Prestige Estates Projects Limited (PRESTIGE) Earnings Call Transcript & Summary

Thank you, Steve. Good afternoon, everyone, and a warm welcome to the 4Q Earnings Call of Prestige Estates. From the management, we have Mr. Razack, Chairman and Managing Director; Mr. Narayana, the CEO; and Mr. Sarma, the Chief Financial Officer. Without taking too much time, I will just hand over the phone to Mr. Razack for his opening remarks, post which we'll open the floor for Q&A. Thank you, and over to you, sir.

Good afternoon to all. It's a pleasure to be with all of you, and thank you for joining this call. Yes, we are going through very, very, very difficult times which we haven't ever seen in our lives. And -- but we have to steer through these also. And we have to stay positive. But today, positive is also a bad word. However, mentally, we need to stay positive. Physically, we can be negative. So that's the balance we need to do. And I believe that as long as we keep doing what we are doing, and I think we can achieve results. This year, as a whole, we have stopped short from giving any guidances because we really can't predict what's going to happen the next day. So -- but at the same time, we are taking each day as it comes. And Bangalore especially has performed well in the last 3 weeks, which is very heartening for us. And the other cities also should pick up where Hyderabad, we don't have much inventory. But however, the only city that we see a lot of traction is coming from Bangalore alone. And fairly decent numbers are coming from Bangalore. We will -- I'll update you as we go along in the Q&A. You've all seen our numbers, you've seen everything else. Actually, the team is also working very, very hard, and they are doing what they're supposed to do. And the other thing is during the lockdown period, a lot of activity was done by our teams in terms of keeping our communities that are living in our projects safe, proper service was given to them, apart from our CSR efforts through Prestige Foundation to see that we provided rations to all those laborers who were in their camps, to see that medically they were checked up. Apart from the community itself, we have distributed a lot of ration kits as well as meals. We did something like about almost 2.5 million-plus meals have been done during that period. And it's been gratifying that everybody from the company has really been involved in it. And it's one chance that we also got to give back to the people who deserve. And I believe, again, as we go on, it has to be something that we need to look at in a different way. Of course, there are different asset classes and each asset class that we are involved in, has a different total sort of stress point. But we'll take the questions as they come, and we'll be more than happy to answer you. Of course, during the quarter, that is the March quarter, we have done some very good sales. I'll ask Venkat to update on the operational performance for the quarter.

Hi, everyone. Good afternoon, and thanks for taking the time out to be on our Post Results Conference Call of Prestige Estates. As Chairman said, it's been testing times, difficult times across all industries and for the economy...

Across the globe.

Across the globe and the entire economy as a whole. But things are slowly coming back to track in Bangalore. And we hope you and your families are safe and healthy. Let me quickly take you through the operational highlights of Q4 and financial year as a whole, and also the key highlights in terms of financial numbers and post which we can open up for the Q&A. So the quarter that have gone by, we've registered presales of over INR 1,200 crores, INR 1,208 crores to be precise. And we collected INR 1,338 crores of money. This is in addition to the rental and the hospitality income that we had during that quarter. And the overall collection for the year have been very good as well. We launched around 7.4 million square foot of projects, and we completed 2.56 million square foot of projects. The projects that we have launched are: Finsbury Park, Prestige Sky Tech in Hyderabad. It's a commercial development. Finsbury Park is affordable housing under HDFC platform. This is the first project that we've launched under HDFC platform, and the other one is getting ready, should get launched soon, that is Prestige Smart City. These are the 2 transactions that we have done under that platform so far, and there are quite a few that we are evaluating. And in terms of completions, we had one block of Cessna Business Park, 0.7 million getting done. And Star Tech 1.79 million square foot. I'm happy to share that with this property, almost 50% of it just got leased to Accenture. Given these times, that will be the good news...

Signed the lease deed.

Yes, we've signed the lease deed and the documentation is all completed. And the other project that we completed is the Prestige Phoenix that is in Hyderabad. So overall, if you look at the year as a whole, operationally, our presales are at INR 4,500 crores. These are the highest presales that we have done in last 4 years. And the collections are at INR 4,675 crores. And launches for the year as a whole were 17 million square foot, and the completions were around 19.32 million square foot. So now moving on to the operational performance -- from operational performance to the financial performance of the company. For the quarter that has gone by, so we had total revenue of INR 2,000 crores and EBITDA at 27% at INR 534 crores and PAT of INR 51 crores at around 2.55%, 3%, almost close to. And year as a whole, the total revenue stood at INR 8,243 crores, probably highest revenue that we have ever booked since incorporation. And EBITDA of INR 2,474 crore, 30%. And PAT of INR 548 crores at 7%. So these are the financial highlights. Though this year, given the uncertainty, we may not be able to guide you in terms of operationally what is going to happen, but the last year, we had given guidance. That guidance versus achieved if you see in our presentation, Slide #12. So presales guidance, we're at 91% of what we had guided. And collections were at 104%, launches were at 171% of what we guided. Completions were almost double. We brought down debt to equity to the capital raised, as you are aware, in the Q4 to 1.46. The leasing has been at around 74%. The rentals, exit rentals have crossed INR 1,000 crores coming from office and retail. We had guided for INR 952,000 crores, we are at 1,049 crores. And turnover has been substantially high. Overall, FY '20 has been good year, and we crossed some benchmarks in terms of presales being highest in the last 5 years, turnover being highest ever, and exit rentals crossing INR 1,000 crores and all that. And lot of projects have just now got the approvals, including RERA, in different, different cities. We may -- depending upon how situation is going to be, how things are going to improve, we will have launches in Hyderabad, in Bangalore, in Goa, Mumbai and NCR. We're almost getting ready with everything that is required for the launch of projects. In fact, as we speak today, today, we have pre-launch of a project.

Prestige Primrose Hills.

Prestige Primrose Hills. Again, affordable housing project at Kanakapura Road. So we are gearing up internally using this time to plan things better, introspect and directionally get everything right and all of that. But as we mentioned, as the Chairman mentioned, we need to see through this phase, these difficult times. So -- and also, a lot of you have been off record speaking to me about the labor issues and all of that. Yes, there are a lot of laborers that -- who work in Bangalore and other cities that we are present and come from Uttar Pradesh, Jharkhand, West Bengal, Orissa and all that. Yes, they had gone back. But slowly, slowly those laborers also are now coming back to work in batches. And hopefully, in the next couple of months, the construction activity also should be back to where it used to be pre-COVID days. Let's hope and pray that the -- this will be over sooner and wish all of you to stay safe and healthy and take care. With this opening remarks, we can open the forum for the question and answers.

[Operator Instructions] The first question is from the line of Adhidev Chattopadhyay from ICICI Securities.

My first question is on our annuity business across our rental assets in the offices and malls. Could you just tell us how the collections have been post March onwards? And what percentages have you been collecting? Obviously, malls have been more impacted as we understand. And especially, in malls, where our debt-to-EBITDA cover, if I look at your Slide 14, our debt-to-EBITDA cover is around 7x already in the malls. I understand you've taken a moratorium. So can you just also explain to us how your lenders are looking at the LRDs? And will they be refigured or revoked?

Okay. Now as far as office is concerned, I think we've collected almost 98% -- or I would say, 98% of what is due to us. And even the balance also is all under discussion. And I think almost everything or 100% will be collected as on the office front. Okay. Wherever there were some new leases and the tenant hadn't even taken over the -- started the work, they have requested for some pushback on the rent start date, which we have done. So -- but if you work that out, we are still very well in position. Like Venkat really said, now we had signed a large transaction with Accenture, but the property was handed over and the lease deed itself has been signed, even they requested for a huge pushback, which we did not agree. And finally, the rent itself will start yielding from the 1st of August. And that's a month from today. And it's a lease, which is a confirmed lease with a 2-year lock-in for INR 6,60,000. So almost INR 6 crores is the rent. And the balance area, which they wanted on hard option. Probably, they'll exercise it or we may even discourage them from keeping the hard option. And then we'll -- we have got some other customers who we are talking to, and that will be leased out fully. So that's the office front, which is, as of today, as of now, if things don't get worse, if the lockdown doesn't continue for too long, and people start going back to work and -- now see, in Bangalore infections are on the increase last 3 days. So that's a cause for concern. Of course, comparing it to other metro cities, we are far better off. But we never know what type of decisions, what type of knee jerk reaction state government also will take. So it's very difficult for me to commit anything on that. But if things stabilize, things go on, I think we should not have any stress on the office front. On the retail, yes, we did give a waiver of rent right from day 1. We said from the day you are locked up till the day we open up, there's no rent. So that is -- that's actually like a write-off. And the only thing that the tenants paid and the retailers paid during the lockdown period was the CAM charges, so there was no outflow. There was only the inflow as far as minimum guarantee and revenue share did not come because anyway, there was no trading at all. Now going forward, we've opened on June 4 the malls in Karnataka and one in Hyderabad. Tamil Nadu is still shut. The one in Udaipur is still -- is open. We are having footfalls around 30% to 40% max as far as footfalls are concerned, even trading is also almost the same as compared on the same period last year. Now retailers are also feeling the pinch, but we are saying that, listen, we gave you a 100% waiver during March to June. Now please do not come back to us for anything else. But at the same time, we need to be sensitive. We need to build up relationships. Another good part in our malls is, the moment we opened up, except for cinema and the gaming, everything else is open, maybe a couple of retailers would be shut, but all of them, as of yesterday are fully open, and they are trading. Now how much trading happens as we go along, we need to see because, again, it's all about the safety, fear factor. We've kept our malls completely sanitized. We've ensured that there's 100% safety, visitors to our mall don't get infected. We've ensured that the staff who are operating the mall are fully protected, and they are not a source for infecting the visitors. So that's been taken care of, and that's an assurance and reassurance to the visitors to the mall. Having said that, I cannot predict what is going to happen in the next week and the next week. But as of now, things are stable, like Tamil Nadu, Chennai, we haven't opened the mall as yet. Tamil Nadu is under lockdown till the end of June. And even if it opens up in July, we'll have to see what steps have to be taken as far as the directions of the government. And there will be some rental readjustments in terms of maybe we'll have to do part minimum guarantee, part rev share, maybe some increase in the percentage of rev share. These are all work in progress. It'll keep happening. We'll come to know about it maximum by -- if not July end, by mid-August, for sure, we'll know where we are. But the retailers, at least, have opened the stores, and they are trading. That's the positive part. And of course, hospitality, you know what the story is. We have been shut in the sense there's no travel, so there can't be any occupancy.

Sure, sir. Sir, just on the -- follow-on the -- how the bankers are looking at LRDs, especially in the retail, like do we need to top-up more loans? Or like how -- or do you -- or will we infuse equity to cover any of the losses in the lockdown period?

No, no. It's nothing. It's actually, it's -- there has been a moratorium given by RBI for 3 plus 3, 6 months. And obviously, when there's no income coming in -- but having said that, Chennai, we had some cash balances. So what we have done is, we paid off all -- April, May and June, we paid off the EMI. And because wherever there is cash balance available, we do not want to take advantage. And -- but wherever moratoriums are available and where cash flows are not coming, it didn't make sense to bring money from somewhere else and pump it here. So the 6 months moratorium is there, by which time, I think we should have enough cash in the system. And wherever that 6 months, obviously, will be added back to the capital that is the principle of the borrowing. So it's -- in effect, what it means is the repayment instead of having completed in an X period will happen in X plus 6 months period. This thing will just go up. That's all.

Sure. Sure, sir. Now -- second question is on our CapEx and BD plan. So again, for Slide 14, we have mentioned, we have spent around roughly INR 2,300 crores on ongoing CapEx projects. So what would be the pending CapEx on these projects as of March '20? And are we going to now slow down our incremental CapEx? Or are we still going ahead with those plans, including properties like the Delhi Aerocity, the 900-plus keys hotel, and some -- a few projects which you have signed in Mumbai?

See, Mumbai, nothing has started as yet. So we have parked Mumbai on the side. It's not that I'm not going to do Mumbai, 100%, we will do Mumbai. But that will happen once the scenario becomes clear. But in the meanwhile, we are using the time to clean up the property. There's some occupiers are there. They need to be cleaned up. The approvals need to be got. The plans have been more or less frozen. So all that is happening side-by-side, so that there's no issues on that. But real start of work will happen only when the situation is clear. Because we have already invested money, and there's no point in us now trying to have withdrawal symptoms. But at the same time, we need not want to start any construction work because it will be counterproductive. Construction will start when the coast is clear, when everything is clean and the COVID is behind us. But in the meanwhile, we are keeping on to clean up the properties, making sure that legally everything is perfect. So when everything is cleared up, we will be in a position to almost start almost immediately. And as far as CapEx in general is concerned, yes, wherever construction has started, wherever we're already quarter way, halfway through, it is counterproductive for us now to stop or slow down because, again, it will be -- in case there's any debt or where we have taken some construction loan, it will be wrong for us to do it. But what we are doing is actually trying to push it even with -- though labor is an issue, even if there's less labor, we are pushing the construction so that the product gets ready, albeit a few months. So that when we are ready, say, a year later or 2 years later and COVID is behind us, we will be able to do the necessary leasing and actually make this into a success.

Sure, sir. So would you just share the figure like...

Mr. Chattopadhyay?

Yes, yes. Just a follow-up on this same question. On, sir, this INR 2,300 crores CapEx that you incurred, sir, is what 50%, 60% of the committed CapEx? Or -- would you just share the percentage figure, if possible?

So on an average, what we have spent for commercial, retail and hospitality, all put together, if you ask, we spend so far around 42%, and the balance is to be incurred still. So [ the first, ] breakup. On commercial CapEx, we have INR 2,000 crores of balance to spend; and retail, around INR 291 crores; hospitality, around INR 950 crores of balance to spend, totaling to INR 3,250-odd crores.

See, another thing, like we've sold one building to Adobe. Now that is also partly spent. Now we need -- the faster I complete the building and handover in a year or so, the faster I get my money.

[Operator Instructions] The next question is from the line of Swagato Ghosh from Franklin Templeton.

Sir, so this quarter sales, how much was commercial strata sales?

This quarter?

Yes.

One moment, please. I'll [indiscernible].

I think about INR 150 crores.

INR 150 crores?

Approximately. Anyway, let Venkat pullout the exact figure.

I'll just confirm to you. We don't have that -- In the entire year as a whole, it's around INR 1,000 crores. But this quarter exactly, I'll just tell you. Just give me a moment. You can go on to the next question.

Sure. And sir, this Sky Tech that we launched, how much of it will be allocated for strata sale?

Which one? Sky Tech, we have not launched, no.

Hyderabad where we started work. Sky Tech is a commercial project that is in Hyderabad.

Okay. That we've started construction.

As of now, nothing is contemplated for presale.

Got it. Got it. Okay. And sir, one clarification, in the Slide 30, the breakup that you gave of operating, under construction and upcoming. So this -- the details that you gave of the annuity assets, operating assets, under construction and upcoming. So I want to understand is the upcoming, is it all like in future? Have we started any work on this upcoming section? Or we have done 0 work on?

No, no. There's design, planning, approval kind of work. And wherever the cost incurred is specifically against the upcoming, it could be the deposit that we have paid to landowner. So this is more on planning stage, upcoming ones, where work has not started yet.

Got it. And have we started like -- okay, to put it the other way around, in the Aerocity project, how much is our investment till now?

The Aerocity project, we have just picked up 50% stake. As you are aware, we've made that announcement. We have funded so far INR 105 crores into the project. The balance to finish cost is around INR 1,500-odd crores. So in that, our share is INR 750 crores.

Right. So we have not actually contributed anything after the initial stake acquired?

So we have contributed so far INR 105 crores into the project.

Got it. And what is the total contribution for the various Mumbai projects so far?

Mumbai, as Chairman was mentioning, there are projects where we had paid initial money for sign up in a project in Worli. And as far as the other project, the BKC is concerned, as we made announcement, we have bought out from German fund Trinity. So the Worli one was INR 50-odd crores, and the Trinity was little over INR 100 crores. And we have paid deposits for JD in the Byculla project, Jasdan Classic project, close to INR 150-odd crores. So these are the 3 -- from INR 300 crores to INR 350 crores in total.

The next question is from the line of Kunal Lakhan from CLSA.

Just quickly on the office portfolio. On the under construction part, right, there's almost 15 million square feet that we are -- that is under construction. How much will be operational over '21, '22 and '23, if you can give some color? And also in terms of strategy, how much of this would be leased versus strata sale? And how much is pre-leased as of March '20?

I have to compile and share it with you, but our -- this thing outline [indiscernible] any information, all of those projects will get done under construction as planned, if you have to go by in next 30 months or so, they are in different stages of construction. What I will do, against each of the projects, I can tell you by which quarter they will get done, and whether they are strata sold or owned for CapEx. So that's -- maybe as they move forward, we can mention that as one of the column only, but I'll share you the cost too because project work I'll have to do.

Sure. Sure. That will be helpful. But any idea, broader idea in terms of how much would be leased versus strata of the 15 million square feet? Any target that we have in our mind?

Strata, entire Tech Cloud is strata. Let me get to the slide.

That's also a mix and match, Venkat. We're going to sell everything. We're not going to keep everything. So the whole idea was to not to get any leverage. So we said we'll sell as much that is required to put up the property. The rest we're going to keep. So they're being sold well, even the collections that are coming on are pretty well. And I believe it has got a good scope and leasing also should happen once it's ready.

So I'm on Slide 22. Except for Prestige Tech Cloud, around 60% to 65% of it being contemplated as a strata sale. Rest all are right now being owned.

Yes. That also, again, on these new projects, we will take a call whether we want to now do part-sale, part-keep. So -- we have not even started those construction. Whenever we start, we'll take a decision.

So Kunal, apart from Tech Cloud, first one, Tech Park IV is what you see is the other column -- so there we had recently sold...

To Adobe.

So these are the 2 [ personal content ].

Got it. Just a follow-up on that is, basically, you mentioned in your earlier comments that you are -- you will continue to pursue these projects, which are -- which -- where you've broken ground. So this INR 2,000 crore of CapEx on office will happen over the next 30 months or so?

30 months or so, yes.

That's your assumption? Yes.

Yes, you're right.

Okay. Okay. All right. My second question was on the residential front. From our Q4 presales, how much of presales was from the new launches?

How much of presales was from new launches? Except for Finsbury Park, there's nothing else that got launched during the quarter. So majority of the sales have come from ongoing projects. The Finsbury Park sales, the presales, that quarter, whatever we have accounted are -- it totaled INR 250 crores to INR 300 crores.

Sure. Sure. So also it would be helpful if you can share the data point on what is the value of our ready inventory as of March?

Value of ready inventory is there in the Slide, INR 3,400 crores, 3-4-3-4.

Okay. So just a follow-up on that again, like so going ahead, like considering we have this inventory, how are we looking at on the residential strategy in terms of balancing the new launches versus monetizing our existing inventory?

See, the new launches, wherever that was happening, like, for example, just launched project has been the Finsbury Park last quarter. In that location, in that area, we don't have offerings right now. So -- and today pre-launch that we are talking about in Kanakapura Road in affordable housing category, again, we don't have that category in that location and project. So the new launches are going to only help us expand wider in this market. And they're not at locations where we already have completed inventory. So I think they complement each other. The sales are happening, lot of completed projects. If you look at -- but for this year, last 2, 3 years, our launch in terms of residential have been very low and whatever we've been selling, we've been selling from the completed inventory itself. So we think, I think, there is a -- like Sarjapur, next what are we going to launch? We don't have a project in that location. And that's a location where there is lot of employment opportunities and people want to live there. So therefore, the new launches, I don't think are going to disturb the existing projects inventory, which we need to liquidate. So INR 3,434 crores, 3-4-3-4 is the completed projects inventory, which is there in Slide 17.

The next question is from the line of Parikshit Kandpal from HDFC Securities.

Congratulations on leasing this 50% area in Star Tech to Accenture. So I just wanted to know what are the leasing rates which you have achieved in this project. And what are the current market rates?

So the leasing rate is INR 90 a square foot.

Okay. And what will be the market rates there?

Market rate, of course, see that market rate, again, is something that is subjective. In a good market, probably I can even still get maybe another INR 20 more, but that depends. EUR 20 or even INR 30 more, but this was a deal that was done some 3 years ago and which now fructified today. Not 3 -- 2 years ago, we concluded this, and then we had to build and give it, and we got it finished within time. Fortunately, we finished it in time. We got the occupancy certificates in time. And hence, this deal could go through. Otherwise, we -- maybe even the company would have used the thing not to go through or whatever. But then that's happened. Now it's positive. It's nice. So we are happy with it.

So this was the contracted rate 2 years back, about INR 90?

Yes, yes. Whatever contracted rate, that's the same rate we've got. Only remission that we gave is, we pushed out the rent start date from 1st of July to 1st of August.

Okay. No, the other question on the Cessna. So we have average rate of around INR 58 to INR 60. So this new block, what would be the leasing rate for the new block?

Yes. Those -- that building 9, 10, 11 have gone at an average of about INR 85.

So it's almost like the market rate?

Yes, that's the market rate.

Okay. Sir, just last question on this funding support which the hotels and malls will be requiring this year. So if you can quantify that how much of funding support will the mall and the hotels require this year from the parent?

I've said that, in malls, it's basically deferment of about 3 months rent we added back to the principle, and that's I think -- that's also been allowed by RBI. And I definitely look at visibility of starting to get rents from July onwards properly and enough money for us, enough cash in the system for us to repaying the EMIs without any difficulty. Now as far as hotel is concerned, I think, we'll have to fund it, the EMI, I mean, fund the interest itself for at least 6 months more and that will have to come from our cash flows, internal accruals. And I don't think there'll be any reason for us to go back and ask for more debt, unless that moratorium happens and the interest, whatever payment hasn't happened, that will be added back to the principle.

The next question is from the line of Atul Tiwari from Citigroup.

Sir, could you please say again the pending CapEx amount in the office, retail and hospitality under construction projects, I kind of missed it?

The office is around INR 2,000 crores, retail is INR 291 crores, and hospitality is around INR 950 crores. These are the balance to finish construction costs the company shares in these projects. And also to answer earlier questions on Kunal, I think, and somebody else also asked. In the Q4, the Q4 presale, the strata sales contribution from office is around INR 157 crores. And in Q4, presales of INR 1,200 crores that we have done, the sales from the new launches, that is Finsbury Park is around INR 322 crores. I just wanted to give exact numbers. I gave estimate at that time. So these are the numbers.

Okay, sir. And sir, just one more question. In your presentation on Slide 30, where you gave operating, under construction and upcoming projects, say, for the office, your economic interest in under construction projects is about 5 million square feet. But if I go to Slide 22, where you gave the more detailed breakup of under construction office projects, your share in TDA is 15.87. So the difference is quite big. So can you just reconcile...

Sorry, I didn't follow. Can you please help me understand once again?

Okay. So sir, if you go to Slide 30 in your presentation, right, so the first table that you have, which gives the details of office projects, operating, under construction and upcoming. So Prestige's economic interest in under construction projects, it's this 5 million square feet, 5.09, that you have given here, right?

Yes. In the Slide #22, Prestige's economic interest is 11.57, is that what you're mentioning?

Yes. Yes. Yes.

The difference is, Slide #30, what we have taken is only counted for rental income. If you see the headline, this is all of what is meant for rental income, okay? So in Slide #22, it's just -- irrespective of whether it is held for rental income or strata sold, all those projects are mentioned. For example, that has got Prestige Tech Park, which is strata sold; Prestige Tech Cloud, which is strata sold. If you remove what is sold or meant for sale, 11.57 will become 5.09.

Okay. So that means now the majority of your under construction projects will be sold out even on the office side?

That's what I said. Two of them, one is while answering to, I think, Kunal's question, Tech Cloud, which is meant for sale, and I think we have sold substantially as of now, that is around 4 million. The second one is Prestige Tech Park IV, which is 1.58.

The next question is from the line of Saurabh Kumar from JPMorgan. As there is no reply from the current participant, we move to the next question from the line of Shah from Macquarie Capital.

I just wanted to get a sense on the residential business. How are the cash collections tracking for some customers in -- from April to June? If you can just throw some light on that, it would be great.

The cash collection in April was INR 80 crores. May was roughly about INR 250 crores. And June, we will probably cross INR 300 crores.

The next question is from the line of Akash Damani from Edelweiss.

Sir, my first question is, what percentage of your tenants are not in lock-in or about to complete lock-in this year on your commercial and retail side? And also, what percentage of your commercial space and retail space is due for re-leasing in FY '20 and FY '21?

See, I don't have that data off hand, but it doesn't really matter whether they are locked-in or not, if they have to go, they will go. And there's no way that we can stop them from going. So basically, we have to now just check whether the general health and this thing of the tenants are good. And we more or less believe that we've got some good solid clients. There could be some small clients who may want to move on, and that's the office side. And as far as the retail also, it's the same thing. If you ask me that all the anchors have got all long-term leases like 15 years and all that. But generally, in retail, for the smaller stores, that is what we call the line shops and the vanilla shops, we don't give leases for more than 3 years nor do we insist on lock-in because we ourselves don't want them to be there for too long and we always like to do the churn if somebody is not performing. Now this is a different time. We'll have to see how the whole thing can be worked and how we can work with them. As I said, we are very, very happy that when we open the malls, we are like almost near full in terms of trading, except for the cinema and the gaming and upon maybe a few restaurants because -- since liquor and restaurant timing itself is restricted to 8:00, maybe it will be counterproductive for them not to open up just now. But apart from that, more or less, we are online and most of them are trading. So the question is we need to evaluate and view even whether the office tenants, like now, I told you about this lease that we just signed. Now the CapEx depends on how much CapEx is spent and when they spend. Now if you ask me for Accenture, my lock-in is 2 years. Now they've signed the lease deed. Obviously, if they want to vacate, they'll have to pay that 2 years rent. But we don't want something like that to happen. We actually want them to be there and they want a more a longer-term relationship than short term and start looking for new tenants.

Sure. And my second question is on your hospitality segment. What is the fixed monthly cash burn rate in your hotel segment? And some luxury hotels in the country have started to offer their spaces and hotels to corporates. And license terms are at about 30% to 40% discount to commercial market rates. So are you also looking to something like this in yours hotels, leasing out to corporates for the next 1 to 3 years?

No, no, 1 to 3 years, we won't, that's too long, but let us see. Let this -- now even if I give it for free, if there's no travel, why will they want to take it off? So we have to see when things come back to almost near normal, which is going to take some time. I don't know whether it will be 3 months or that will be 6 months. But whenever that happens, definitely, we'll be working with them to see. And then obviously, when that happens, when there's a normalcy, why will I want to discount myself? I'll be giving them better service, a better product and a product that has been kept in good fresh condition, a safer product for them. And that will be the distinguisher now. The distinguisher is not the price alone. Maybe if I'm offering a much higher price, but I'm giving that safety, if I'm giving the confidence that, listen, by staying in my hotel, you won't get sick, people will be willing to pay me a premium because today, it's not about pricing or this thing as far as hospitality is concerned, it's more that confidence that people will have when they get in, in terms of service, in terms of the product itself, in terms of the safety. So -- but then as of now, it's too early for me to tell you anything, predict anything. It is going to take some time. And whenever it happens, we'll see what takes place.

Sure. And sir, what was the monthly cash burn rate in your hotel segment?

What did you ask, sorry?

The monthly fixed cost that you incur in your hotels?

Yes, that's an excellent question. Now the thing is, we have brought down our monthly fixed cost to almost 20% of what we used to spend when the hotels were operating. And if you ask me like a Conrad and if it's a Sheraton Grand, we -- my teams have really done a wonderful job. But at the same time, I have not sacked one person who are on my rolls. Only what we've done is all the contract people, all those agencies that were on contract, they have been terminated on day 1, and we've saved a lot of cash. I think according to me, the Sheraton, we have a monthly fixed cost of about INR 1.5 crores to INR 2 crores. Similar with Conrad and about INR 1 crore and odd in Aloft. In fact, till the month of May in -- in fact, we did have a negative cash flow. We got some INR 8 lakhs positive and my DMs are very happy. We made a profit of INR 8 lakhs. But June is a separate story. We'll see when June happens, what comes out. But as I said, this is -- on a daily basis, we'll have to see the things happening.

[Operator Instructions] The next question is from the line of Dhaval Somaiya from PhillipCapital.

Sir, I just wanted to understand, if you can give some color on how the month of April, May and June has been for our residential segment? And how have we approached the online sales model?

The online is the way ahead now. You -- just to update you, April, we were fully in lockdown. And in spite of that, my teams were able to sell about 25 units. That all came through online and the money collected, agreements done. Now the month of May, I think even first week of May, we did some 20 units. And about 20, 20 units, we did for the next 2 weeks. But the last 3 weeks, we've done an average of about 55 to 57 units. In fact, last week, we did 60. But then if you take an average, it's about 57 units we have sold. And it's all not the mid-income. It's mid-income, premium as well as luxury that's been sold. So overall, we have suddenly now got back the confidence in that things and consistently, last 3 weeks have been good. The only thing is -- danger is with Bangalore, again, cases going up more than 100. Now there's all this talk about one more lockdown. I don't know what's going to happen next day, next week.

The next question is from the line of Sameer Baisiwala from Morgan Stanley.

Sir, what are your updated thoughts of equity raising, both in the office portfolio, which was pre-REIT and at the entity level?

Sameer, at the entity level, as you know, in the Q4, we had some capital raising. And as far as the yielding portfolio is concerned, we've been in talks to do -- save capital either to pre-REIT or to go and get listed by combining office and retail, both of them put together. So we need to do -- we definitely need to do the unlocking of value between the commercial and residential yielding portfolios. Now given the situation, given the way things are, it's on a slow track now. We'll see once things improve, how to take that forward. But definitely, the plans are on.

Okay, great. And just to complete this point. So for the entity level equity raise, you are not looking for any further dilution?

No. No.

Okay. And my second question, sir, is, sir, what's the picture? You mentioned some around labor disruption, et cetera. But how many of your sites are operational? Or let me put it this way, pre-COVID to now, what's your labor population? Is it 50%, 70%? And also, are your show flats, customer footfalls, where are they at the moment?

Yes. Now see, labor is right now between 30% to 40%. And in fact, more labor has been promised by L&T, JMC, saying that they're going to get -- like L&T has promised me 500 labors coming this month. Another 700 labors coming the following months because some of the large jobs like Jindal City and all that are under production. They've also said that they will make sure that they keep that overall time line. We've had a lag of about 3 months, but they are very confident that they will not delay the projects. And as far as footfalls to the show units, of course, it's 0 during the lockdown. And after the unlock 1 has happened, if we clocked in these number of sales as I said in the last 3 weeks, obviously, customers will be coming into the show units and making bookings. And one good thing is whoever would be coming, would be serious players, so -- and the sales have happened.

The next question is from the line of Mohit Agrawal from IIFL.

Sir, can you share the construction spends that you did for your FY '20? And also the spends in CapEx and on acquisitions, could you give some data on that?

Yes, sure. Sure. Mohit, in terms of construction spend for the year as a whole, we have spent around, for developmental business, INR 2,560 crores. And the CapEx projects, retail, office and hospitality put together around INR 1,000 crores. So it is around INR 3,560 crores of the construction spend. And for the land -- for land, refundable deposits, TDRs, our investment stakes, buying of stakes in various companies, acquisitions and all of that is around INR 1,565 crores for year ended. So this has been the spend for construction as well.

The land one, you said INR 1,500 crores?

INR 1,565 crores.

Okay. And sir, if I may just ask one clarification. You gave an understanding of the Slide 22 and Slide 30, the difference between the office numbers that you have, under construction numbers between the rental and the strata sale. Similarly, for -- in Slide 24, you have given that numbers for retail and in Slide 30, the rent yielding. In retail, also, do we have a strata?

No. No. No. We don't have. The 30 and 22 difference is, one is the strata phase. Other is -- 22 is the total -- in fact, I was about to clarify, the 22 is total developable area, whereas 30 is the leasable area. That's the difference.

The next question is from the line of Kunal Lakhan from CLSA.

Mr. Razack, in your opening commentary, you mentioned that Bangalore is showing some good numbers. Can you elaborate a little on that in terms of like residential and office and retail probably?

No. No. I just mentioned, Bangalore, last 3 weeks, we've been able to clock 50, 55, 60 sales per week, which according to me is fairly decent, and especially so during these times. And that's how we are even doing a prelaunch today. Only thing that remains to be seen how this can be sustained. And if there is no further lockdowns, I believe that this will improve further.

Fine. That's on residential front. But on office front, are you -- how are you seeing the demand panning over there now?

See, now -- I -- no MNC is working today or thinking of any expansion at the moment. Whatever old transactions that were there, even that we had -- we needed to see that contracts fructified. And as far as we told you about the Accenture transaction, which we signed the lease yesterday, and that's on track completely. Then, we've done a transaction with Adobe, where they are buying one complete block, I think, it's about 450,000 square feet to the nearabout, even that transaction is on. They've paid us money. We need to now produce and deliver those goods. Now as far as new leasing is concerned, there has been some activity from 3 or 4 clients. And we've been given some inspections and some are in CBD, some are in the -- where the Tech zone, like the outer ring road and other areas. But then I think the decision-making process itself will be a bit slow, a bit more measured, but the interest is there. In fact, last week, at least 3 companies have given inspection for some large spaces. And it's -- the only thing is the decisions have to come. And however much people are talking of WFH, which is suddenly became the flavor of the season. WFH cannot be practical and will not be done. So basically, I believe there, again, that's only a fiction in somebody's mind. The office -- working in the office will be the order of the day for future. Today, there's no choice. They are locked-in and they're also worried about their safety. Many large MNCs, though locked -- unlock 1 has happened, they haven't started coming to office. They are still sitting in their homes and they're working. But that can't be for too long. It's only till the -- there is some assurance that coast is clear and things are safe. But then -- till then, it will go on like that. But then in any large company, there has to be collaboration, there has to be meetings, there has to be physical sort of contact point, in a sense, not physical contact in that literal sense, but eye contact and work has to go on. So this will pan out. But I believe 6 months -- let's give it 6 months and see how things pan out.

Just a follow-up on that is, in our existing portfolio, the existing rental yielding portfolio, what will be the tenant mix, which basically where the underlying business is like directly impacted because of COVID, like the aviation, hospitality or retail? What will be the tenant mix of that?

See, aviation, we probably wouldn't have anything much except now. If you ask me, there's one space in Chennai where we leased out to -- for an office -- sales office for Emirates that's about 2,000-odd square feet, which is of no consequence looking at the millions of square feet that we've leased out. Now if you look at oil, I've leased out from very large space to ExxonMobil. Now ExxonMobil, whether the oil price goes up or goes down, they are a very huge corporation, and they are there to stay. They're not going to run away. Then like that, we've got BPOs and even banking. Now all these are different, different businesses, and they are also IT companies. So it depends each time, what type of businesses, like, of course, if there is a big, say, a company who's doing hospitality bookings or a travel agency or who's involved, like if you take a Makemytrip, fortunately, I don't have a Makemytrip, that risk is not there. In fact, you've got some people like even the online shopping guys in our properties, like Amazon or the others. And those guys are doing great business.

Would it be safe to assume that the concentration of such clients would be less than, say, 5% or so?

Yes. Yes. Yes.

The next question is from the line of Saurabh Kumar from JPMorgan.

Sir, first of all, Venkat, congratulations on the work you've done for the migrants. Sir, I just had one question on the equity point. So say, you had the foresight to raise equity in January, but it seems that you do need more, especially given the dislocations you have in the retail and the office business. Would you be open to selling some of your completed assets -- I mean, some of your completed offices or hotels or even malls, just one by one, if possible and not go down the restructure to just deliver down the firm? Or is that not an option you think is required at this point of time...

[indiscernible] No option is closed as long as it's a sensible thing because ultimately, we need to see how we can churn cash. And if there is less dependence on that, so be it. But I'm not saying we are going to do it today or tomorrow. I'm not saying that will happen. See, even a REIT is like giving away a certain portion of your asset. So we have an open mind. We work with open minds, only in the interest of bettering the company.

Okay. That's good to know, sir. And Venkat, just on the DTA, so fair to say that 35% -- tax rate on refi will be 25% and everything else will be on MAT.

Sorry. I'm sorry, sorry, sorry.

Yes, yes.

On the movement to the new tax regime?

The lower tax regime, 22% one?

Yes.

So we will be moving, but only thing is we have MAT credits that we won't be able to utilize when we move to the new regime. But those and the deferred tax liabilities have been reversed. Is that what the question was?

Sir, residential will -- no. So you said that you are moving to the new tax regime for certain entities. So does that -- so should one assume that the residential business has 25% tax and the office business continues to stay on the MAT regime?

No, no, no. What we said is, in the notes, some of the entities, so there is option that has been given without deductions to stay at the current rate -- sorry, with reductions to stay at the current rates and without deductions to go to the new tax regime at the lower rate. So we said most of the entities, we're going to opt for that. So now if you look at PEPL, if we opt for it, there are residential, there are office, there are retail, everything in that put together. We will not be able to take a decision asset-wise.

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

Sir, I just wanted to check that for the next year, broadly, are we looking at any increase in debt or net debt, say, on a Y-o-Y basis, considering where the cash flows are now?

See, now as far as residential goes, we have customer collections. We have balance of received money we've been selling, so we'll be -- the cash flows that we will -- those anyways are, as per RERA also needs to be used for the construction. That's how discipline we've been following. That will be done through the collection is concerned. As far as the rental yielding portfolio is concerned, anyways, even earlier we used to borrow 50%, 70% in the balance of the equity. And that continues to happen for the ongoing residential and retail -- sorry, ongoing commercial and retail.

Okay. So you are comfortable with the gearing ratio broadly now?

Comfortable.

Okay. And sir, just one more question. The HDFC platform project, 10 million square feet, where are we on approvals now? And where does it gets launched?

As I mentioned initially, the most projects we have, we've got final leg of approval, some of them are in RERA registration phase, some of them are in final leg of approval. Now the cities that I had mentioned, we will have all the approvals, like Hyderabad, a project in Goa and a couple of more in Bangalore and Chennai. All the approvals in place in next 30 to 45 days, subject to the government agencies working. And launch is something we'll take a call based on how the situation is. Please split into 2 parts if you see. I think the above part is where we will have approvals in next 3 months and everything. All upcoming projects will eventually [indiscernible].

The next question is from the line of Swagato Ghosh from Franklin Templeton.

I have 2 quick follow-ups. On the strata sales we have been doing over the last few months, can you please help us with what is the cap rate we have realized, average?

Which one, sir?

The various strata sales that we have done. I just want an indicative cap rate that we have realized?

Sales are not being done on the cap rate basis because they are not pre-leased, okay. So it's more like residential. It's land cost plus construction cost plus our margin. That's how the sales price has been factored in.

But there will be some implied cap rate based on the market rentals?

Yes. So wherever -- like outer ring road, the market rentals of around INR 80 to INR 90 have been taken into consideration as a reference point, okay. So on that, if you look at -- maybe it will translate to around 7.5%, 8% cap rates. But Tech Cloud, if you look at, which is closer to the airport of Bangalore, that scale, that size, there's no need of reference point. We can only estimate that this will get leased at X number once it is completed. So there, it's more of cost plus basis model.

Understood. Helpful. And sir, for DIAL project, the Aerocity project, do we have an option to wait out before we make our next contribution, like wait-out for situation to normalize and not contribute anything instrumental?

Anyway, just now work is also not happening in full swing because of the labor and the situation in that area. So obviously, the pumping in inclusion of mix turn of money will happen only after the construction resumes in full swing.

Yes. But construction might resume in a few months where the hospitality sector might be under uncertainty for a longer time. So can we probably wait it out till that time?

We haven't thought from that angle. I mean of course, we definitely want situations to improve. When we say, sector-wise, we look at each sector and then take a decision because residential is slowly coming back. Office, right now is more or less okay. The retail, we need to wait and see when the malls open. The hospitality, of course, we need to look at. Else, segment-wise, we will take a decision. Right now, anyway, since the infusion point has not been discussed, so we've not deliberated out.

Ladies and gentlemen, due to time constraint, we take the last question from the line of Adhidev Chattopadhyay from ICICI Securities.

Sorry, yes. Sir, just a housekeeping question. For -- what is the rental income for the fourth quarter, the actual rental income we have done? And for retail hospitality, what is the EBITDA impact or loss, which has happened in the fourth quarter in a reported number?

The rental collections are around INR 258-odd crores for the quarter. And what was the next question, what was it?

Sir, I was referring to your retail hospitality, right, so margins in FY '20. So just wonder as to what is the impact of COVID? I mean is there any COVID impact, like what is the -- what would have been the margin or the EBITDA if the COVID was not there? Like anything...

No, I think, March -- up to March quarter, there was not much of this thing. There's nothing that is significant because...

So if it's the next quarter and the next quarter, that needs to be reviewed minutely. As far as we are concerned, the March quarter was -- except for 15 days, which probably even sales was impacted by about roughly around INR 200 crores. Otherwise, we would have had much more sales -- presales. But nevertheless, that was the story as far as the March is concerned. But now the April to June and July to September is what really needs to be seen. Office, as far as I'm concerned, it's fully protected, whatever the rentals have to come, have come. But it's retail, as I said, it's like 0, 0. And even hospitality has been 0, 0.

I now hand the conference over to Mr. Aditya Bagul for closing comments.

Yes. So I just wanted to thank everyone for joining onto the call. A special thank you to the management for taking out your time and answering your questions so candidly. I'll hand the call back to the management, Mr. Razack, Mr. Narayana, if you have any closing comments?

Venkat, you give your closing comments.

Thanks, once again, for taking time out to be on this call. Please take care, be safe, and we'll keep updating you whatever improvements that we are making in sector-wise as and when things come under control because it's now state-wise, city-wise. It's not about one city, one geography. And all 5 segments that we are in are -- have got different challenges and may take different -- take extra times to come back to track. Likewise, each of the cities have got their own specific issues. So we'll keep you posted. If you need any further information, please feel free to reach out to us. Thank you once again for your time.

Thanks, again, for joining into the call. Like Venkat said, we have to keep safe. And I always have, I'm a firm believer, that there has to be a balance between life versus livelihood. Yes, lives have to be saved, but livelihood also has to go on. We need to see that the economy is churned, at the same time keeping our people safe. And I said lives versus livelihood and life versus living because what is the use of life without living that life, and what is the use of having life without livelihood. So this is a huge delicate balance. We only have to pray and hope that this huge pandemic is behind us very soon. I don't see it happening soon, but then we just have to keep praying and hope that the almighty gives us the clearance and the strength to face this and at the same time, see this pandemic through. And we go back to those times which we used to normally cherish. Now looking back, it looks as though it's something very different. I think we are ever grateful to the lord. But yes, we need to continue with whatever we are doing in a positive frame of mind. Thanks again for joining the call.

Thank you, ladies and gentlemen. On behalf of Axis Capital Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.