Embassy Office Parks REIT (EMBASSY) Earnings Call Transcript & Summary

Good evening, everyone. A very warm welcome to all for Embassy REIT's Fourth Quarter and Full Year FY 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Ms. Sakshi Garg, Head of Investor Relations for Embassy REIT. Ma'am, you may begin.

Thank you. Welcome to the fourth quarter and full year FY 2024 Earnings Call for Embassy REIT. Embassy REIT released its financial results for the quarter and full year ended March 31, 2024, a short while back. As is our standard practice, we have placed our financial statements, earnings presentation discussing our performance and a supplemental financial and operating data book in the Investors section of our website at www.embassyofficeparks.com. As always, we would like to inform you that management may make certain comments on this call that one could deem forward-looking statements. Please be advised that the REIT's actual results may differ from these statements. Embassy REIT does not guarantee these statements or results and is not obliged to update them at any time. Specifically any financial guidance and pro forma information that we provide on this call are management estimates based on certain assumptions and have not been subjected to any order to review or examination procedure and do not reflect the impact of any proposed acquisitions or fundraises. You are cautioned not to place undue reliance on such information and there can be no assurance that we'll be able to achieve the same. Joining me today are Aravind Maiya, our CEO; Abhishek Agrawal, our CFO; and Ritwik Bhattacharjee, our CIO. We'll start our brief remarks on our business and financial performance and then open the floor to questions. Over to you, Aravind.

Thank you, Sakshi. Good evening and thank you all for joining us on the call today. We recently celebrated our 5th anniversary as a listed REIT and I reflect back with pride as to what we have achieved in these years, notwithstanding a global pandemic that threatened the future of offices. Over these last 5 years, we grew our completed office portfolio by 47% to 36.5 million square feet, added 619 keys to our total business ecosystem, increased our in-place rent by 38% from INR 63 to INR 87 per square feet, expanded our occupier base from 165 to 255 leading companies and our investor base from 4,000 to over 91,000 today. All these efforts have translated to annualized returns of over 11% to our unitholders, including almost INR 9,900 crores in distributions. We are delighted to see the continued acceptance of this product class in India and have doubled our efforts to promote its further awareness by partnering with the Indian REIT Association. Coming to our annual results. FY '24 was an outstanding year with 8.1 million square feet of total leasing, 2.2 million square feet of new office deliveries and INR 7,200 crores of debt refinancing at leading rates, we surpassed our leasing guidance for the year and met our financial guidance. Abhishek will shortly take us through our next year's guidance numbers, but I'm pleased to announce that FY '25 is going to be a year of growth with expected year-over-year growth of 10% for NOI and 7% for DPU at the midpoint of our guidance range. On the macro front, global capability centers continue to lead the office space take up in India. As per recent reports, 85 subcenters were set up newly or expanded further in calendar year '23, taking up around 25 million square feet space and contributing to around 40% of the total office absorption in India. Not surprisingly, around 30% of these centers were set up in Bangalore as the city continue to lead the chart in terms of office take up globally. Even in this last quarter, Bangalore reported robust numbers with absorption outpacing supply and market trends recording a 3% to 5% year-over-year growth. With this backdrop, let me give you an annual wrap-up of our leasing performance. We leased our highest ever annual total of 8.1 million square feet in FY '24 and exceeded our original 6 million square feet leasing guidance by 35%. This 8.1 million square feet was signed across 99 deals and included 4.4 million square feet of new leases, 1.3 million square feet of renewals and 2.4 million square feet of precommits. GCCs contributed to over 65% of this total leasing, with the demand primarily driven by technology, BFSI, retail and health care sectors. With 8 new GCC entrants this year, we now have 86 GCCs in our occupier rosters of 255 corporates. Another highlight this year was the return of large deals. We signed 5 deals over 300,000 square feet during the year, highlighting the confidence many of these companies have regained regarding their India footprint. We also noted 3.3 million square feet of tenant exits during the year, primarily from IT services occupiers. Of this, we have already leased around 64% of the area vacated at 19% spreads and have a promising pipeline for the remainder. With this churn in the portfolio, while our occupancy levels dropped marginally during the year, our in-place rents went up by around 10%. We also met our occupancy guidance of 85% on the portfolio level and 87% on a same-store basis at year-end. Especially Bangalore and Mumbai are 2 core cities, which contribute to around 86% of REIT's value, continue to see an uptick in occupancy levels with multiple demand tailwinds. Our Bangalore portfolio is now at 91% occupancy and Mumbai at 99% levels with 2 properties in Mumbai 100% occupied. Our Pune and Noida markets continue to be soft with around 70% occupancy levels and will take some time -- some more time to increase. On the SEZ front, we had applied for de-notification of 1.1 million square feet under the old regulations across 2 buildings in Bangalore and Pune. We've already received the state NOC for the 0.8 million square feet building in Bangalore and are in the process of receiving the same for the 0.3 million square feet building in Pune. We expect to complete the de-notification process for these 2 buildings by next quarter. We had also applied for demarcation of 1.1 million square feet area across our Bangalore, Pune and Noida properties in January. We are in the process of computing the final duties payable as per the recent clarifications received from the Ministry of Commerce. We expect to complete the demarcation process for these spaces in the next 2 to 3 months. Moving to our development portfolio. We've received occupancy certificate for the 0.7 million square feet Tower 1 in Embassy Oxygen in Noida. This new tower is around 30% leased and has also been successfully converted to nonprocessing area as per the SEZ demarcation process. Our current development pipeline now totals 6.1 million square feet, all of which is in Bangalore. Of this, 4.7 million square feet is scheduled for delivery over the next 2 years and is already over 70% pre-leased along with expansion option for another 10%. This organic growth is a key lever of our NOI and DPU expansion over the next few years. Lastly, on our hotels. Our hotel portfolio continued to perform strongly with 64% occupancy in Q4, signifying a remarkable 900 basis points Q-on-Q uptick. With a 14% year-over-year ADR growth in FY '24, our hotels delivered an annual EBITDA of INR 184 crores, much ahead of our guidance. Finally, we have recently announced the proposed acquisition of Embassy Splendid TechZone in Chennai and a proposed unit capital raised to an institutional placement, subject to unitholder approval and other conditions. We will keep you updated as you progress on that. With this, let me now hand over to Abhishek for our financial update.

Thank you, Aravind, and good evening, everyone. Let me begin with the financial highlights for FY '24 and then provide some color on FY '25. We met our FY '24 guidance for NOI and DPU. Our revenue from operations stood at INR 3,685 crores and NOI at INR 2,982 crores, both up 8% year-on-year. This was mainly driven by new lease-up at high re-leasing spreads, contracted rent escalations and a ramp-up in our hotel business, which was primarily offset by the impact of exits in our office portfolio. Our commercial office margins of 84% and hotel margins of over 45% continue to lead the industry. We have declared Q4 distributions of INR 495 crores or INR 5.22 per unit, representing a 100% payout ratio. With this, our total distributions for the year amounted to INR 21.33 per unit, down 2% year-on-year. This was primarily led by an increase in our interest costs and other working capital changes, mainly relating to security deposit refunds on tenant exits. Moving to updates on our balance sheet. We are focused on active debt management and optimization of our interest costs. During the year, INR 4,100 crores of debt was due for maturity, which we successfully refinanced at an average rate of 8.2%. We also proactively refinanced an additional INR 3,100 crores of debt with low interest rate instruments and achieved 103 basis points pro forma interest savings. Visit these refinances through a combination of listed debentures, bank loans and first-time commercial paper, all of which had rates locked in for less than 2 years on an average. We followed this tactical approach to benefit from any turn in the rate cycle. With this, we also expanded our debt investor base with 9 new entrants, including large public sector banks, private pension funds, domestic mutual funds and insurers. Our net debt book now totals INR 16,000 crores, implying a 29% leverage ratio and a 7.8% interest cost. Also, less than 2% of our debt matures in the first half of the financial year, limiting any refinancing exposure. Moving to an update on our year-end portfolio valuation. As per the independent valuer's assessment, our GAV is at INR 55,000 crores and our NAV at INR 401.59 per unit. This increase was mainly driven by our new deliveries, ongoing development CapEx, improved hotel performance and an increase in the pre-leased rents as well as market rents for our Bangalore and Mumbai properties. Lastly, our outlook for FY '25. We expect our NOI to be in the range of INR 3,215 crores to INR 3,345 crores and our distributions to be in the range of INR 22.4 to INR 23.1 per unit. At midpoint, this guidance implies a 10% growth in NOI and a 7% growth in DPU on a year-on-year basis. Our outlook is based on the following key assumptions for the full year: we expect 5.4 million square feet of total leasing. This comprises 3.8 million square feet of new lease-up, including new building deliveries scheduled for the year; 0.6 million square feet of renewals; and 1 million square feet of precommitments. We have 2.2 million square feet of lease expiries due for FY '25, implying a total of 1.6 million square feet of likely exits during the year. We expect a year-end portfolio occupancy of 89%. However, this does not factor potential downside risk of any further portfolio optimization initiatives by an occupier in the IT services sector. We are confident of achieving contracted rent escalations of 13% on 7.7 million square feet leases during the year. We expect our hotel NOI to increase by around 10% year-on-year on the back of occupancy and ADR growth. Our Solar Park NOI may decline by around 20% year-on-year due to the revised government tariff. Finally, we expect a 15% to 18% year-on-year increase in our interest costs. This will be driven by the full year impact of refinancing, 2.2 million square feet of new deliveries in FY '24 and interest costs related to 2.5 million square feet of new deliveries scheduled for FY '25. Lastly, I want to clarify that this guidance excludes the impact of the proposed ESTZ acquisition as well as any associated fundraise. To date, we have always delivered on our guidance numbers. And going forward, our single most focus remains on delivering growth to our unitholders year after year. With this, let's now move to Q&A, please.

[Operator Instructions] The first question is from the line of Puneet Gulati from HSBC.

Congratulations on a good outlook. My first question is on the demarcation part. Is the final guideline now available in writing? And are you confident that there is no risk of delays because of elections, et cetera, you should be able to do demarcate the area within a quarter?

You want to finish the second question, Puneet?

Yes. Second is on the leasing guidance of 5.4. How should we think of it? Will it likely be backward-ended or it is likely to be evenly spread out throughout the year?

Okay, sure. I'll let Abhishek take the first and then I'll take the second one.

Yes. So, Puneet, on the demarcation, there was some clarity, which was required on how to compute the duty. Now the recent instruction that we have received, I think we have a landing of how to compute the duty. With this, we expect that for the buildings it should be around, as we said, INR 400 per square feet and an additional on the common area infra, which should be around INR 42 to INR 50 per square foot. We don't think there should be any delay now. We think now it should be 2 to 3 months because it is the first time that they are doing and post that it should be streamlined.

So this notification is now published?

Yes. It came about 10 days back, Puneet, so it's out there in public domain, the final FAQ which gives all these answers. Yes. Just moving to your second question on leasing, it has 3 components. It's about 3.8 million square feet of new lease-up, including the deliveries, which are getting done this year. It had about 1 million square feet of precommitment and 0.6 of renewals. And in terms of timing, I would say probably the precommitment would be a little front-ended and the new lease up of 3.8 will be more or less even through the year. That's the way we are looking at it as of now in the guidance.

Right. So basically, if you had to think about it, there will be on your 5.6 million square feet current vacant area about 1.4 million square feet is likely to be expiring and 2.3 million square feet should be new area addition and roughly for the existing portfolio, only 4.4 million square feet should be new leases. So that should still leave around 5 million square feet area vacant at the end of the year.

Just there's some clarifications, 5.6 million square feet is correct. 1.6 million square feet is the expected exits during the year and 2.5 million square feet is the expected completions. Of this 2.5 million square feet, around 1.2 million square feet plus, 1.8 million square feet is already pre-leased. So it has only 0.7 million square feet left to be leased, right, which we kind of have a factor that we will lease because we have prime asset Embassy TechVillage. So that's already included in the 3.8 million new lease-up number, which we've given.

Sorry, this 1.8 million square feet is already pre-leased or will it...

Yes. 1.8 million square feet is already pre-leased, which is nothing but 1.2 million square feet of pre-leased done in Parcel 8 of Embassy TechVillage and 0.6 million is M3 Block B, which is fully pre-leased, which means what is left is around 0.7 million square feet in Parcel 8 of ETV, which get delivered in phases between October to December '24. And we believe in our guidance, the balance 0.7 million square feet also gets leased up by March '25. And this 0.7 million square feet is a part of 3.8 million square feet.

Is a part of 5.4 million square feet, right, which is the full lease-up?

Yes, part of 3.8 million square feet and part of 5.4 million square feet. And the numbers of which have been taken to reach that 89% year-end occupancy. What remains is a vacant area at March '25 is around 4.5 million.

The next question is from Mohit Agrawal from IIFL.

Congratulations on giving good outlook and guidance. My first question is on the new leasing 3.8 million square feet guidance. If you could give some color on which are the assets where this is coming from or if you could give Bangalore, non-Bangalore? And does it include the entire 1.1 million square feet area that we had applied for demarcation? So some color on that will be useful.

Anything else, Mohit, or this is the only question?

My second question is basically on the 2.2 million square feet of expiries next year. So we've seen this in the last year that from the time that initially the expiries have gone up during the year, so what gives you the confidence that I think Abhishek did mention that there is a risk of expiries in that 89%. But what is the kind of visibility you are seeing? Are you in touch with your tenants and are they giving you confidence that this 2.2 million expiries won't substantially change during the year?

Sure. First is on this 3.8 million square feet. I mean when you look at it, if I can go city by city, Mumbai, there's nothing left for us to lease because it's 99% occupied. The big city is Bangalore, which year-end was 91% occupancy, but a substantial portion of the 1.6 million of exits is in Bangalore and also a large portion of that is in Manyata. So obviously, a large portion of this leasing guidance comes from Bangalore and also from Manyata. I mean, roughly, you could say almost 60% of the leasing guidance is coming from Bangalore and in that also a substantial majority in Manyata. And then the balance is a little bit in Pune, around 1 million square feet in Pune and around 500,000 in Noida. That's the broad split we are looking at of the leasing guidance. That's the first part. And second, in terms of expiries, I think that's a fair question considering what's happened in FY '24. But the way we're looking at it is if you see FY '24, a significant portion of expiries, Mohit, was coming from IT services. We had big exits in the form of Cognizant, TCS and Accenture. Now as we speak, IT services in the entire portfolio is just around 11%. So a lot of exits have already happened. And the one, I would say, from a commercial real estate point of view, one sector which is not necessarily been doing well for us is IT services. So the risk has already become minimal. Having said that, Abhishek has rightly called out one specific tenant where it's still a little uncertain and could be a downside risk for us. But beyond that, while we've seen this happen over the last say, 5, 6, 7 years, there will always be some additional expiries coming in, but we don't expect it to be substantial. That's the sense we have as we speak.

Okay. Can you quantify the downside? Maybe I missed that number, but the one tenant that you're talking about.

We've not really quantified that, Mohit, but the way I would like to answer that is if this tenant were to take a different decision during the course of the year, we believe we have factored the downside risk in terms of distributions already in the range. But from an occupancy point of view, it could have an implication of 1.5% to 2% downside.

Okay. This is very clear. Just one last question. This is for Abhishek. So SEBI, in December, SEBI had put out a revised NDCF framework and that now kicks in from 1st of April 2024. Just trying to understand that firstly, has that been incorporated in our estimates? And also, what kind of impact, if any, it would have had? And will it make the distribution on a quarter-on-quarter basis more volatile?

So Mohit, 2 things. One, we have factored that because actually, there is no impact. The revised NDCF that we have computed is based on the revised NDCF format only while completing further guidance. It will not make any volatility come in because of just change of the presentation, the way SEBI has put out. For us, it's just a change of presentation. We don't start with the PAT, we start with the CFO.

The next question is from Kunal Tayal from Bank of America.

I have 3 questions, if the third one is allowed. The first one is just looking at your walk down from NOI growth of 10% to about 7% at a DPU level, I get the interest expense part of it, but I was just wondering that as security deposits worked against distribution in the past 2 years when your occupancy was going down, should it not have worked in favor now when it is expected to go up during FY '25? So that's sort of the first question. Second, I just wanted to get some more color on this annual escalation contributing to about 3% growth this year, and we were looking at data that even next 2 or 3 years, it's more in the hand of 3%. So I mean, we've often thought of it as being in the range of 4.5%, 5%. Any peculiar reasons as to why it's looking at 3% for the next few years? And then finally, just on that NOI range of 7.5% to 12.5%. Fair to assume that the low end would account for the exit risk related to the IT services tenant you highlighted?

So Kunal, I'll take these questions one by one. On the escalations, which you're talking about, I think the way it is some of these tenants have 5% escalation every year, and most of the tenants standard 15% every year. So that pulls down the average to around 13% to 14% every year. But if you see effectively, it is 15% largely. On the first question, which you had, which is, I think, related to guidance where the NOI to NDCF, NOI is basically increasing by 10%, while NDCF is not. The reason, yes, what you rightly said, there's a big impact of interest, which is coming out, as I mentioned, because of the deliveries and the full year impact of past deliveries and refinancing. Also, there is a lot of noncash item -- noncash NOI, which will also get generated during the next year because of all the leasing guidance that we provided. Also, this current year, we had a huge amount of other income, which came out because of insurance receipt and the receipt of scrap sales income, which is not expected. Because this is one-off, which is not expected to be as high next year. On the NOI range for the guidance, I think we have considered in the down -- in the lower end, we have considered the impact of that one tenant if it exists fully.

And just Kunal, if I can expand a little bit more on the first one. What's happening is, yes, the security deposits is playing out positively, but there's also a lot of straight lined noncash revenue which is included in the 10% upside, which does not necessarily flow down to distribution for FY '25, but will flow to '26. So that kind of somewhere offsets each other. That's why you don't see the full impact going through.

Got it. Clear. Just if I might, there was one follow-up on the escalation split. I get the difference between 5% annual and 15% over 3 years, but if this is happening for 3 to 4 years on the trout, that feels a bit weird. I mean, do I understand if 1 year, it is more like 3% and next year, it goes up to 6%. So -- or is it more a case that we just had one of these prior years where the big escalations came in and in the next few years is more like catch-up now?

We can come back on this, Kunal. We don't see any exceptions to our 15% escalation. I mean there are just very, very few where it might be a little lower, but we can probably pick this offline.

The next question is from Praveen Choudhary from Morgan Stanley.

I have 2 questions. One was about EBITDA margin, which went up from 79% to 81% between FY '23 and FY '24. I just wanted to understand, as you continue to grow, how high can this go or have we reached the peak? That's the first question. The second question was this 10% and 7% guidance that you have given in NOI and DPU growth, if I were to add the Chennai acquisition and QIP for which you had presented before that it is 2.9% to 2.2% accretive, would it change the number from 10 and 7 to let's say, 13 and 10 or not really?

Praveen, I'll take the second one first. We are constrained from answering that, considering all the things which we're working on. So probably I'll just skip that question. And I'll direct Abhishek to answer the first one on the EBITDA margin. Abhishek, over to you.

Yes. So Praveen, what has actually happened is last year, we had certain expenses, which we had done during the last quarter for the hotels that's the reason why EBITDA margin was 79% last year and 81% this year. I think the sustainable which we expect is between 80% to 81% only.

Understood. Understood. If I may add one more question. You were explaining this question between 10% and 7% difference. For FY '24 Q4, just for Q4 specifically, will you be able to give us a little bit more the difference between 13% NOI growth and a 7% decline in DPU growth? What portion of that decline was because of interest expense, which we understand? And what were some of the other things that you mentioned, insurance, et cetera?

Yes. So Praveen, there are a couple of reasons where due to which this decline. One is obviously, the interest. Second was the other income, which is scrap income and insurance income, which was again lower by INR 10 crores, INR 12 crores. And the third component was the working capital change, which was significantly lower this year, but this quarter also because of the security deposit payment.

And also, there were some collections last year, right, Abhishek, which happened one time.

Yes. Because of which the working capital went down. And the last component around INR 15 crores was because of the noncash NOI.

Understood. I mean again, the question was asked before, but we are still wondering some of these things should reverse except for interest expense, hopefully, that should have helped in FY '25 or FY '26, if it was [Technical Difficulty].

Praveen, sorry, you're barely audible.

I'm sorry. I was just saying this question was asked before, but some of these things that we saw in fourth quarter, which declined versus FY '23, some of that will reverse. And I'm just wondering from a quarterly perspective or half yearly perspective or annual perspective, which year or quarter in FY '25 or FY '26, we could see the benefit of DPU versus NOI?

So the answer to that, Praveen is we are already seeing the benefit of that in FY '25, where because of all the lease-ups done last year, including pre-leasing, plus the lease-ups done later part of the year and the guided lease-up for FY '25, all of which will lead to positive working capital in the form of security deposit. All of that is baked in already. Having said, there are 2 negatives in the FY '25 guidance is a large part of it is because of interest where Abhishek has said that the interest will increase by 15% to 18%; 2 reasons, rate increases as well as deliveries. And second is a significant portion of FY '25 lease-ups will not result in cash revenue next year, right? That's somewhere kind of becomes much smaller cash increase in NOI. So just to answer it in 1 line again, we already -- the guidance already bakes in the positive working capital in FY '25.

Yes. That's very clear. And I'm sorry that we are asking the same question because they are key questions. So thank you for explaining it.

No problem. No problem.

The next question is from Pritesh Sheth from Motilal Oswal.

Just clarification on the new leasing part, 3.8 million square feet. Does that include a full new development that are coming up, which is 2.5 million square feet or only the unleased portion, which is where we are confident that we would be able to lease that in this year itself?

So why don't I loop in Amit Shetty, our Head of Leasing over here to answer this question. Amit, over to you.

Yes. I mean the 3.8 million square feet is -- the answer is yes.

So it includes 2.5 million square feet full that is coming up for delivery this year?

Correct.

Okay. And second, again, on the NOI to NDCF flow, how much working capital change, whatever positive-negative you would have assumed in that number, if you can quantify that for me?

We'll skip quantifying that exact number, Pritesh.

Okay. And on the interest part, that 18% kind of increase that has been assumed, you have mentioned about 2 components. One is interest rate increase. Does that also include the refinancing that we'll do in the second half, starting of the second half this year of INR 2,000-odd crore refinance that is due?

Yes, Pritesh. We have included that also. So it includes the full year impact of refinancing, which we did last year; the impact of recycling, which we will do in the next year; the full year impact of deliveries, which we had done during the last year; and the impact of deliveries, which we will do in FY '25. So all 4 impacts considered.

Sure. And part of your capital raise that you will be doing is also to repay some of the debt, right? So if that happens, whether that interest benefit is being considered in this number or no, right?

No, Pritesh. As I mentioned in my prepared remarks, this guidance doesn't take any impact of any ESTZ acquisition or fundraises.

The next question is from the line of Piyush Mittal from Kotak Alternate Asset Managers Limited.

Congratulations on the results. I have 2 questions. The first one on the acquisition that we're doing. For the development piece, I understand we're expecting a 10% yield on the asset, the under construction piece. Similarly, when we have done the acquisition of Embassy Business Hub last year, we had done the acquisition at 12% yield on cost for the under construction piece. So first question is around -- just wanted to understand why are we valuing them at different yields? That's number one. And number two is, from an equity fundraise standpoint, how do we evaluate between various avenues that we may have, say, a rights issue or QIP? How do we choose between what we want to go ahead with?

Yes, let me -- it's Ritwik. Let me take the second one first. The only actual real avenue available for us right now from an equity perspective is QIP. You could think about also potentially doing a prep. But really, I think at this point in time, given where our stock is, given the re-rating in the stock price and the fact that we have a public float, we thought it was just in our interest to go out there and continue to expand the free float to a level, which allows sort of new -- other sort of pedigree blue-chip investors to also take advantage alongside our existing holders. So the capital markets, like I've always said, continue to be -- continue to evolve for us. I don't think sort of a rights issue at this point in time has the same sort of cash it does maybe in other jurisdictions. So that's not an avenue that we really were looking to explore. So I think the QIP route was probably the best one. Secondly, I think just on yields on cost between Chennai and Hub, I think, a, they're different markets, there's different, obviously, sort of construction costs as well as the rents in there. So I think at this point in time, given that we are looking at Chennai, we have sort of 61% off sort of the asset by value, but we take on the whole construction cost, that rent should have obviously come -- the yield on cost number sort of just tops out at roughly sort of 10% at this point.

And just one additional point on that is Hub was, you can say, a little shorter construction time frame versus S&Ps a little longer, so the IDC also plays a part in the yield on cost.

The next question is from the line of Abhinav Sinha from Jefferies India.

Sir, in the beginning, you alluded to some improvement in rentals in Bangalore. So can you slightly elaborate on that? And are we expecting this trend to strengthen in FY '25 or what are you seeing on ground there?

This is Amit. So the rentals in Bangalore is growing stronger over the last 4 quarters, if I have to say. The rentals, especially in micro markets that we own and operate are seeing upwards of about 5% to 8% year-on-year. Also, the relevant supply in Bangalore is also shrinking given some of the larger deals that have been completed in the marketplace and also the fact that some of the developers are moving towards resi given the high resi demand in the city as well. So this kind of puts us in a very, very strong position on the rental side.

And sir, similarly, for Manyata and ETV when you are doing these precommitments, particularly for Manyata, how far are we above the market?

So typically, we are getting about anywhere between 5% to 8% above market as a premium.

Okay. So we are leasing slightly north of INR 100 there, roughly, today?

Yes, yes, yes.

Okay. Okay. I think that's helpful. Sir, secondly, a quick question on the transaction, which we are looking at, what are the time lines if you can help us with that now for both the acquisition as well as the follow-on?

Well, we put out the EM notice on April 6. We are doing the unitholder vote on Monday, which is April 29. And then really, I think the fundraise is a factor of sort of market conditions and going out there and seeing what's optimal post that what's an appropriate period between unitholder board and us actually executing this. So think about something we've got sort of close to sort of a few weeks after the unitholder board to do this.

And the asset acquisition is simultaneous or that will take some more time?

No, we'd effectively look to close everything by pretty much in a couple of months from now.

Ladies and gentlemen, we will take that as the last question. On behalf of Embassy REIT, that concludes this conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.