Mindspace Business Parks REIT Q3 FY22 Earnings Conference Call Insights

Key highlights from Mindspace Business Parks REIT (MINDSPACE) Q3 FY22 Earnings Concall

Q&A Highlights:

• Adhidev Chattopadhyay from ICICI asked about the early re-leasing of almost 0.5 million square feet, if it’s initiated by the tenants. Vinod Rohira, CEO said that it’s a 10-plus years old client and wanted to renew early. The company got the mark-to-market rents from this tenant, which is a win-win for both.

• Adhidev Chattopadhyay from ICICI also asked about the releasing spread achieved across the deals and if the company is expecting many more early releasing to happen. Vinod Rohira, CEO replied that it’s 28%. On early releasing, the company added that it’s part and parcel of business.

• Adhidev Chattopadhyay from ICICI asked about the FY23 expiries and how confident is the company of retaining considering the improved environment. Vinod Rohira, CEO said the company has visibility of 60%-odd of renewal clarity from the 1.08-odd area.

• Atul Tiwari from Citigroup asked about the timeline to complete or evaluate the ROFO deal. Preeti Chheda, CFO said the company just got the Board approval to start the evaluation. It’s between now and the next quarter is when the company will be evaluating and then taking it back to the Board.

• Rahul Marathe from ICICI asked about the valuation of the 43 acres deal at Pocharam. Preeti Chheda, CFO replied that the valuation is at INR80 crore.

• Shashank Savla from Somerset Capital asked about the mark-to-market potential, which has been gradually been declining for last six quarters from 17% to now 7%. Vinod Rohira, CEO said the mark-to-market was in line with the estimates the company had given forward in terms of the broad rents MINDSPACE was hoping to achieve. As the markets are firming up MINDSPACE is seeing better opportunity going upwards from there.

• Sameer Baisiwala from Morgan Stanley enquired about the ROFO asset and how does the company plan to fund that. Preeti Chheda, CFO answered that the entire structure is something which MINDSPACE will start working on and evaluating. One form of this acquisition could also be issuing of units of the repurchases of the SPV coming in. So that also could be one probability in which case the company may not need any capital for the acquisitions. So that’s something still under evaluation.

• Sameer Baisiwala from Morgan Stanley asked about the demand in Airoli. Vinod Rohira, CEO replied that from an Airoli perspective, the company is seeing within the non-SEZ space, demand picking up steadily. MIDSPACE has done much more than it had envisaged at the beginning of the year.

• Sameer Baisiwala from Morgan Stanley also asked that in the next 2 years if the steady state occupancy should be expected at 97%, 98%. Vinod Rohira, CEO replied that the company hopes for that number.

• Mohit Agrawal from IIFL asked about the FY23 distribution and the growth outlook. Preeti Chheda, CFO replied that the company cannot put a number but directionally, there should definitely be a growth in the distribution, given that the rentals of those leasing should start flowing in the coming quarters.

• Adhidev Chattopadhyay from ICICI asked that in the Gigaplex asset, the current occupancy is around 60%-odd, whereas the committed occupancy 67%, so when does this gap get breached. Preeti Chheda, CFO replied that it generally takes about 4 to 6 months for rent to start, so that’s the time line the company is looking at.