Puneet?
Puneet Gulati
So can you — okay, this is — we are calculating this net debt number. Is the understanding correct that net debt change is INR270 crores? Or is it a different number?
Alok Aggarwal
No, the net debt change would be much higher because the proceeds the QIP were actually used in the last quarter. Some of it was used in December, but a lot of it was used in March, but Amit, you can add.
Amit Jain
Yeah, yeah. Sure.
Puneet Gulati
Net debt, not the gross debt. I mean I know the gross debt has fallen quite a bit, but our net debt for the quarter and versus previous quarter. If you could share the net debt number, I think it will be.
Amit Jain
Puneet, not sure which slide you are seeing, but whatever is the net debt, either it will be utilized for repayment of.
Puneet Gulati
So what is the net debt number — sorry, what is the net debt number for the quarter?
Amit Jain
Net debt number for the quarter is — if you come to Slide 21, so there is an addition of bank debt of INR47 crores. And if you add these three numbers, please.
Puneet Gulati
So my understanding is there is a gross debt that you are saying that has INR7,910 crores. And the cash on your books as per your balance sheet is INR575 crores. So net debt should be INR7,335 crores.
Amit Jain
Okay. So you’re talking about not the moment between the quarters, the total net debt number, right?
Puneet Gulati
Yeah. Total net debt number for this quarter and total net debt number versus last quarter, if you can share those two numbers and help me reconcile the balance.
Amit Jain
You’re right. So at the consol level, the net debt number as of March 2025 is INR8,000 crores, which is the debt at the REIT level, minus cash of INR570 crores. So you’re right in saying that the net debt number is around INR7,500 crores. The similar number for the last quarter, let me just quickly check that. Puneet, I would say that our net debt number for the previous quarter would have been INR11,000 crores because the total debt at December ’24 was INR11,000, right?
Puneet Gulati
Yeah. Sir, the gross debt, right?
Amit Jain
Yes, that’s gross debt. And then the cash balance would be in the similar range. So the net debt movement between the two quarters should be in the range of around INR3,000 crores to INR3,500 crores. INR3,000 crores has been utilized to repay the debt and around INR200 crores, INR300 crores would have been utilized for capex purposes.
Puneet Gulati
Okay. Okay. Maybe I’ll take this separately. The other question is also if you can talk a bit about the fall in NOI for Worldmark and Airtel Center on a Q-on-Q basis. What’s happening there?
Alok Aggarwal
Just give us a second. Airtel Center, I mean, if there’s expenses; otherwise, there’s nothing.
Amit Jain
See, the NOI wouldn’t have fallen, Puneet, because.
Puneet Gulati
Q-on-Q.
Amit Jain
Yeah, yeah. The cash has gone down, distributions from NCP portfolio because in the previous quarter, we had tax refunds, right, that got distributed to REIT. But in the current quarter, because there are no tax refund in the NCP portfolio, the distribution to REIT has gone down. I think you’re looking at the.
Puneet Gulati
I’m just looking at the NOI, which is — which was — previous quarter was INR90 crores, this is INR86.3 crores, Q3 was — and Q4 number. And similarly, Airtel Center, INR41 crores down to INR35 crores for the quarter.
Alok Aggarwal
Puneet, why don’t we look at this and get back to you? From a business perspective, there’s no change. Occupancies will continue to be in line, but why don’t we just look at this and get back.
Puneet Gulati
Okay. Lastly, if you can also — sorry.
Alok Aggarwal
On the previous question, look, I think we invested about INR150 crores of what we raised to purchase MIOP. So it has basically translated into an investment on the book in a way because we use the QIP part of it for that. And we — actually INR50 crores of cash that was sitting as a part of our debt reserves with the lenders, as we repaid those loans, got leased as a part of NDCF this quarter, so that’s about INR200 crores of the INR270 crores movement. Balance, I think we can come back to you separately.
Puneet Gulati
Okay. That’s fine. And similarly, on the — okay, capex side as well as second quarter versus this quarter, the CWIP, it is INR178 crores. And the last year — sorry, Q2 CWIP was INR208 crores, now it’s INR178 crores. So is there something — some new assets which you’ve capitalized in this quarter?
Amit Jain
Yeah, yeah. So, Puneet, we do the tenant improvements or certain — upgrade capex on a continuous basis. So until our project is completed, it is booked in CWIP. And once a particular project gets completed, it moves to the property plant and equipment or investment property, so that.
Puneet Gulati
Which asset is this?
Amit Jain
This is across all the assets, but the tenant improvements and the asset upgrades is a continuous process, and we continue to do these activities across all the assets.
Puneet Gulati
Okay. That’s great. Thank you so much and all the best.
Amit Jain
Thank you.
Operator
Thank you. We’ll take our next question from the line of Pritesh Sheth from Axis Capital. Please go ahead
Pritesh Sheth
Yeah. Thanks. So just a couple of questions. First, on the leasing guidance, 1.5 million to two million square feet. How are you seeing this — I mean, occupancy improvement across our three core assets, where there is a higher vacancy, G1, G2 and N2? So individually, if you can highlight on how you are seeing the traction. Obviously, I think this quarter, we saw a good improvement in N2, but if you can comment on all three assets combined and whether all of these new leasings that you have — you are expecting is largely in these three assets or there are other assets, which are contributing to this leasing?
Alok Aggarwal
Yeah, yeah, Pritesh, I think good observation, good question. So let me just say, our leasing guidance of 1.5 million to two million square feet, if you see our non-SEZ assets, occupancy is around 95% to 96%, whereas SEZ occupancy overall is about 84% to 85%. So our bulk of leasing next year is expected to be four assets, which is G1, G2, N2 and Powai. Now let me take assets one by one, so not three, but four actually. Powai momentum is strong. We have, thus, constantly and consistently done numbers, closed leases beyond our business plan numbers. So we remain confident. There’s a traction, and we keep doing leases. We are confident about leasing in Powai.
Let’s come to G1. G1, if you see occupancy has kind of dramatically moved up from bottom of 67% to almost now 80%. Our non-SEZ space also came up pretty early. And out of that non-SEZ space, we are able to lease out two lakh square feet in G1 as well. This is — I’m talking about non-SEZ. SEZ space momentum is continuing in parallel. So G1 traction momentum remains strong. We are very confident that we should be able to — whatever targets for G1 are there, we should be able to meet them or kind of do them better.
Then there’s N2. Again, N2, while we have been able to denotify spaces, we have not seen any leasing in non-SEZ spaces last quarter, but SEZ space momentum remains strong, but we have strong pipelines even for non-SEZ spaces, and we are confident that we should be able to — even in N2, we should be able to meet our leasing targets number with a combination of SEZ as well as non-SEZ space. Then we come to G2. Of course, G2 has been a laggard, but now we have some non-SEZ space as well. And while G2 will probably be a laggard as compared to G1 and N2, but there’s a good pipeline.
We are talking to a large tenant as well. And we are confident that in a few quarters, we should be able to get good leasing momentum in G2 as well. So this 1.5 million to two million square feet should — more or less would come from these four assets, and then, we’ll push our remaining assets to get whatever, 95%. If we can move to 97%, 98% or even higher, that will be our efforts.
Pritesh Sheth
Sure. So considering our leasing guidance and some of the renewals might also get expired, so we right now have 3 lakh square feet — 3 million square feet vacant. Net-net, what kind of occupancy target we should be looking at? 93-odd-percent should be a good number next year?
Alok Aggarwal
Yeah. Fair point. I think between early 90s to mid-90s is something what we expect next year. Now it becomes 92% or 94%, that’s probably — it’s just too early, but I think around 92% to 94% is something we are targeting or we can — I don’t know if we can exceed that, but that’s for next year. And then if everything goes well, probably next to next year we can cross 95%.
Pritesh Sheth
Got it. And from DPU perspective, is this INR5.25 now a base number that we should be eyeing for every quarter and then probably better leasing will lead to growth — further growth on that from ’27 onwards?
Alok Aggarwal
Let me take — let me request Amit to answer this.
Amit Jain
Yeah, yeah. So at least for the next one or two quarters, we would maintain a similar kind of a distribution of INR5.25. And once the leasing pans out, maybe we should be in a position to give a guidance maybe in the next quarter. But for the next one or two quarters, INR5.25 should be the minimum distribution that we would be targeting.
Pritesh Sheth
Got it. And just one last, we have mentioned about Bangalore portfolio, which you have already started evaluating from sponsors. Any thoughts on what will be the structure considering our stock is still trading at 15% discount to NAV? I understand it’s too early, but are responses okay to do a share swap is that’s — if valuation discount continues where it is or they would want to cash out whenever this happens?
Alok Aggarwal
Yeah. So look, the structure is still pretty much under valuation. We can do various sizes of deals. Some deals are now capable of being financed with the money we have already raised. So if you ask me, I think where we trade doesn’t matter, the fact that we already have the money, we need to put it to work to strong total returns. So I would say that about INR3,500 crores of dry powder is pretty much ready to be deployed and should be deployed in cash. If the size of the deal is larger than that, then that’s the structure that is still under discussion and evaluation. If the size of the deal increases, we may buy more assets beyond just the largest one. But again, I mean, still on the whiteboard on this one, but we’ll come back with more details.
Pritesh Sheth
Got it. Thanks. That’s all from my side and all the best. Thank you.
Operator
We’ll take our next question from the line of Pradyumna Choudhary from JM Financial Family Office. Please go ahead.
Pradyumna Choudhary
Yeah, hi. Thanks for the opportunity. So my question is more related to sectoral wise, what sort of are we seeing — what sort of demand or softness are we seeing? Like, especially if we talk about the tech sector, are we seeing any sort of slowdown there? Because if you look at commentary by a lot of these larger IT names, the hiring has slowed down. Some of it is to do with overall weakness in the sector. Some of it is to do with the way tech is now disrupting the entire sector. So if you could give some commentary regarding that in the near term as well as how you see the impact over the medium term?
Alok Aggarwal
Yeah. So, Pradyumna, I think we have been talking about uncertainty. We have been living in state of uncertainty from last four years. But honestly speaking, at least today, things are far, far better than what we have seen. At least last one year has been good, and today also, it’s good than what we have seen during COVID times. Slowdown, I believe there’s a lot of talk of slow down, but back-to-office momentum is always getting around. Space availability has gone down. And even for new contracts, generally, companies are — most of the companies have announced like full time back to office, not three days, not four days, five days. So at least we are not seeing any slowdown.
A lot of talk, but we’re not seeing any slowdown. Companies do take space, and companies cater — take place to cater for the growth in next one or two years. Now if whatever — hiring will slow down, the rate of hiring has come down, but that companies, already they have shed a lot of real estate portfolio. So today, whatever hiring they have to do, they have to take more space. And, of course, if the slowdown is not there, probably instead of 88%, 89%, probably it could have been at 95%. But whatever uncertainty and the global uncertainty, I think we had late mid-80s or early 90s, I think if a fillip comes, probably our — and not us, any institutional landlord, the occupancies could move much higher.
But overall demand is good. We are confident. Tenants are not delaying their take-up. They know the amount of space they have to close up — they have to close. So those things are pretty good.
Pradyumna Choudhary
No, fair enough. But like my question is more from a medium-term perspective, like, of course, in the nearer term, the back-to-office and limited space availability are resulting in still a good demand environment. But once this comes into the base, once things fully normalize, which I believe is now anyway happening, right, in terms of back to office. Most of the organizations have already started that.
So over maybe a two-year window, once these demand drivers are no longer there, and GenAI, everyone has been reading, there will be job losses, right? So then how do we expect things to turn out is what I’m trying to understand? And its impact on different sectors. Of course, tech would be the one most disrupted, but even, for example, would GCCs also be impacted as per your understanding?
Alok Aggarwal
See, now, let’s look at GCCs, let me talk about GCCs first. Today, only 30% of the companies have GCC in India. Out of 100 companies, only 30% have GCC in India. So not only these 30% who have presence in India will grow, but also will keep attracting at least 100 GCCs per annum in India. So please understand, new GCC will come, existing GCC will kind of expand.
Tech companies, I don’t think with AI — and this is a constant debate, I don’t think this AI, on a gross level, we are going to see. Of course, entry-level jobs will come down. They may come down, but new job sectors will be created. The rate of growth of hiring is going to go down. That is we have interacted with many companies, and what we are getting is the rate, the growth will be there in terms of manpower. And rates may come down, but jobs in new different segments may get created.
And so this is one. And today, again, also, we are seeing, and there are early shoots that some of the manufacturing companies, they are looking at our non-SEZ spaces, which was unheard of. So somewhere, I think we’ll get compensated. We’ll be already at — by next year, we will be already at somewhere 90s, 92%, 93%, very sweet spot to increase our rentals to push our NOI, get larger tenants. So these are very, very positive and gung-ho on commercial real estate sector probably in a short to medium term.
Pradyumna Choudhary
I understood. That’s fair. And one question was on the — like how you give a sectorial-wise split of tenants by gross contracted rental? Similarly, what’s the split between your front-office tenants versus mid or back-office tenants?
Alok Aggarwal
We can get back on the split in terms of revenue, but most of our IT campuses would not go for front office. They will go for GCCs. They’ll go for IT companies. They’ll go for BFSI, but front office is something which — what would be 80/20, I think? It could be around 80/20. We’ll share exact number with you, but 80/20, 20 is front office, balance would be — and I’m saying — I’m not taking GCC as a front office. Front office means, they are front office.
Pradyumna Choudhary
Understood. Fine. Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Parvez Qazi from Nuvama. Please go ahead.
Parvez Qazi
Hi. Good afternoon and thanks for taking my questions. So two questions from my side. First, you’ve seen about 15% same-store NOI growth in FY’25. So can you give a broad split between what portion of it would have come from occupancy improvement, rent escalation and cost savings, etc?
Operator
Parvez, sorry to interrupt, can you mute your line please? There’s background noise on your line.
Alok Aggarwal
So should I answer his question first or you want to raise the second question as well?
Parvez Qazi
Sure. The second question is. Hello?
Alok Aggarwal
Yes, please go ahead.
Parvez Qazi
How much ACV conversions have we done till date? And how much of that has been already leased? Thank you
Alok Aggarwal
Amit, would you like to answer those questions?
Amit Jain
So on the 15% NOI growth compared to the FY2024 NOI versus Q4 FY2024 versus Q4 FY2025, roughly 7% has been on account of occupancy growth, 3% to 4% on account of MTM and roughly 4-odd-percentage on account of escalation that is kind of coming in our portfolio. So that’s a broad breakup of the 15% NOI growth. Coming to the question on NPA conversion, we have — we are in the process of — we have a total NPA area of roughly two million square feet across our portfolio, out of which we have converted — already converted 1.5 million square feet, and we are in the process of getting another 0.5 million square feet getting converted. So that’s a broad stack of the NPA conversions.
Alok Aggarwal
How you leased?
Amit Jain
So out of the 1.5 million square feet, which has been already converted, 0.8 million square feet is currently leased. And then we have a very healthy pipeline for the remaining NPA area that we have across our properties.
Alok Aggarwal
So 0.6 got leased in Kolkata and 0.2 got leased in G1, Gurugram, right?
Amit Jain
Yeah.
Parvez Qazi
Sure. Thanks and all the best. Thank you.
Operator
Thank you. We’ll take our next question from the line of Abhishek Khanna from Kotak Institutional Equities. Please go ahead.
Abhishek Khanna
Hi. Sir, I just wanted to check on two things. One, the MTM spreads that you’ve given in one of the slides, a fairly low 9%, 2%, 3% for, let’s say, ’27, ’28. What you’ve generally seen is that you tend to do better spreads. Is that how it should likely be in the years ahead also? Is this generally based on industry estimates? And do you have an expectation that you’ll be able to do north of 10% at least in terms of the re-leasing space that you achieve? I was referring to Slide 16, which shows 9% for ’26, 2% for ’27 and 3% for ’28, respectively.
Alok Aggarwal
No, no. I think that’s a good observation, and that’s something we also kind of think about, but these are the kind of predictions of third-party valuers. But just to give two examples, when we renewed Barclays in N1, which is, again, a large lease of 1.5 lakh square feet, we have seen overall increase of almost about 60%. The rent has gone up from almost INR45 to INR72, so 60% increase we have achieved. We never projected that kind of a number.
Again, Kolkata, if you recollect last year, we were — market rents were around INR44, INR45, and it was very difficult to project, so anybody would say that our rents would go INR55 plus. But last year, when we did new leasing, we crossed INR55 plus. So these are numbers projected by third-parties, and we can’t control them. But we are always confident, keep investing in our assets, that we should be a market leader and able to increase our rentals to the extent possible.
Abhishek Khanna
Sure. 10% is a reasonable expectation to have maybe? Anything higher is a bonus, but 8% to 10% should be doable, right?
Alok Aggarwal
Yes, yes. On average, yes.
Abhishek Khanna
Sure. No, that helps. Second, I just wanted to understand what is the physical occupancy trading. How has it increased over the years for the portfolio, and let’s say, for the IT tenants specifically speaking, if you have some numbers to share there?
Alok Aggarwal
Now physical occupancy is in now — almost now mid-80s, mid-80s to — it’s in mid-80s, somewhere. While occupancy, it’s mid-80s there. Like I said, some companies, they don’t have — they have only three days or four days. That’s the issue. But, otherwise, on the working days, it’s immediately.
Abhishek Khanna
And that would not be too different for the IT tenants as a whole?
Alok Aggarwal
This I was talking of IT tenants. For non-IT, you have to be in office, I mean, all five days.
Abhishek Khanna
Got it. And the last one that I had, how do you see demand from flex players in — across your portfolio, a lot of other REITs do specifically point out some of the top tenants being some of these flex players, how are you looking at that as a demand category, specifically speaking? Is that increasing in your portfolio? Just some broad sense on that. I understand I think you also have something within Brookfield, if I’m not mistaken, but just the broad sense.
Alok Aggarwal
Yes, yes. Fair point. Fair point. So our aim is to kind of be with tenants, capture them or whatever the demand they need. So we have our tech platform called co-work. And whenever tenants want spaces.
Amit Jain
So just to kind of give you numbers, in our REIT portfolio, we have over 2.6 lakh square feet of co-working space. Some of them leased up by co-working place, some of them we have kind of provided on a management fee model basis. And in this 2.6 lakh odd square feet, we are having an occupancy of 95%. So there are — the co-working space that we have in lease is currently at a very good occupancy.
And we are seeing some demand coming from the MOS, I mean, managed office space from tenants, in that we have an in-house player. We are able to kind of offer those kinds of services to our tenants as well. So going forward, we see some traction on that side also in our REIT portfolio, and we’ll be able to kind of get more tenants under the managed office model in our REIT portfolio.
Alok Aggarwal
Yeah. I mean I just want to — not let tenant go. So whether they want to do directly, they want to go through a flex player, we want to kind of get them into our portfolio and cater to their needs.
Abhishek Khanna
Sure. And this would be across geographies, I understand, no specific part of the portfolio where you’ll be seeing more demand from it, right, and NCR or Bombay for that matter of fact?
Alok Aggarwal
Across geographies, you’re right.
Abhishek Khanna
Correct. Okay, perfect. That is helpful. Thanks a lot.
Operator
Okay. Thank you. We’ll take our next question from the line of Sarvesh Gupta from Maximal Capital. Please go ahead.
Sarvesh Gupta
Good afternoon, sir. Sir, on Slide 16, you have explained the NPL space which is sort of decreasing.
Operator
Sarvesh, sorry to interrupt, can you use your handset mode, please?
Sarvesh Gupta
Yes. Sir, first question is on Slide #16. So this NPL spread expectations are coming down. So if you can explain that a little bit more because I think we have mentioned like 14%, 15% as we please.
Alok Aggarwal
So we just answered this question. And — I mean, just to kind of sum it up, yes, this is third-party estimates. We expect to do much better.
Sarvesh Gupta
Okay. And this 14%, 15% re-leasing spreads that you have got is on an aggregate what sort of tenure?
Amit Jain
On the re-leasing when we get 18% spread, then what sort of tenure do we lock in the spreads?
Alok Aggarwal
Yes. These are 9-year tenures. Mumbai could be five years, but typically they are 9-year tenure.
Sarvesh Gupta
So on an average, maybe 1%, 2% per year of re-leasing spreads were also captured additionally.
Unidentified Speaker
The previous lease of 9-year spread, that’s correct, yeah.
Alok Aggarwal
Yes, yes. That is correct, 1% to 2% per year, on top of the 5% growth.
Sarvesh Gupta
Yes, on top of the existing inflation, yes. And on the overall asset book now we have a sizable almost INR40,000-odd crores of asset value. So what sort of pipeline do you see over the next three to five years, where we can reach in terms of new assets as well as organic, inorganic acquisitions?
Alok Aggarwal
So look, I’ll just compare this to where this asset book used to be when we did the IPO of this company in ’21, it was about INR11,000 crores. Today, we’re managing about INR38,000 crores. Every year, you can say that we have added on an average in our four years of ownership or post-IPO ownership, we have added about INR7,500 crores on an average to this portfolio, right? So you can expect a similar run rate as we move along, probably better, if we can raise more money in the REIT, but at least that much will be our endeavor. So in three years’ time, you can be looking at INR60,000 crores REIT.
Sarvesh Gupta
Okay. Okay. On slide number 11, you have explained the pro forma sort of a DPU of INR25.4, but you also mentioned that you will be — in the first half, you will be distributing around similar to Q4, which is INR5.25. So by when do you expect to achieve these sort of stabilized numbers?
Alok Aggarwal
Yeah. So when you’re talking about INR25 kind of number, I think it should take about two, three years. That’s what we said next year achieving occupancy of tad lower than mid-90s and then crossing mid-90s. So in the next two to three years, we should achieve these numbers.
Sarvesh Gupta
But this year, on the same sort of an occupancy increase, your DPU growth was much higher, right? You had a 600 basis points of occupancy increase, which led to a much higher DPU growth. So what are you projecting for the next year as a whole? And why on a higher sort of an increase, we should not be getting that sort of a DPU growth that we saw this year?
Alok Aggarwal
So we grew 6% in occupancy last year and 10% in DPU terms. Again, Alok mentioned earlier in his remarks that we will try to be somewhere in the 93%, 94% spot. If we hit that number, that’s again 6 percentage points growth. That should again lead to a 10% increase in DPU. That will be our expectations. So we have 12% vacancy in the portfolio. We managed to lease all of it, then we should have a 20% growth in our DPU, which is what you see on the slide as well.
Sarvesh Gupta
Understood. Understood. Great. Thanks a lot, and all the best for the coming quarters.
Operator
Thank you. [Operator Instructions] The next question is from the line of Ankit Minocha from Adezi Ventures Family Office. Please go ahead.
Ankit Minocha
Yeah, hi. Good afternoon. So on the previous question only, you were talking about this INR25 DPU sometime in the future. Now assuming this is at peak occupancy, like you mentioned, what is the peak occupancy that you’ve seen in the past? I mean earlier, whenever you’ve seen kind of peak occupancy, has it gone up to — what levels have it usually gone up to?
Amit Jain
I think we have to talk asset-wise. I think it’s not fair to comment on a portfolio basis, but asset-wise, in most of the assets, we have — even portfolio basis, our peak occupancy 96% in ’17. And then in ’20, it was 96%, 2020. But asset-wise, we have gone to 99%, 98%, 100% as well.
Unidentified Speaker
Yes. Look, each of these assets in the past has seen a 99% to 100% at some point in the past. Just because the way these have been built, these are large-scale IT parks, rectangular floor plates, highly efficient. Many tenants sometimes want full building solutions. So there’s no structural vacancy. And as Alok said, each of these assets have had a period where they have touched 99% to 100% in the past. So everything goes very heavily in favor of demand. We can’t touch those numbers, but I think we are setting ourselves for a target of 97% to 98%, yes.
Alok Aggarwal
Yeah. Just one thing, when we achieved 96% in 2020, we had development in G1, which is Gurugram. We had development in N2, which is Noida. We had development in N1, which is again Noida. So now there is — just we have a development in Kolkata. There is no development. So also keep in mind that this 96% achieved was considering almost 2.5 million to three million square feet development happening at that point of time. And we can see it was in large part in under development or under construction building. With no development or very limited development in this portfolio, we are confident, and let’s see. I think, let’s see, how does it pan out, but we are confident of achieving high 90s.
Ankit Minocha
And if I look at what the current reasons where this number was kind of being pulled down, I think if I am correct G2 would be one aspect of it and maybe then — so could you just outline in which are the kind of assets which currently have lower occupancy figures? And what are the reasons for that? And what could be the potential triggers for that number to improve?
Alok Aggarwal
We discussed this question in detail, but let me just sum it up again. If you see, we have four assets, which we are expecting bulk of occupancy or re-lease to happen, of course, G1, G2, N2 and Powai. We have talked about asset-wise in detail. Given, again, very strong momentum, we have done 2 lakh square feet of non-SEZ leasing as well, so given — and very good pipeline. N2, the pipeline is good, while we are not being able to close non-SEZ last quarter, but we remain confident, the pipeline is strong. It should close.
Again, Powai, momentum is strong. We have been constantly losing — leasing space at much higher than the predicted number. Yes, G2 is a laggard, but we have pipelines, even we’re talking about very large occupiers. If that materializes, G2 could be sorted. But, otherwise, even a non-SEZ space is now available to lease. So that itself, we have a good pipeline. So G2 wise remains a laggard, but it should achieve our predicted numbers in terms of occupancy.
Amit Jain
And just a data point to add to what Alok said, look, if you just — this information is on Slide 34 of our presentation, right? If you just see what we did last year, just between G1, G2 and N2, we were able to add one million square feet of new leasing between these three assets. Today, as we stand, these three assets put together have about 2.5 million square feet of vacancy. But we just did what we did last year, the one million square feet itself can add in terms of occupancy almost about 4 percentage points in a single sort of year for us, and that would be our endeavor. Of course, G2 can be slightly slower than the other 2. But even last year, you would see G1 and N2 both did about 400,000 to 500,000 square feet each just in terms of new leasing.
Ankit Minocha
Right. Thanks a lot. And considering we are already in Q1 of ’26, I mean, are you guiding for DPU for FY’26 for the total year?
Amit Jain
We mentioned, Ankit, currently, we are not giving a guidance as such for the full year. What we are saying is that for the next one or two quarters, we would continue at that similar DPU of INR5.25. And maybe we’ll come back with the guidance in our next call once we see the momentum of leasing in the current quarter.
Ankit Minocha
Great. Thank you and all the best.
Operator
Thank you. [Operator Instructions]
Alok Aggarwal
So if — are there any — if there are no questions, we can conclude the call.
Operator
Sure, sir, please go ahead. There are no questions.
Alok Aggarwal
Okay. So thank you, everyone, for joining today’s call. We look forward to connecting with all of you next quarter. Thank you.
Operator
[Operator Closing Remarks]