Brookfield India Real Estate Trust · NSE:BIRET.RR
Brookfield India Real Estate Trust — FY2021 Earnings Presentation
43 slides from Brookfield India Real Estate Trust's earnings presentation, May 20, 2021
Slide 1: Brookfield India Real Estate Trust FY2021 Investor Update
Brookfield India Real Estate Trust F I N AN C I AL Y E AR 2 0 2 1 – I N V E S T O R U P D AT E M AY 2 0 , 2 0 2 1 CANDOR TECHSPACE K1, KOLKATA
Slide 2: Disclaimer
Disclaimer By reading this presentation (the “Presentation”), you agree to be bound by the following limitations: This Presentation is for information purposes only without regards to specific objectives, financial situations or needs of any particular person, and should not be disclosed, reproduced
Slide 3: Table of Contents
Table of Contents Overview and Highlights 4 Market Trends 14 Business Updates 19 Financial Updates 29 Inorganic Growth Pipeline 33 Appendix 37 3
Slide 4: Overview and Highlights
Overview and Highlights CANDOR TECHSPACE G2, GURUGRAM
Slide 5: Brookfield India Real Estate Trust
Brookfield India Real Estate Trust India’s first and only 100% institutionally managed REIT 14.0 MSF 10.3 MSF TOTAL AREA COMPLETED AREA Gurugram (4.0 MSF) Noida (2.8 MSF) 3.9 0.1 1.9 0.9 18% 38% 22% 4 91% Kolkata (5.7 MSF) OFFICE PARKS IN SAME-STORE OCCUPANCY(1) 3.1 2.7 GATEWAY MARKETS 22% Mumbai (1
Slide 6: Brookfield India Real Estate Trust (Cont'd.)
Brookfield India Real Estate Trust (Cont’d.) Strong inorganic growth pipeline through Identified Assets and ROFO Properties within the Brookfield Group IDENTIFIED ASSETS ROFO(1) PROPERTIES Gurugram (3.7 MSF) Noida (4.5 MSF) 8.3 MSF 6.7 MSF 3.7 0.1 2.9 1.6 LEASABLE AREA LEASABLE AREA Rs 86B Rs 104B G
Slide 7: IPO Highlights
IPO Highlights STRONG SPONSOR COMMITMENT BSE: 543261 | NSE: BIRET 54.4% 15.0 MSF / Rs 190B Post-IPO Stake Acquisition Pipeline LISTING DATE Feb 16, 2021 USE OF PROCEEDS(1) MILLIONS FRESH ISSUE SIZE Rs 38.0 Billion Repayment of Debt Rs 35,750 Issue Expenses and General Rs 2,250 Corporate Purposes MAI
Slide 8: High Quality Properties in Gateway Cities
High Quality Properties in Gateway Cities Our portfolio is at the centre of the technology growth story in India, with our occupiers running business-critical operations Mumbai’s only Private SEZ located in Powai (a walk-to-work modern township) Largest Office SEZ in CBD Gurugram KENSINGTON, POWAI,
Slide 9: Operating Resilience through COVID-19
Operating Resilience through COVID-19 While new leasing decisions have been delayed, existing occupiers continue to see value in retaining their spaces 99%+ 9% 78% 31% COLLECTIONS (1) AVG ESCALATION OCCUPIER MARK TO MARKET ACHIEVED ON 3.7 MSF RETENTION (3) HEADROOM AREA (2) Low density Implemented m
Slide 10: FY2021 Business Highlights
FY2021 Business Highlights Portfolio remained resilient in FY2021, maintaining a 91% Same-store Occupancy(1) and 99%+ rental collections • Collections of operating lease rentals remained robust at 99%+ 99%+ ~9% Collections Operating Lease Avg Escalation on • ~9% average escalation on 3.7 MSF leased
Slide 11: FY2021 Business Highlights (Cont'd.)
FY2021 Business Highlights (Cont’d.) Identified Assets achieved significant development progress. Our properties remained open to ensure business continuity for our occupiers, with elevated health and safety standards Identified 908,000 SF • Leased 102,000 SF in FY21; ~400,000 SF under advanced stag
Slide 12: FY2021 Financial Highlights
FY2021 Financial Highlights Financial metrics stayed resilient, backed by contractual arrangements with creditworthy counterparties OPERATING LEASE RENTALS NET OPERATING INCOME NDCF GUIDANCE(1) Rs 6.1 Billion Rs 6.5 Billion Rs 12.75 per unit 2.5% increase vs FY20 constant vs FY20 due to post- total
Slide 13: Doubling Tax-free Distributions
Doubling Tax-free Distributions In line with our thinking, we have taken steps to enhance the tax efficiency of our distributions and make it more appealing for a wider variety of investors FY22 NDCF FY22 NDCF G2+K1 OWNERSHIP AT IPO % TAX FREE, AT IPO % TAX FREE, POST CONVERSION 15% 30%+ 12% Compuls
Slide 14: Market Trends
Market Trends CANDOR TECHSPACE N1, NOIDA
Slide 15: Solid Services and Technology Sector Fundamentals in India
Solid Services and Technology Sector Fundamentals in India Significant cost and manpower advantages, coupled with accelerated digital transformation, will further propel the growth of technology sector in India INDIA’s IT-BPM REVENUE DIGITAL REVENUES # EMPLOYEES (USD BILLIONS) (% OF TOTAL) (MILLIONS
Slide 16: Technology Hiring Resuming for Top Multinationals
Technology Hiring Resuming for Top Multinationals Driven by strong demand and anticipation of order books, technology hiring has picked up in the last few months. With India being a direct beneficiary, we expect occupiers to return to office to house this growth as up-skilling and retention gain mor
Slide 17: Supply Dynamics Remain Highly Favorable in our Micromarkets
Supply Dynamics Remain Highly Favorable in our Micromarkets Our micro-markets represent 11% of India’s office stock, but only 6% of next 3 year supply forecast (totaling to 5 MSF) INDIA OFFICE - STOCK (MARCH 31, 2021) INDIA OFFICE – NEXT 3 YEAR SUPPLY TOTAL = 528 MSF TOTAL = 89 MSF Direct Direct Non
Slide 18: Demand Recovery has been Softened by the Second Wave
Demand Recovery has been Softened by the Second Wave After a significant pick-up in enquiries last quarter, we are beginning to experience a slowdown in decision making post the second-wave of COVID-19 KEY THEMES IN MEDIUM TERM RECOVERY NET ABSORPTION IN REIT MARKETS (MSF) • Relocation: from non-ins
Slide 19: Business Updates
Business Updates KENSINGTON, POWAI, MUMBAI
Slide 20: At the Forefront of Recovery
At the Forefront of Recovery With our fundamentals intact, we believe our assets will be at the forefront of the post pandemic recovery OPERATIONAL STABILITY INSTITUTIONAL QUALITY • Significantly Complete Portfolio • 100% institutionally managed • Deep Rooted Tenant Relationships • Brookfield Group
Slide 21: Significantly Complete and Stable Portfolio
Significantly Complete and Stable Portfolio 93% of gross asset value is in operating properties, which are 91% occupied on a same-store basis(1) with a long-dated WALE of 6.5 years Area ( in MSF) Leased Area Metrics In-place Asset Dev. Area # Office Same-store WALE Asset Operating Total Rent Value P
Slide 22: Deep Rooted Tenant Relationships
Deep Rooted Tenant Relationships Technology-led, high credit quality tenant roster, with an established track record of tenant expansion as the ‘landlord of choice’ in our markets SECTOR DIVERSIFICATION OF TENANTS TOP 10 TENANTS BY LEASED AREA Growth % Leased Tenant Sector # Parks since Area Others,
Slide 23: Institutional Quality Assets with Proven Outperformance
Institutional Quality Assets with Proven Outperformance Our high quality properties and experienced management have consistently delivered superior performance relative to the micro-markets DELIVERING FASTER LEASING RENT GROWTH SUPERIOR OCCUPANCY VIS-A-VIS MICRO-MARKETS % CAGR(1) %(2) 8.4% 98% 7.4%
Slide 24: New Leasing and Renewals
New Leasing and Renewals Aggregate 673,000 SF leased and renewed in FY21, achieving 17% re-leasing spreads TRACK RECORD IN NEW LEASING (MSF) FY21 LEASING SUMMARY Area (‘000 SF) New Leasing 122 2.3 Renewals / % of term expiries 551 / 54% Total Leasing / Renewals 673 Avg Re-leasing Spread(1) 17% NEW L
Slide 25: New Leasing and Renewals (Cont'd.)
New Leasing and Renewals (Cont’d.) Portfolio has a well staggered lease expiry profile and provides an opportunity to capture an attractive mark-to-market spread KEY HIGHLIGHTS LEASE EXPIRY SCHEDULE Area Expiring (MSF) Cumulative Expiry (% of Rentals) • Extended expiries: 401,000 SF of FY21 expiries
Slide 26: Development and Capex | N1 Amenity Block
Development and Capex | N1 Amenity Block Development work of N1 Amenity Block expected to complete by September 2021 CURRENT PROGRESS POST COMPLETION (RENDERING) 26
Slide 27: Development and Capex | K1 Amenities
Development and Capex | K1 Amenities Revamped the occupier amenities in Candor Techspace K1 RENOVATION OF LOBBY AREA REVAMPED HEALTH CLUB UPGRADED BANQUET HALL EXPANDED FOOD COURT 27
Slide 28: Development and Capex | Kensington Upgrades
Development and Capex | Kensington Upgrades Commencing planned upgrades in Kensington with best-in-class amenities LOBBY RENOVATION PODIUM LANDSCAPING NEW FOODCOURT RECREATIONAL AREA 28
Slide 29: Financial Updates
Financial Updates CANDOR TECHSPACE K1, KOLKATA
Slide 30: Value, Structure and Unitholding
Value, Structure and Unitholding UNITHOLDING PATTERN AS OF MARCH 31, 2021 MILLIONS PER UNIT MARCH 31, 2021 Gross Asset Value(1) Rs 114,808 Rs 379 Non- Less: Gross Debt(2) (21,015) (69) institutions, Add: Other Net Assets 2,071 7 16% Net Asset Value Rs 95,864 Rs 317 Sponsor Institutions, Group, 30% 5
Slide 31: Summary Balance Sheet
Summary Balance Sheet Our business is well-capitalized, backed by a strong balance sheet MILLIONS MARCH 31, 2021 Liabilities and Equity Total Equity Rs 82,028 Borrowings(1) 21,015 Security Deposits 3,730 Other Liabilities 3,017 Total Rs 109,790 Assets Investment Property Rs 100,180 Investment Proper
Slide 32: Capital Structure and Liquidity
Capital Structure and Liquidity Low leverage, long interest only period and undrawn credit lines provide us with ample liquidity. We are also evaluating the available 50bps+ headroom in borrowing costs HEADROOM IN BORROWING COSTS Rs 21.2B Rs 2.8B GROSS DEBT UNDRAWN COMMITTED FACILITY 7.15% 6.45% 4.9
Slide 33: Inorganic Growth Pipeline
Inorganic Growth Pipeline CANDOR TECHSPACE G2, GURUGRAM
Slide 34: Brookfield Group's Footprint in India
Brookfield Group’s Footprint in India Brookfield owns a 100% interest in a high quality pan-India office portfolio spanning 33 MSF CANDOR G1, GURUGRAM POWAI DISTRICT, MUMBAI ECOWORLD, BANGALORE CANDOR N2, NOIDA EQUINOX, MUMBAI ECOSPACE, BANGALORE CATEGORY IDENTIFIED ASSETS ROFO PROPERTIES OTHER BROO
Slide 35: Identified Assets Update
Identified Assets Update We have rights to acquire two complementary properties in Delhi NCR before Aug 2022. The ongoing construction program in both assets has achieved completion over the last year ON APR 30, 2021 G1 N2 ASSET VALUE BY STATUS (% OPERATING) Operating Area (MSF) 3.7 3.6(1) Mar 31, 2
Slide 36: Identified Assets Update (Cont'd.)
Identified Assets Update (Cont’d.) New area of 908,000 SF was delivered in FY21 and another 673,000 SF was delivered in April 2021. Balance 155,000 SF on track to be delivered by September 2021 N2 – TOWER 11 (673,000 SF) G1 – TOWER 8 & 8A (769,000 SF) 36
Slide 37: Appendix
Appendix CANDOR TECHSPACE N1, NOIDA
Slide 38: Detailed Lease Expiry Schedule
Detailed Lease Expiry Schedule IN-PLACE IN-PLACE AREA AREA % OF GROSS RENT AT % OF GROSS RENT AT YEAR / ASSET EXPIRING YEAR / ASSET EXPIRING RENTALS(1) EXPIRY(1) (RS RENTALS(1) EXPIRY (RS (‘000 SF) (‘000 SF) PSF) PSF)(1) FY21 Actuals FY24E Kensington 138 - Rs 79 Kensington 745 55% Rs 91 G2 544 - 74
Slide 39: Ongoing Capex and Upgrades
Ongoing Capex and Upgrades Rs 2,961M of capex projects underway across new tower developments and upgrades to existing towers. Capex including interest during construction to be financed through debt ESTIMATED PENDING COSTS ONGOING PROJECTS COMPLETION DATE (MILLIONS) Asset Upgrades/Tenant Improvemen
Slide 40: Property Income | Walkdown
Property Income | Walkdown MILLIONS FY21 FY20 KEY DRIVERS Income from Operating Lease • Rs 146 million / 2.5% YOY increase driven by contractual Rs 6,100 Rs 5,954 escalations, partially offset by new vacancies Rentals (OLR) • Rs 879 million decrease in CAM revenue (cost-plus contracts), driven as a
Slide 41: Property Income | Consolidation Details
Property Income | Consolidation Details INCOME FROM REVENUE FROM MILLIONS OPERATING LEASE NET OPERATING INCOME (NOI)(1) OPERATIONS RENTALS (OLR) FY21 FY20 FY21 FY20 FY21 % OLR FY20 % OLR Kensington Rs 1,464 Rs 1,488 Rs 1,592 Rs 1,616 Rs 1,333 91% Rs 1,313 88% G2 2,518 2,478 3,657 4,084 2,725 108% 2,
Slide 42: Research Coverage
Research Coverage RESEARCH HOUSE ANALYST EMAIL ID Bank of America Kunal Tayal Kunal.Tayal@bofa.com HSBC Bank Puneet Gulati PuneetGulati@hsbc.co.in ICICI Securities Adhidev Chattopadhyay Adhidev.Chattopadhyay@icicisecurities.com IIFL Mohit Agarwal Mohit.Agrawal@iiflcap.com JM Financial Manish Agrawal
Slide 43: Glossary
Glossary Gross Asset Value / Asset Value The market value as determined by the Valuer as of March 31, 2021 (Occupied Area + Completed Area under Letters of Intent) Committed Occupancy In % Completed Area Represents Committed Occupancy for areas where the occupancy certificate was received on Same-st
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