The Phoenix Mills Limited (503100) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q2 and H1 FY '22 Results Conference Call of The Phoenix Mills Limited. [Operator Instructions] Management of the company is being represented by Mr. Shishir Shrivastava, Managing Director; Mr. Varun Parwal, Deputy CFO; and Mr. Pawan Kakumanu, Deputy CFO. [Operator Instructions] Please note that this conference is being recorded. At this time, I would like to hand over the conference to Mr. Shrivastava. Thank you, and over to you, sir.

A very good afternoon, ladies and gentlemen. I take this opportunity to wish your loved ones and you a very happy, healthy and prosperous Diwali. As always, we take pleasure in welcoming you all to discuss the operating and financial performance of the second quarter and half year FY '22. I will now take you through the key highlights for the second quarter and for the first half of FY '22. In our retail business, local restrictions were imposed across our malls in April '21. While some of our malls started becoming operational by end of June, it was only by mid-August that all our malls were allowed to operate, though with certain restrictions. We are extremely happy to see swift recovery in consumption for the malls that were allowed to operate without much restrictions. Consumption was at INR 1,012 crores in Q2 FY '22 and INR 1,271 crore in H1 FY '22. This was approximately 74% and 69% of Q2 and H1 FY '20, adjusting for operational days and categories permitted to operate. In October '21, our operational malls recorded a consumption of INR 661 crore approximately, which is 90% of consumption against October 2019, which was the pre-COVID month. Our collections are also improving substantially. In October 2021, we collected approximately INR 104 crore against INR 133 crore that we collected in Q2 of FY '22. The consumption ramp-up in Maharashtra malls has been slower compared to others on account of requirement of visitors to be fully vaccinated. The staff, we had already vaccinated through our extensive vaccination drives. As more and more people get their second dose of vaccine, we are seeing the trajectory of these malls to be similar to the non-Maharashtra malls. Overall, we remain very positive in our consumption recovery outlook for the second half of FY '22 driven by strong demand, more categories being allowed to operate, more people being allowed to enter malls together with the festive season that has already begun. In particular, I would like to highlight the performance of the newest mall in our portfolio, Phoenix Palassio in Lucknow. The mall is now at 81% trading occupancy with 213 stores trading, and another approximate 10% of leasable area is under fit-out with 18 stores under fit out. In Q2 FY '22, the mall generated an EBITDA of approximately INR 25.3 crore. Considering that this was a normal quarter and annualizing this number, this asset will be able to generate over INR 100 crore of EBITDA in the next 12 months. For a perspective, our current set of MarketCity malls were able to achieve this milestone in the fourth and fifth year of their operations, where -- while Phoenix Palassio has been able to achieve the same in a much shorter period of time, and that, too, in this environment of the pandemic. This further reaffirms our confidence in the performance that our malls currently under construction will be able to deliver upon being operational. I would now like to brief you on our discussion on rental negotiations with our retailer partners. Since the malls became operational in August of this year and the pace of business has picked up with each passing week, we are happy to share that we have been able to conclude our negotiations with the majority of our retailer partners. To first update you for the malls outside of Maharashtra, it has been agreed with retailers that waivers or rebates or discounts will be only for a limited period of the first half of FY '22. It is also agreed that the period of lockdown will not be rent-free. Accordingly, we have built approximately 53% to 60% of contractual MG rental on an average for the first half of FY '22 for anchors, inline, F&B, food courts, et cetera. At our Maharashtra malls which were the last to open up, and that, too, were allowed to operate under severe restrictions, again, we have a clear understanding here that waivers, rebates, discounts will only be limited until the month of October '21. We would be -- we have built retailers across inline, anchors, et cetera, at approximately 40% -- 35% to 40% of contractual MG for the first half, and this number will go -- move up to 100% from November. With multiplexes now opening across the states, we have been able to conclude on the negotiation with them as well. This includes a mix of waiver on a certain portion of the minimum guaranteed rental for FY '22, along with an increase in the revenue share percentage. Conservatively, we expect our rental billing for FY '22 to be at 100%, if not more, compared to FY '21 in the fourth quarter of FY '22. Moving on to our commercial office business. Our commercial office portfolio continues to remain resilient. Collection efficiency for the commercial portfolio was in excess of 94% in the second quarter of this year. Fountainhead Tower 2 has seen strong leasing traction with approximately 40% of the GLA being leased in the last 6 months. The revenue contribution from this asset will improve significantly from the second half of this year. Fountainhead Tower 1 in Pune has a lease occupancy of approximately 95% and is fully operational. Work at Fountainhead Tower 3 is now complete, and we are awaiting OC. We have already commenced with the leasing for the third tower as well. To talk a little bit about our residential business, we have witnessed a very good traction in residential sales, mainly led by the reconfiguration of our Kessaku property into smaller units and the robust demand of ready-to-move-in inventory. Between April and September of this year, we sold 16 apartments at One Bangalore West and Kessaku, which represents an area of approximately 52,000 square feet and a sales value of approximately INR 98 crore. We continue to see a strong buildup in demand and faster conversions for our ready inventory. We are stepping up our efforts to sell inventory by launching attractive subvention schemes for the entire development, special offers on ready-to-move-in flats and a very, very effective digital marketing campaign to widen the reach of our product. We expect to see this momentum in sales to continue into the second half of FY '22 and beyond. Our hotel business has seen a testing time in the months of April, May, June. However, from the month of June onwards, business looked up where we saw an increasing traction in occupancy on account of staycations, social events. We have seen an uptick in the number of social events and corporate events between July and October, and the demand for November, December, Jan and Feb continues to be strong, and the business on book keeps increasing. The St. Regis, Mumbai reported revenues of approximately INR 28.7 crore, and the Courtyard by Marriott at Agra contributed about INR 5.8 crore in the second quarter of FY '22. At The St. Regis, Mumbai, we have invested in upgrading our hotel property during the downtime. We are happy to share that Sette Mara, our Middle Eastern restaurant which opened in mid-August, has been doing extremely well. Our all-day dining facility, Seven Kitchens, has also been reopened in a new avatar. From the last weekend, we reopened our Asian restaurant, By the Mekong, which was under renovation. We believe that as things return to normal and the demand for F&B continues to increase, our various strategic upgrades at the hotel will enable us to recover faster and reemphasize the hotel's positioning as the epicenter of all marquee corporate and social events in the city. Occupancy levels at The St. Regis, Mumbai are now back at FY '20 levels, aided by a revival in the domestic corporate travel and the demand in social events. We expect the second half of this year to be far better for the hotels driven by leisure travel and social events. A quick update on our marquee project at Lower Parel, Project Rise. Project Rise is our flagship, office-led, mixed-use development and will substantially complement our existing retail and hospitality landmarks at Lower Parel, Mumbai. We expect to add office GLA for approximately 1 million square feet and retail GLA of approximately 200,000 square feet. We have made significant strides in securing approvals and development potential for this Project Rise in the last quarter. We have paid approximately INR 280 crore towards securing 1 million square feet of FSI and development potential. We further paid another INR 65 crore towards development charges and have received the commencement certificate. We are also progressing with our plans for offices at Wakad, Hebbal and Chennai, and we'll expect to share more detailed updates as we crystallize the same at our end. A quick update on our under construction projects. Our current pipeline of under construction malls: Phoenix Millennium at Wakad, Pune; Phoenix Citadel in Indore; the Phoenix Mall of Asia at Hebbal, Bangalore; and Palladium at Ahmedabad; and the upcoming mall in Kolkata will cumulatively take our current portfolio of approximately 7 million square feet to approximately 13 million square feet. Construction work at all our sites is on at full swing. Kolkata, we have not yet commenced any construction activities, but we are awaiting approvals. We have done the initial site development work. We currently expect our mall at Indore, Phoenix Citadel, to open to public in the first half of FY '23; and Palladium, Ahmedabad in mid of FY '23. Both Pune and Bangalore malls, which are Phoenix Millennium, Wakad, Pune and Phoenix Mall of Asia at Hebbal in Bangalore will be operational by the first half of FY '24. Retailer interest in our under construction assets remain extremely high, and we've seen significant traction in leasing activity in this last quarter gone by. I will now request Varun to update you on the financial performance of the company. Thank you.

Thank you, Shishir. Good afternoon, ladies and gentlemen. Thank you for joining us on this call. I would like to share with you some key highlights of our consolidated financial performance. Our income from operations for quarter 2 FY '22 stood at INR 371 crores, and our quarter 2 FY '22 EBITDA came in at INR 186 crores. Our retail rental income came in at INR 198 crore in quarter 2 FY '22. And our commercial office portfolio reported a total income of INR 78 crore for the first half of FY '22. Our inflows from operations, Shishir has already updated you on the retail collections in the first half. Overall, our cash inflows from operations was at INR 540 crores. This includes the inflows from the offices, residential, hotel and retail as well. And our operational free cash flows were approximately INR 350 crores. Consolidated gross debt at the end of September was down by about INR 60 crores, and the number was at about INR 4,300 crores. Our average cost of borrowing is down to 7.84%. This is down significantly from March 2020 when we were at 9.19%. We also have a few refinances underway, and we expect the cost of borrowing to further come down in the coming months. Overall, our group liquidity remains strong and is in excess of INR 1,320 crores. We have also parked funds of over INR 600 crores in revolving credit facilities. Further, this liquidity does not take into consideration the second tranche of investment by CPPIB in our Kolkata SPV milestone or the potential for GIC to further bring in INR 400 crores in the next 12 months. Phoenix share of gross debt is at about INR 3,178 crores, and adjusted for the liquidity available with Phoenix, our share of net debt stands at about INR 2,096 crores. With this, we will close our opening remarks, and we open the call for an interactive Q&A session. Thank you.

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

My first question is, if I heard correctly, you said in October, we collected INR 104 crores versus INR 130 crores in...

Quarter 2, yes.

Yes, which -- was it quarter 2 of FY '20, right, this is the number we've mentioned?

No. So Adhidev, Varun on this side. This is quarter 2 of FY '22. The idea of giving this comparative is to demonstrate that last year our collections really picked up from November onwards. So November through March, each month, our retail collections were in excess of INR 100 crores a month. This time around the first half, our collections were already significantly higher than the corresponding period last year. And in October itself, we crossed that threshold of INR 100 crores of retail collections a month. I think as construction stays strong and as we continue to see a revival in consumption, hopefully, this number will also stay strong and pick up from here on.

Okay. So where I'm coming from exactly, you mentioned obviously that our consumption across malls, again, 90% of the pre-COVID level. So this rental collection which you have done corresponds to what similar percentage? Just trying to get on to that number. Is it 100% or is it 90% of the pre-COVID level?

I think allow us to come back to you at the end of the quarter since billing and reconciliation of both past and current deals will take some time to be completed.

Okay, okay. So there is a mix in that. Okay, okay. Got that. That is clear. And now on this rental, so assuming that now the consumption trends above the pre-COVID levels, maybe by the fourth quarter, assuming no third wave comes, how would the rental -- as per the current regulation agreements with the retailers, how would our rental collections trend? Let's say we do 120% of pre-COVID, do we also get to collect similar rentals? Or will it be possibly even higher? So just wanted to get to understand how that works. And when are you moving to a full pre-COVID minimum guarantee type of structure across our portfolio?

So Adhidev, let me take the first part of that, and then I will hand it over to Pawan for more granular details. At this point in time, I think we will stay with the commentary given earlier on the call that we expect our rentals to go back to 100% by quarter 4 of FY '22, provided that things continue to improve the way they are. And as we report the next quarterly results, you will start seeing an improvement in the collection trends. Just handing over to Pawan now for the comments and details on that.

Adhidev, so as was stated in our opening remarks, for non-Maharashtra malls, we have currently concluded waiver proposal only for the first half with the understanding that starting October, we will be going back to our contractual arrangement. So from that perspective, on your second part of the question, when can we start expecting MGs to go back to contract for the non-Maharashtra mall, that's our current thinking. And with the consumption being as strong as it is, we are not seeing much issue with the retailers also. Second for Maharashtra malls, here, the situation is a little more fluid and, as we all know, was a little tougher than other geographies. So here, we are expecting that from November, we will be coming back to our contractual rents. But as stated by Varun also, we definitely know that from fourth quarter, it will be 100% everywhere. It is just about whether in November or while we are working towards it and the consumption definitely is poised to ensure that we come back to contractual rents even in Maharashtra. That's a little bit of a wait and watch.

Okay. And finally, in terms of from next year, is there any thought process of the levies to have this pattern of renewals coming up and you need to look at the escalations for the portfolio? So will -- are those discussions being revived again right now with certain categories of [ retailers ] -- or sorry, tenants in our malls? That's my last question, yes.

Yes. So Adhidev, if I understand your question, your queries, all the renewals which are going to come up, are we going to see the bump up that we typically have seen in the past when such annuals come up, was that your question?

Yes. Yes, yes. Correct. Correct, yes.

Yes. So Adhidev, even during COVID-19 when we went for renewals, we were able to see a jump in the minimum guarantee rentals while -- when does that jump up come into play was something that we negotiated given that people need a little bit of breather after COVID-19. So similarly, we do expect that now as renewals start coming up, we will start seeing a jump up. Now it needs to be seen whether the jump up is going to be as high as the past or not, but we definitely remain confident that the traction has been extremely strong, which is also reflected not just in our existing malls but in our new malls, where we are seeing typically the leasing rates to be at or higher than our business plan. So I think that gives us a good sentiment that the bump up in rentals should be strong even in our renewals of our existing malls as well.

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

Congratulations for another fresh start. My first question is on the rental negotiation again. So while you talk about October to November minimum guarantees coming back, are these minimum guarantees higher than what you used to command in FY '20 or at similar levels?

Puneet, Pawan here. Puneet, when I -- in our response, we stated that we are coming back to the contractual rents. Those contractual rents already bake in the escalations which would have been due and thereby effective in October 2021. So from that perspective, yes, these minimum guarantee rentals would be higher than what minimum guarantee rentals we charge for the same month in financial year '19, '20.

Understood. And when you talk about Q4 going back to 100% levels, those are 100% levels of FY '20 or '21?

Just one moment.

Puneet, this is Shishir. When I mentioned that I said conservatively, I'm estimating that we will be going back to 100% of Q4 FY '20. But with the escalations, higher revenue share and now the multiplex and other categories also kicking in and contributing towards the rentals, it's quite practically possible that we'll be far beyond that 100% of FY '20.

Okay. Understood. That's very helpful. My second one is on the Lucknow mall. While you gave a lot of interesting data, what is the trading density like? And there was a Lulu mall which is supposed to come up. Any color what's happening there?

So at Lucknow, Phoenix Palassio, we have a trading density of roughly around -- trading density is -- far in excess now has exceeded INR 1,000. It's close to about INR 1,100. And in this festive season, we are expecting it to move up significantly. I'm guessing your question was on trading density and not on trading occupancy. Trading occupancy is approximately 81%, 82%.

Correct. Correct. That, you already told. And the Lulu mall, any update what's happening there?

They have their work ongoing. I would not have any comment on their status. But they have their work ongoing, and they will commence operations at some point in time. I think they are not very close to commencing operations. They may be 6 months or so away. And I don't have an answer on their leasing.

[Operator Instructions] The next question is from the line of Mohit Agrawal from IIFL.

My first question is, you've been mentioning that there will be an increase in revenue share under the new contracts. Could you quantify that assuming FY '23 is a normal year? That 2% to 3% increase in rev share, how much will that translate into the rentals going up?

So at general, I mean, one would estimate about a 15% to 20% increase on the -- incremental increase on the revenue share percentage which is contractually captured with retailers. So for example, if we had a 10% revenue share with a particular brand, that may move up to 11.5% or even to 12%.

Okay. So that's the [ estimate ]. Okay. The other thing is for this Phoenix, the GIC deal, the stake, this 26% stake can go up to 35%. Any update on that? And is there a threshold event or something that is -- that you have to fulfill for the stake to go up to 35%?

So the intent of that, of the further dilution is basically to fuel growth. So there is no threshold to be achieved for the funds to come in. The funds will be brought in at the end of 12 months or earlier if -- as we identify a deployment opportunity.

Okay. Okay. So that is contingent upon you being able to identify any opportunity?

Or at the end of 12 months from the first infusion, we have the option of drawdown of further equity.

Okay. And one last bit from me on the Rise Project. You said -- you've earlier said that the total CapEx is around INR 1,000 crores, and we have already paid INR 350 crores. Just wanted to understand that has the construction commenced? And what will be -- how will we manage the remaining funding, the remaining INR 650 crores of funding?

So we've not commenced any construction. The amounts that have been paid have been paid to PML towards land from its subsidiary, Plutocrat. We have further paid for the FSI and premiums, et cetera. At this stage, we have not yet commenced construction. We expect to commence excavation by December, subject to getting all the necessary approvals. We already have the approvals to commence construction until CC, until plinth. We are awaiting the MoEF approvals. Your question on how do we intend to fund the balance, we have the liquidity at PML level to infuse more equity. We are also looking at some very attractive construction finance options. At this stage, we have not crystallized on the debt equity ratio but we do not -- we intend to be a little conservative and not rely heavily on debt.

And would you consider bringing in a partner for this project?

We are open to all options. At this point in time, we don't have any specific comment on any transaction.

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

Congratulations on a good set of numbers. So my first question is, if you see the balance sheet is under levered...

Sir, if you could move closer to the handset, please?

One second. So I was saying the balance sheet is very unlevered right now and under levered. Consumption has come back surprisingly very positive. In this scenario, in a scenario where Phoenix expected large momentum in your -- in the construction mall leasing, just wanted your sense on the business development pipeline. So with the under levered balance sheet, surplus cash available, huge headroom for doing LRDs to raise funds and even at the stand-alone level leveraging the balance sheet, so how do you see the opportunities in the market on the business development side since most of the malls will be operational in the next 12, 15 months? Just wanted to get some sense on that.

Right. Thank you for your question. So with all the liquidity, with all the capital that we've raised and the free cash that is now getting generated from all our operating assets, for the interim period, we did take up, I would say, a conservative view, and we paid down some debt. We parked down funds in OD facilities and reduced the interest exposure. We've also gone and looked at opportunities to bring down our cost of debt. We've refinanced some of our assets. And as you may have seen from our presentation, our cost of debt has come down to about 7.84%, and it's likely to go down even further as we complete some other refinance of some of our operating assets. You bring an interesting question on opportunities. We have been scouting for opportunities. I would say, completed operational mall opportunities aren't too many. The ones that are in distress and are available at attractive pricing are opportunities which don't typically fit our mandate in terms of either size or quality or architecture design, et cetera. We are seeing some very attractive opportunities in the greenfield space. As you know, in Jan, we had concluded Kolkata acquisition, and we are looking at other greenfield opportunities. And in our experience with the overall skill set that we bring across acquisition through design, through development, through operations, we find that we are able to create the maximum shareholder value in the greenfield opportunities. So we are looking at some attractive opportunities there in certain key markets where we hope to replicate the magic of Phoenix Palassio in Lucknow at these new locations.

Okay. And second question is on your office space. So Phoenix is known to be a mall story -- a mall development story, and office is always the sideline. You do have plans. You have FSI available across properties, across assets. But somehow the development -- the visibility has been lacking there. So just wanted to get a sense now since the occupancy has started improving and some [ facilities ] are bottoming out for larger asset class -- office asset class. So any accelerated CapEx rollout there or better visibility in terms of development? I mean, do we see offices now getting more area shared in the presentation? So I just wanted to get your sense to that -- your sense of the offices in terms of business will become more visible for Phoenix Mills.

I'm sorry, Parikshit, your voice was not coming very clearly. Was your question on -- I did hear that we are known to be a mall story and...

Yes, yes. Just one second. Well...

Can you repeat the main part of the question?

So I was saying that Phoenix has been known for a mall story, and offices somehow has been not very visible, not getting much screen share in our presentation. So we have been talking on and off about CapEx plans out there, and each of the malls have each large office spaces, which is present there but not visible as a [ hot ] asset. So just wanted to get your sense whether things, with the bottoming out of facilities and overall pickup in office space expected over the next 2, 3 years, so are we looking to do some accelerated roll out of CapEx there and offices becoming more of a mainstream going ahead in terms of mix?

So I would say that for us, the mainstream is not office nor I would say specifically mall. I think we have now become known to be a mixed-use development story. The mall is always the anchor at the mixed-use development. We had utilize the balance, a fair potential to build other asset classes such as offices. Now our experience at Mumbai with the Art Guild House and Phoenix Paragon Plaza, which forms part of the mixed-use development, has been that it's a very attractive proposition for tenants where your social infrastructure, your parking infrastructure, accessibility, generally gives a far better holistic experience to the office users as compared to what is -- what they may experience in stand-alone offices. We have -- in the past, we have been very, very selective about expansion. But if we look at the performance of, let's say, Pune, Fountainhead Tower 1, you may recollect we've covered this in the past, the cost to build that for us was sub INR 3,000 per square foot. We are 95% leased in Fountainhead Tower 1. We have an average net rental of about INR 70 per square foot per month, which is INR 840 annually, which is -- moves straight to our EBITDA level. So you can imagine the yield on cost from INR 840 in the first year at a cost of about INR 3,000 odd. So that currently stood at around [ 28-odd percent ] of yield on cost. So for us, where we are building out office as an expansion to our existing project where we have underwritten the entire land cost for the mall, It's a very attractive proposition, and it also gives us a lot of elbow room to be very competitive in these markets since the land cost is negligible or 0 for the office expansion. Just to cover for you, we are expanding our offices at other locations. We have Fountainhead Tower 3 at Pune, which is awaiting OC. We don't have any CapEx remaining on that one. At Phoenix Palladium Chennai, which forms part of the large mixed-use development, we are expanding that existing structure with about 400,000 square feet of offices. Phoenix MarketCity, Bangalore, we have 1 million square foot potential where you only have to pay premiums, there's no cost of land. At Lower Parel, again, we have 1 million square foot potential. Phoenix Mall of Asia at Hebbal, which is an under development project; and Phoenix Millennium at Wakad, which is an under development project, at each of these locations, we have roughly about 1.2 million square feet of office potential. So our overall commercial office portfolio under planning is roughly around 5.2 million square feet. We already have operational about 1.4 million square feet, and that's going to basically add up -- sorry, we have operational about 1.6 million square feet, and we have 5.2 million under development. So this will take our office portfolio to about 6.8 million-odd square feet.

Just last bit, if I can squeeze in. Just if you can give the lease status of the under construction malls, that would be my last question.

The lease status on under construction malls, allow me a second. Phoenix Citadel Indore, which is currently at about almost 50% in terms of commitment and LOIs executed, and we expect that by the end of this financial year, we will exceed 80%. At Phoenix MarketCity, Hebbal, Bangalore, we are currently at about 18-odd percent, which is leased in terms of LOIs and in terms of transactions which are committed, the number may be closer to about 40%. This, we expect to be at about 65% to 70% pre-leased by the end of FY '22. Similar numbers at Wakad where we have about 20% in terms of executed LOIs, another 15%, 16% which is committed, and we are expecting the LOIs and security deposits shortly. This will also exceed about 60% by FY '22. Phoenix Palladium, Ahmedabad is at 70% leased as of now.

And by March '22?

By March '22, this number should move up to about 85%, 90%.

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

Shishir, you mentioned in your remarks that you've seen some healthy leasing activity in the under construction malls. Can you quantify this? And also in terms of like kind of -- what kind of rentals are you signing in these contracts? Are they as per your expectations, original expectations? Or are we seeing some pressure over there? And also a related question is that how are these new contracts structured in terms of are they more skewed towards revenue share than minimum guarantee compared to our older contracts?

I'll answer your second question first. There is no structural change in the new contracts versus the old. We remain in the similar band range of MG plus or revenue share, whichever is higher. As far as what has been our experience in the areas that have been leased so far, see, we had put our leasing on halt for several months during this pandemic. And I think that was a good decision because in that uncertain times, retailers were not really -- they could not take a very well-informed decision on commercials. With the traction that we have seen in our malls from August of this year and Maharashtra malls, September, October has been fantastic, the retailer's confidence is very high. And in the last 2 months, we've seen a very accelerated leasing rollout. In terms of commercials, we have -- I don't believe we have gone below the business plans that we have written. In many cases that we are much higher than what we had underwritten in our business plans at the time of acquisition of these land parcels.

Sure. Can you quantify the leasing activity by any chance?

I just did. I mentioned how much we have leased out at each location. If you're looking for per square foot rentals, we can discuss that separately. I would prefer that Varun have a separate chat with you on that. But as I mentioned, the per square foot rental is at least at or much higher than the business plans that we have underwritten.

Sure. And my second question was -- actually, I missed out in your opening remarks, but what kind of rental negotiations we have done with multiplexes and SMBs?

Multiplexes we have we have not yet signed out. In a few locations, we have. But with the multiplexes just becoming operational only about 8 days ago in Maharashtra, and I think we are a little away from finalizing that.

But say, Bangalore and Chennai, like those have been operational for a while.

So see, for the period that they have not been able to operate, we are giving them a significant discount. We are not giving a full write-off for the period that they were not able to operate. Now for the period that they have become operational, since they've become operational, what is going to be the minimum guarantee is still in discussions at various locations. In Bangalore, I think we've already concluded it. We've -- we are going to be extending some discount to multiplexes for this quarter as well, current quarter as well. But on the flip side, we are going to take a much higher revenue share for the next 12 to 18 months. That's the general structure that we are discussing.

The next question is from the line of Girish Choudhary from Spark Capital Advisors.

Yes. So firstly, you did mention about the strong momentum at The St. Regis property. So if you could share what kind of occupancies and room rate one can expect in the near term?

Yes, am I audible?

Yes, I now hear you.

With regards to the hotel at -- I couldn't hear very clearly, but is the question with regards to occupancy and rates at The St. Regis, Mumbai?

Yes, yes.

Okay. So in this last month of October, we've been -- we've seen close to 80% occupancy. This has largely been driven by increasing corporate -- domestic corporate travel and an increased demand from groups for weddings and social events. This has also helped us pull up our average room rates from what they were at in the month of July and August. So we are close to 80% in October. In September, we were at about 74% in terms of occupancy. We were at 14% in the month of May. So that has been the ramp-up from 14% to -- 14% in May to about 50%, 51% in August, 74% in September and almost 80%, 78-odd percent in October, 77% in October. In terms of room rates, we have seen our growth as well. Our room rates have now moved close to about almost INR 8,000 in terms of average rate in the month of October, and which was -- at the lowest, it was in the range of about INR 5,000 in the month of May. Since the profile of the of the hotel guest is now moving away from the staycation and highly discounted groups to corporate -- domestic corporate travelers and social events, we've been able to pull up this rate, and we expect this to continue on through the strong months of December, Jan, Feb, March, where our banquet bookings are also extremely high.

Got it. Got it. And my second question is again on how to look at the rental trajectory in the near to medium term. So if I look at the quarterly run rate of rents in FY '19 and also '20, it was around INR 250 crores average. This quarter, we clocked around INR 198 crores, but like-to-like, if I see it's INR 175 crores. So going ahead, looking at October consumption trend, renewals and increasing occupancies, can we reach this INR 250 crore run rate or even more from the existing properties in the near term?

So we remain hopeful that there are no further lockdowns and there is no further impact going forward. And in that environment, looking at the current consumption that is seen at the mall, our current rental billing and collections rate and the retailers confidence, which is evidenced by them paying what is due, we are expecting that Q4, we should be able to see the -- see similar rentals on a conservative basis as compared to Q4 of FY '20 and if not, higher.

I have one more if I may. This is just a housekeeping, just the balance of CapEx budgeted for FY '22 and FY '23.

Allow me -- I'm going to request Varun to give you the brief on this.

Girish, so for the first half, we have spent about INR 230 crores on the 4 retail malls which are under construction at Wakad, Hebbal, Indore and Ahmedabad. Besides this, we have also spent about INR 20 crores on our under construction office tower in Pune, which is Fountainhead Tower 3. And we have also -- like Shishir mentioned, we have also secured FSI and approval for Project Rise as well. I think going forward, given that all 4 of these malls are going to become operational between the next 12 to 24 months, the construction spend per quarter is going to ramp up from the current number of INR 100 crores. We expect it to go to about INR 170 crores, INR 180 crores per quarter.

[Operator Instructions] The next question is from the line of Biplab Debbarma from Antique Stockbroking.

Sir, my first question is on regarding your rental and the revenue share. I'm a little bit confused. So for a typical mall, for a typical new tenant, so are you saying that once it becomes fully operational and everything goes back to normal, they will be paying the rental as per the agreement, which is -- which has included escalation, and in addition, they will pay revenue share -- a little bit higher revenue share than that was there in the agreement? Just can you give the examples and clarify how things would pan out once things become normal?

Yes. So your understanding is correct. With part -- with the second part of your understanding on an increased revenue share, that is for a limited period that there will be an increased revenue share to offset for the past period where we have given discounts and waivers. But yes, as things return to normal from this month onwards, we are expecting to be at contractual rental by and large in -- across categories with the exception of multiplex.

So just a clarification on this. So this revenue share -- increased revenue share, that will be already decided that how long it will be there, I mean, for 5 months, 6 months, increased revenue share? Or it will be decided later?

It is -- it varies from our brand-to-brand negotiation. But it is generally for the period of FY '23. In some cases, it may be 6 months. In some cases, it may be 12 months. In some cases, it may extend into FY '24 for some limited period as well.

Okay. Okay. Second question is on the footfall, sir. I mean, consumption is great, 90% in October of 2019. And I'm sure in the festive season, the consumption will increase. Sir, just wanted to understand about the footfall. What will be the footfall in general? I mean, is it same like 60%, 70% footfall but the consumption per person has increased?

You're right. So the ticket size per person coming into the mall has gone up. The footfalls, again, your estimate is right, it's about 60% to 70%, and it varies from mall to mall. But the average spend per person in the mall has certainly gone up. So you're getting good -- I would say, serious shoppers and a very good profile coming into the mall.

Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Shrivastava for closing comments. Over to you, sir.

We wish you all and your families a very happy and prosperous Diwali. Thank you for joining the call today, and we look forward to more frequent engagements along with our IR team in the coming months. Thank you.

Thank you. Ladies and gentlemen, on behalf of The Phoenix Mills, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.