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

Ladies and gentlemen, good day, and welcome to the Q3 and 9 months FY '22 Results Conference Call of the Phoenix Mills Limited. [Operator Instructions] Management of the company has been represented by Mr. Shishir Shrivastava, Managing Director; Mr. Anuraag Srivastava, Group CFO; 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. Shishir Shrivastava. Thank you, and over to you, sir.

A very good morning, ladies and gentlemen. As always, it is our pleasure to welcome you all to discuss the operating and financial performance of the third quarter and 9 months of FY '22. Today, before we begin with the results update, I would like to take this opportunity to extend a warm welcome to Mr. Anuraag Srivastava, our Group CFO, who has joined us from December 2021. Anuraag brings with him a rich and varied experience of more than 25 years across diverse sectors like FMCG, retail, telecom and infrastructure and across geographies. Most recently, he served as the Group CFO at Sterlite Power Transmission Limited. Prior to that, he has held senior positions at Tata Teleservices, Indus Towers, GSK Consumer Healthcare and The Future Group. With our company undergoing a period of fast-paced growth and transformation, Anuraag will be responsible for driving the company's overall financial and capital allocation strategy, unlocking shareholder value, future fundraise strategies, mergers and acquisitions, digital transformation of the Finance and Accounts division, amongst others. These initiatives will help the organize to manage, scale and evolve our businesses as we continue to accelerate our momentum. Anuraag, a very warm welcome and wishing you lots of success.

Thank you, Shishir. I'm really excited to be part of Phoenix Mills family and look forward to a fulfilling journey with the company.

I would now take you through the key highlights of our results. In the retail business, consumption was at INR 2,070 crore in Q3 FY '22. Likewise, consumption in Q3 FY '22, including Phoenix Palassio at Lucknow was at 100% of Q3 FY '20, which is the pre-COVID quarter. Excluding Phoenix Palassio, consumption in Q3 FY '22 was at approximately 89% of Q3 FY '20. Consumption in 9 months FY '22 including Phoenix Palassio was at 60% approximately of 9-month FY '20. However, it's important to note that most of our coveted mall assets in Maharashtra were not operational for most of April through September period. In January 2022, our operational malls recorded a consumption of approximately INR 493 crores. This is at approximately 79% of consumption against Jan 2020 which is the pre-COVID period and 70% adjusting for consumption of Phoenix Palassio. January consumption was, however, impacted due to increasing cases and the third wave of COVID and local restrictions in certain states. This is on par with October 2021 consumption levels. Further, trends observed in the first week of February, indicate that consumption is back to pre-COVID numbers. As on date, most restrictions across states have been lifted and malls are close to resuming normal operations. Our retail collections have improved substantially. In Q3 FY 2022, we witnessed an all-time high of collections, which stood at approximately INR 448 crores. While for the 9-months period of FY '22, collections stood at approximately INR 698 crores. January collections remained strong at over INR 130 crores. Overall, we remain positive in our consumption recovery outlook for the fourth quarter on the back of improved vaccination levels and resumption of normal operations across categories. Moving on to the commercial office portfolio. Our office portfolio continues to remain resilient. Collection efficiency for the portfolio was in excess of 95% in Q3 FY '22. Fountainhead Tower 2, we have seen strong leasing traction with approximately 48% of the gross leasable area getting leased so far. Fountainhead Tower 1 in Pune has a leased occupancy of approximately 95% and is fully operational. In December 2021, we also received the occupation certificate for Fountainhead Tower 3 at Pune and expect the start to start generating rentals in the next few months. During the 9 months of FY 2022, we have signed new deals of approximately 1.9 lakh square feet, of which roughly half is operational and the balance will become operational in the next 2 quarters. We have renewed deals worth approximately -- renewed deals for approximately 2.1 lakh square feet during the 9 months in Mumbai. 9-month FY 2022 office has benefited from the rental contribution from Fountainhead Tower 2 in -- and the income is likely to improve in the coming quarters as over 100,000 square feet of area becomes rent generating in the next 1 to 3 months. To summarize, we have done a leasing of approximately 4 lakh square feet in 9 months FY '22, of which renewals is 2.1 lakhs, and new deals is 1.9 lakhs. A quick update on our iconic project at Lower Parel Project Rise. During the quarter, we executed agreements with the Canada Pension Plan Investments to develop a flagship office-led mixed-use development which will substantially complement our existing retail and hospitality landmarks at Lower Parel. We expect to add office GLA of approximately 1 million square feet and retail GLA of approximately 200,000 square feet at this new project. We have also made significant strides in securing approvals and crystallizing the development potential for Project Rise. We have received the commencement certificate for the project and are currently in advanced stages of design development. We are very confident of building an iconic office landmark destination for the city of Mumbai. Meanwhile, we are also progressing with our plans for developing offices at our malls at our mixed-use projects at Wakad in Pune and Hebbal at Bangalore and also at Chennai. And we expect to share more detailed updates as things crystallize at our end. Moving on to the residential business. We have witnessed good traction in residential sales, mainly led by the reconfiguration of our Kessaku property into smaller units and the robust demand for ready to move in inventory. Between April and December, we have sold inventory worth INR 130 crores. During Q3, we have sold inventory worth INR 32 crores. For 9-month FY '22, we have additionally sold INR 31 crore of inventory, which is yet to be registered, taking our 9-month FY '22 sales to approximately INR 161 crores. Our collections from residential business during the 9-month FY '22 was at approximately INR 178 crores. In the month of January itself, we have sold inventory worth INR 18 crore and collected more than INR 22 crores. We are seeing strong buildup in demand and faster conversions for our ready inventory, and we are stepping up all our efforts to sell inventory by launching attractive subvention schemes for the entire development, special offers on ready-to-move inventory and digital marketing campaigns to widen the reach of our project -- of our product. Momentum in sales is expected to continue in the coming quarters as well. A quick snapshot on our hotels. The hotel business showed strong improvement on the back of higher occupancies, social events and the F&B. The St. Regis Mumbai reported revenues of INR 55.3 crore in Q3 FY '22. This is up 93% Q-on-Q and 140% year-on-year. While occupancy levels have reached pre-COVID levels in Q3 FY '22, we expect average room rates to increase as well going ahead with the resumption of business travel and relaxation for foreign travelers. Similarly, Courtyard by Marriott had a good quarter and contributed approximately INR 10.1 crore in the third quarter FY '22, with average occupancy of approximately 66% and ARRs in excess of INR 4,260. Our under construction projects, a quick update on that. Our current pipeline of under construction malls, Phoenix Millennium at Pune, Phoenix Citadel at Indore, Phoenix Mall of Asia in Hebbal and Phoenix Palladium in Ahmedabad and our newest mall in Kolkata will take up our portfolio of retail to approximately 13 million square feet of GLA. Construction work at all our sites is on in full swing. We expect Indore and Ahmedabad malls to be operational by mid- to second half of FY '23. And both Pune and Bangalore new malls should become operational by the first half of FY '24. Retail interest in our under construction assets remains very high, and we have seen significant traction in leasing activity in the quarter gone by. We expect Phoenix Citadel at Indore to be -- to cross 75% of leasing by March 2022. Phoenix Mall of Asia at Hebbal, Bangalore should cross 50% by the end of this financial year. And similarly, Phoenix Millennium at Wakad, Pune will also exceed 50% by March 2022. Phoenix Palladium Ahmedabad is already leased at over 75%. May I now request Anuraag to update you on the financial performance. Thank you.

Thank you, Shishir. Good morning, ladies and gentlemen. Continuing with the briefing which Shishir gave, I would like to share with you some of the key highlights of our consolidated financial performance. Our income from operations for quarter 3 FY '22 stood at INR 425 crores and INR 988 crores for 9 months FY '22. Quarter 3 FY '22 EBITDA was about 3 -- INR 231 crores. While for 9 months, it was at INR 493 crores. Retail income came in at about INR 261 crores in quarter 3 FY '22 and INR 546 crores for the 9 months. Quarter 3 FY '22 retail EBITDA was INR 251 crores, and INR 531 crores for the 9 months. Our commercial office portfolio reported a total income of INR 37 crores in quarter 3 FY '22 and EBITDA of INR 21 crores. For the 9 months, the commercial income came in at INR 115 crores and EBITDA was at INR 71 crores, while we remain confident to do an EBITDA in excess of INR 100 crores for the full year as occupancy ramps up across some of our assets. Our income from hotels was INR 65 crores in quarter 3 FY '22 and INR 115 crores for the 9 months. Moving to collections. Our gross collections from the business came in at about INR 1,113 crores for the 9 months of FY '22. Out of which, retail contributed INR 698 crores, commercials was at INR 122 crores, residential at INR 178 crores and hotels at INR 115 crores. This resulted in a 9-month FY '22 EBITDA of INR 493 crores and operational cash flow of INR 418 crores after payment of taxes, et cetera. Proceeds from RP transactions with CPPIB and GIC were INR 2,600 crores for 9 months FY '22, while our CapEx for the same period was INR 959 crores. Our liquidity position as on 31st December '21 was INR 2,495 crores, an increase of INR 758 crores as of 31st March 2021. This excludes undrawn OD limits of about INR 685 crores, which are available to us. So as a result, our consolidated gross debt stood at about INR 4,305 crores as of 31st December as compared to INR 4,299 crores at the end of quarter 2 FY '22. This is up by about INR 6 crores. Our average cost of borrowing continues to go down. It went down to about 7.61% from 7.84% last quarter. Cost of borrowing is further expected to decrease post refinance of certain existing loans, which we are planning going ahead. PMLs share of gross debt is about INR 3,197 crores. Adjusted for the liquidity available with PML in form of bank balance investments, et cetera, PMLs share of net debt is INR 1,264 crores only. We strongly believe that tough times are behind us now. With this extremely strong balance sheet position and liquidity position, our focus is now to deliver on our under construction projects in time and judiciously deploy our capital to expand our portfolio. With this, we would like to close our opening remarks, and we'll open up the call for an interactive question-and-answer session. Thank you.

[Operator Instructions] The first question is from the line of Parikshit Kandpal from HDFC Securities.

Congratulations on a good quarter. My first question is -- it's actually your slide. So the trading occupancy is still lower than -- converge the leased occupancy. So just wanted to understand that with respect to like-to-like comparison versus pre COVID. So once these 2 numbers converge, so on a like-to-like basis what could be the exact rentals, yes, so that's my first question.

Yes. Your question is why the gap between trading occupancy and leased occupancy?

No, no. Sir, I wanted to know when these 2 numbers converge, so on a like-to-like basis versus pre-COVID level, what kind of only rentals, we are now averaging. So want to just understand what is towards the leased occupancy.

So we have -- across all our assets, we have several stores which have either undergone a churn or they have gone into refurbishment. So we expect this to converge probably in the next, I would say, in the next 2 quarters. We expect to see our trading occupancy move up to closer to 90%, 92%. A positive impact of this to the rental income would be in -- across the portfolio should be approximately INR 100 crores. This does not include any rent escalations which will further take the number -- rental income up.

So Shishir, once you have the rental escalation in place and the trading occupancy moving towards the headline occupancy, so we were averaging about INR 1,000 crores of rental pre-COVID. So what that number would be once these 2 things happen. My FY '23 exit excluding Palassio I'm saying and any new mall in this slide for my comparison.

I think to answer that question, we should see, let's say, an annual run rate of about INR 1,200 crores, including Lucknow after -- let's say, from June onwards. That would be our estimate.

Okay. Second question is any rethink on the business development pipeline where we have been partnering each and every mall? So now with COVID largely behind us, and we put such a strong balance sheet and cash position strong. The cash position, I mean if I include the real estate unfolded and so hardly any debt on books or P&L shares. So any big thing that from new malls maybe, our stake maybe near 100%, or maybe much higher than how we have been diluting the partners. So I mean you see there for the business development pipeline?

So I would say that our focus at present is to deploy the capital that we have raised in the GIC platform. And there are several opportunities that are under evaluation in various geographies. We continue to look for opportunities even beyond that. And for us, without having much debt, we have strong partners at the asset level. I think growth is imminent. It's about just getting the right opportunity. We have enough liquidity on our balance sheet, as you rightly pointed out, to be deployed for such opportunity.

Sir, my last question is, could we see acceleration now on the building side, given that you were earlier looking to add about -- so can -- there because we have a strong management position, so can there be a estimation in the new building pipeline where we can have some projects deployed, 100% or 100% stake and some project leading partners?

Sorry, can you repeat the last part of that question? I didn't understand the 100% stake part.

So I think we have been diluting with partners like CPPIB and GIC and potentially there's some capital to be deployed with GIC. So given that we are that most of the COVID is behind us and with a strong balance sheet, we will look at adding more malls now in a more accelerated way wherein some malls may have 100% economic interest and others, we will continue to partner with CPPIB or GIC.

So -- I'm really sorry, but your line is a little weak. I'm not able to appreciate. What is the question. Is the question that are we evaluating acquiring assets outside of our partnerships?

Yes, yes. So I was saying that we have given a guidance that every year, we'll be adding a new mall beyond FY '25. So now since the balance sheet is so strong and most of the other competitors also are looking out at adding loans. Do you think that given the strong balance sheet we have, we can add more malls beyond that one number? And can we have like some malls 100% stake economic interest while in some malls, we may continue to partner with CPPIB or GIC?

So okay. So I'll break this up into 2 parts, my response. We had a stated goal of increasing our retail GLA to excess of 12 million square feet, which was our goal that we had set out for ourselves in 2018. This was pre-COVID. We are well on track, delivering that goal. In fact, we wanted that number to be at 12 million by FY '24, and we expect to be achieving that. We had also a stated goal that each year after that, we would add approximately 1 million square feet with the Kolkata acquisition. The FY '25 target is also in place. We are extremely active on the BD side. We are looking for opportunities in the markets of Hyderabad, Surat, Jaipur, Chandigarh, Navi Mumbai, amongst others. So we are active there. And I think we are well on track to continue adding 1 million square feet of our portfolio even beyond FY '26. Having said that, your second part, whether we will be looking at adding assets on our own balance sheet with a 100% stake. At present, we do not intend to dilute any further to raise any capital with any private equity partner on any of our existing assets. We do have liquidity in our JV platforms, which we are going to be looking at deploying. And I think it's going to be a little opportunistic. Some assets we will be acquiring through our JV platforms and some may be outside of that as well, depending on our partners' preferences.

The next question is from the line of Puneet from HSBC.

Congratulations on good numbers turning back to normal seniority. My first question is you talked about your leasing of the new upcoming malls reaching almost 50%. Is it still LOI? Or is it the commitment number? How should I read this?

So when we -- Puneet, when I mentioned that Phoenix Citadel Indore should cross 75% by March '22, this would be a committed number with an LOI executed and security deposit received.

Okay, security deposits received. Okay.

Yes. And similarly, that would be the case with all the other malls as I mentioned.

So even with Bangalore, Pune, they are 50% committed number with security deposit received already?

By March, we expect to be at that number.

Okay, by March, okay. And Ahmedabad, you said about another 85%?

75% already received, yes.

85% already received securities?

75% is where we are, where we've already received security deposits.

Okay. Okay. That's very good. Secondly is how -- is there any thought from retailers or any push from retailers to renegotiate renters during the Omicron impact?

Not particularly, Puneet, nothing as such. In the -- this was -- I would say, it was a short wave and the resurgence of -- or the bounce back on consumption which was at the same in January. Despite 2 weeks of impact, January consumption was similar to October '21. And last 2 weeks, the consumption has been near to 100%, 2020 -- Jan 2020.

Okay. Okay. That's interesting. And...

That kind of gives the confidence to the retailer. And there has not been any discussion on negotiation of rentals.

Understood. So now you're saying that by February, things have returned back to normal in terms of consumption, trading, et cetera?

Yes.

Okay. Okay. That's good. The last one is on if you've been able to conclude your discussions with cinemas and food court. Any comments there?

On -- so we've concluded our discussions with all cinemas and all F&B operators at food court even otherwise and even the other dine-in restaurants. There's nothing -- there's no -- as such there's no deviation to really respond or report on right now.

No. So will they come back to normalcy from 4Q or is it going to be 1Q in terms of rental contracts and all?

Multiplexes -- for example, Q3 consumption across the board, multiplexes were at 10% above Q3 FY '20. So I think...

10% above FY 20 -- Q3 FY '20?

Yes. That's right. January was, of course, impacted because again of the restrictions and the wave. But Q3 numbers were quite -- gave us a lot of confidence.

Yes, okay, okay. So I would presume...

It's actually, several of our F&B operators are seeing very, very good business. In fact, if you just look at Q3 numbers, they were at -- the consumption in F&B was at about 2% higher to the pre-COVID period.

Okay. That's good. So despite the fact that actually in many places, they were still 10% to 20% lower or at an average 11% lower on consumption in Q3 FY '22 versus Q3 FY '20, cinema was higher and food court was higher but...

That's right.

Very interesting. So is it fair to assume that 4Q FY '22, which is the current quarter and next quarter, the cinemas will be back to their normal run rate in terms of paying rents, et cetera?

I would -- we certainly hope so because I think it will be better for us to observe for the next month or so and then it also depends a lot on the content that's available to be...

Yes. No, no. What I mean to say is there is no concessional deal given to them before that is better.

That is.

The next question is from the line of Pulkit Patni from Goldman Sachs.

Shishir, my first question is in continuation with the previous one. So while we've seen consumption being pretty robust, rental is still not caught up to the same level. So any -- again, checking any concessions that were given in Q3? And how should we look at this trend going forward? Because across most assets where I see, we are at about 80%, 85% of pre-COVID. Whereas except for -- even if we take out Palassio, our consumption numbers are almost there. So that would be my question #1.

Yes. So there's -- I would say that there would be in Q3 FY '22 excluding Palassio, our rental income was at INR 236 crores. And pre-COVID quarter was at INR 270 crore across our entire portfolio. But if you look at specific malls, right? Look at Bangalore. Bangalore was at 97%, 300 -- INR 38.6 crores versus INR 40 crore. Phoenix MarketCity Pune was at INR 43.2 crore versus INR 45.8 crore, so it was close to 95%. All of our assets have been trending closer to that 95% -- 90%, 95% range. Mumbai because of the serious restrictions, severe restrictions, did see an impact and those restrictions continued on into Q3. And in fact, Mumbai and Pune only opened up by the end of October fully as such. So there was an impact in that quarter. But overall, if we look at the overall rentals, overall, we were at about close to 87% compared to pre-COVID levels. And Mumbai, Pune, our 3 assets did see an impact of the restrictions and being shut until September and October.

No, but consumption there were almost back to normal. So you are saying there was no additional concession that were given to any of the tenants then? And in which case, I mean if we adjust for January wherever it is, our rental collections will also catch up is what you are saying very soon. Is that the right way to look at it?

The right way to look at it is there were some adjustments for the billings done in Q1, Q2, which were negotiated during the period of Q2 and Q3, and that impacted our numbers -- rental numbers for Q3, reported in Q3. But for that period of Q3 itself, there were no, as such, no really remarkable concessions.

Got it. So whatever has to be done is done and dusted now? And going forward, it will be a normal number that one should expect?

That would be correct.

That would be correct, okay. My second question is just looking at our commercial portfolio. And I clearly see a increase for this on commercial. I mean, even if we look at Project Rise, which is predominantly a very, very robust retail asset for us already, we are doing a lot more commercial. And that too, when our rental collection or our rental rate is not probably one of the highest in that micro market, if I look at Lower Parel. So just wanted to get a sense of why 1 million commercial and 200,000 retail there? Why not full retail? Just a sense on the thought process there?

Okay. So we are taking the benefit of the development regulations to be able to go under the CBD scheme and develop the maximum FSI potential. However, it's important for you to understand that the area where one can build this, the footprint is very limited. And as you go higher up, you can do a mall, which may be ground plus 3 or ground plus 4 level. But beyond that, retail won't really work. Therefore, the tower portion is going to be for an office.

Okay. So it's basically trying to optimize the space that we have available at the locations?

Yes.

The next question is from the line of Adhidev Chattopadhyay from ICICI Securities.

First, just a clarification on how the rental agreements were currently in Q3 and in Q4. So is our understanding has -- have most of the tenants moved back to the minimum guarantee sort of arrangements pre-COVID or is there still some time to go for that? And if -- what is the percentage also in the overall tenancy on minimum guarantees?

Almost all tenants have moved back to contractual minimum guarantee rent and many of them with escalations as well.

Okay. So would you share some -- means, percentage number? Is it like 85%, 90% or like I'm just trying to adjust for multiplex...

It would be closer to 95%, 96% have moved back to contractual rent.

So this is from January or from previous quarter? This is just...

This is from January.

Okay, from January. And is there any further collection spillover, which may happen in Q4 from the previous 9 months of the year from the rental collections?

Collections spillover, yes, of course, they will be.

So sir, so a reasonable assumption is this number maybe on a group basis, our retail rental income may cross INR 800 crores for this year. Is that the correct way of looking at? Means we at least achieve the run rate we have achieved in Q3 of INR 260 crores, group level.

I would think, yes, we should be somewhere -- so let's say, for 9 months, our number was at about -- 9-months rental income was about INR 550 crores. I would add perhaps another INR 200-odd crores coming in the last quarter. So say, INR 250 crores more. So that would take us closer to INR 800 crores.

Okay. So that is, I think, a minimum and something higher. And have the overall revenue sharing also, have you gone back to pre-COVID or is it now a higher share of revenue -- sorry, the revenue share portion will be higher this time compared to previous -- pre-COVID at other portfolio?

Yes, there would be some spillover of our negotiations with retailers, where for us, for a period after the discounts and on minimum guarantee rent, we would be accruing a higher revenue share. So that should probably continue until -- in several cases till March of this year, and in few cases till July of the year.

Okay. Okay. Sir, my next question is on the escalations. As you talked about, sir, the portfolio what would be sort of a blended sort of escalation in FY '23, considering like we're going to have almost 3 years -- sorry, a couple of years lost out due to COVID and overall, the inflation which has been there in the -- during that time.

I would suggest you connect with Varun offline and get a detailed breakup on this. Compared to, let's say, if we just look at the last quarter compared to December -- quarter ended December 2019, we -- our MG would be up by approximately 10% in the quarter ended December '21.

Okay. And sir, my question is more for what are we looking ahead? Like in FY '23, right, once things normalize and everything, right? So what is the sort of escalation one could expect at a portfolio level? That is more on a forward-looking basis.

See, it's not a very simple and straightforward answer. We are looking at -- there is a significant churn which is ongoing at several of our assets. And we are looking at new categories and new retailers coming and taking up that space. I would think that if there is -- I don't have an overview on what could be the escalations arising out of these changes. So it would be incorrect for me to hazard a guess.

Okay. Sir, and last question is just on that 4 upcoming malls, right, Indore and at Ahmedabad, Bangalore and Wakad, what is the indicative rentals you have done the leasing at, if you could just share till date for whatever...

Indore is roughly at about close to INR 90 a square foot. Ahmedabad is close to about INR 150. Bangalore, Hebbal is at about INR 160 again. And Wakad, Pune would be about INR 115 to INR 120. But this is all the mall-level average since we have leased across different categories.

[Operator Instructions] The next question is from the line of Kunal Lakhan from CLSA.

Shishir, I mean, since mall operations are stabilizing across the country, like how are you looking at the new acquisition landscape now? Are other deals fewer versus, say, a year back? Or the terms are getting less favorable versus a year back? Or is it otherwise?

So Kunal, we have -- actually, we were scouting for opportunities in completed or operational assets, but we didn't find many malls which would meet our specifications or design standards. So for us, the focus has only been acquiring greenfield opportunities. Land pricing really has not -- we have not seen any reduction or drop in land pricing in the last year or as such and it continues to remain stable. So we are looking at greenfield acquisition opportunities across the markets that I had earlier mentioned.

Sure, sure. But are the land price -- you're saying the land price is still the same. There's no change over there.

I would say the stress has -- the stress may have reduced a little bit, but we have not seen any significant movement in land pricing as such because if we are looking for opportunities for us, we are looking at 8 acres going up to 15-acre, 16-acre land parcels. And there aren't too many purchases for that size. And also, as a matter of fact, like I said, the prices had not really dropped in the first instance. Landowners had not dropped their expectations on their pricing in the last 1.5 years. So it kind of remains stable.

Sure, sure. My second question is on the ARR side. Like your occupancy in the hotels is very close to the pre-COVID levels. But ARR was like 40% below the pre-COVID level. So how -- when do you think -- by when you think this ARR will normalize?

So in Mumbai, the ARRs -- and we've been tracking all our comp set. I think generally across the board, ARRs have been in the range of INR 7,000, INR 7,200, INR 7,500. The last quarter has been all about getting the occupancy up. And we expect to see -- it's pretty typical when you start seeing a higher occupancy in excess of 75%, the ARR start moving up. If I were to just crystal gaze, I'm hopeful that in this next quarter, Jan, Feb, March typically, which is a slow quarter, but there are a lot of several corporate events and social events that are lined up that should take our ARR up. But whether it's going to hit INR 10,000 or INR 12,000, which was the pre-COVID level, I'm not -- I can't really hazard a guess again on how long it will take to reach that. It all depends on demand.

Okay, okay. My last question is a bookkeeping question, actually. So if you can give us overall balance CapEx on your under construction portfolio. And if you can break that up to the -- I mean, into Indore, Hebbal, Wakad and Ahmedabad also.

I can give you approximate numbers. If we just look at the malls, our total CapEx across malls -- just allow me 1 second, Kunal.

Sure.

So across our malls at Phoenix Millennium Pune, Wakad, Mall of Asia at Hebbal, Phoenix Citadel at Indore and Phoenix Palladium at Ahmedabad, we've so far spent about INR 2,485 crores. The balance cost to complete is about -- estimated at about INR 1,540 crores.

INR 1,540 crores, right?

Yes.

Okay. And if you -- this would have included Project Rise? This is -- it would...

No, this will not include Project Rise. These are only the 4 malls which are under development, which are going to be delivered between FY '23 and FY '24.

Okay. Great. It's possible to give a breakup or should I take it offline?

Yes. You can reach out to Varun, and he'll address it offline.

Sorry, and one last question on how much was the spend on approval in Q3...

Sorry, could you repeat that question?

How much was the spend on approvals or FSI in Q3?

On approvals?

FSI, sir, premiums you have paid pertaining to Project Rise?

Pertaining to Project Rise?

Yes.

So in this last quarter, I think we've spent about INR 35 crore on some of the premiums, et cetera, that had to be paid. If you need further details on the granular level, you can again connect with Varun and get that information.

Next question is from the line of Prem Khurana from Anand Rathi.

Congratulations on a good set of numbers. Sir, my question was with respect to our P&L mix. I mean because of this COVID situation, the way the things have been in the recent past, I'm sure, I mean, you would have realized the way some of these categories are kind of reacting to the COVID situation or I mean where required make changes. So do we envisage any meaningful change in our, let's say, tenant mix in terms of categories, later either by design because some of these categories are not right for you now after COVID or by choice? I mean where some of these payments were kind of move out on their own where they don't get to be -- they are required stay back and in these malls anymore?

Prem, not particularly. If you're asking if there's a fundamental change in our approach on our category mix, I don't know, I don't think so. If -- we have seen several of our F&B operators going through a lot of financial stress but that also seems to be behind us simply because the demand on F&B side has been extremely high. So entrepreneurs have been able to sustain themselves and raise capital. There may be a few vacancies on that front. But as such, there is no -- there is going to -- there is no likelihood of any fundamental change in our category mix.

Sure. And any change in the way you structure your agreements now? Have you been approached by any of these clients where I mean, they wanted to have more of revenue share and less of minimum guarantee now because they want to -- they want you to kind of get aligned more with the business prospects or the way the consumption would kind of shape up going forward?

Again, no structural change in the revenue share versus minimum guarantee rent.

Sure, sure. And just one last bookkeeping question. I mean the liquidity that you talk about INR 2,500-odd crores. Possible to share, I mean, how much of this is eventually fungible? I mean, I understand you have INR 2,500 crores, but a large part of this money is lying in some of these SPVs, let's say, CPPIB, Enstar which is meant for specific purpose or Kolkata that again is meant for specific purpose. So how much is the free capital, I mean, which is your own actual own capital, where I mean you would be able to use it for your growth in your personal capacity and not in JVs? Hello?

So we have about -- I would say that we have liquidity of about INR 900 crores at Phoenix Mills Limited level. And in addition to that, we have undrawn OD limits of about INR 680-odd crores.

Next question is from the line of Amandeep Singh from AMBIT Capital.

So Shishir, my first question is on the competitive landscape. So what we hear is that Lulu will be opening its mall in Lucknow by April. And separately, they also announced investments in Ahmedabad recently. So in that context, can you give us some sense on how the upcoming supply in your key micro markets would stack up given you also have a sizable pipeline across micro markets? And any initial sense on how Lulu's recent mall in Bengaluru would have done given the offerings like hypermarket or entertainment center like Funtura. So how their products would differ from yours, so some sense on that?

I really don't have a comment on Lulu's mall and its performance. I think when they opened in Bangalore, they were very widely well accepted. We have not seen a dent in our consumption or our business on account of the mall opening there. There is also a fundamental difference in the category mix and the brand mix that we have between our 2 malls. I think there is -- that's a bit of a differentiator between us and them. On a pan-India basis, there aren't too many malls that are being built. And we remain confident in our own model.

Sure, sure. And whilst we agree that Bangalore mall won't be having any impact because of different locations, can we -- will it be fair to assume that similar would be the trend because of Jio World Drive in BKC in a bit different locations and target audience, so no impact on your Mumbai malls?

Yes. Again, I would say that the Jio World Drive in BKC, again, a very, very good quality asset. It's not really impacted our consumption neither at Phoenix Palladium, Lower Parel nor at Phoenix MarketCity at Kurla. I guess it's again a combination of a different category mix and different brand mix.

My second question is on the residential side. So we acknowledge that Bengaluru as a micro market has been doing well and also has also being reported by the other listed players. So in that context, any sense on when do you think that the company will be able to monetize the entire residential portfolio?

So currently, we are selling our ready inventory, which is largely in Kessaku and some inventory at Tower 7 of One Bangalore West. We still have to launch towers 8 and 9. I think considering what the velocity, we -- it would be fair to estimate a INR 20 crore per month kind of a sales velocity, which we should -- we expect to be continuing to see going forward as well. By our best estimate, I think we should look at being able to exit Tower 7 and Kessaku in the next 30-odd months.

So this is really helpful. And one last question, if I can squeeze it. So 2 of your assets, Pune and Chennai have seen some impact on the lead occupancies amid the COVID. So in that context, can you help me with thoughts on the realization of fresh leases over year and which category tenants would be sending enquiries to expand with?

Did you call out specifically Phoenix MarketCity, Pune in your question?

Yes. Pune, Phoenix MarketCity Pune and Phoenix MarketCity in Palladium Chennai, so these 2 assets.

Yes. I think the pertinent number to look at is not the trading occupancy, it's the leased occupancy because leased occupancy is -- as I mentioned earlier during the call, we have seen several of our stores or our brand partners, either moving out and new ones moving in or some of them renovating their stores. So as a result of that, the trading occupancy may be showing lower. But Phoenix MarketCity Pune is still at a leased occupancy of 91%. And Phoenix MarketCity Mumbai is still at a leased occupancy of 94%. And the trading density -- on the trading density side for the areas that are operational, in Pune, we've not seen much of a difference. In Mumbai, yes, there has been a reduction from INR 1,400 it's come down to close to INR 1,100. That again was more because of -- not because of the stores not performing, it was because the stores were shut. The malls were not allowed to operate, and we really started seeing this, malls becoming operational end of October. So that's why as you can see, there was an impact.

Shishir, just to clarify, I was on -- not about the Mumbai, only Chennai. So your lease occupancy is at 90% versus the 97% pre-COVID. So I just wanted to get some sense on which tenants would be tending to expand over here. The category of tenants, which would be sending enquiries to expand.

In Chennai, we are seeing a transitional vacancy because at Palladium, we are also seeing the first renewal cycle coming to an end. So that is the transitional vacancy on account of that. And that has -- and in addition to that, we have some mall upgrade going on in Phoenix Palladium at Chennai as well. Is there a second part to your question?

No. And all the very best.

The next question is from the line of Biplab Debbarma from Antique Stockbroking.

So most of my questions are answered. Still 2 questions from my side, sir. I'm just trying to understand, you have been mentioning churns, significant churns. Could you give us some insight what kind of churns? Why the churns happening?

It's end of contract-related churns.

So significant -- so is it like a lot of renewal happening this quarter? Is that what you meant? And new place, with new tenants would be replacing some of these old tenants who are -- who may not be renewed, is that what you mean by churn, significant churn? Hello?

So in Chennai, as I mentioned, we do have the end of the first renewal cycle, which has kicked in and there is a churn on account of that. We are also looking at -- in several locations, we are looking at relocating some of our existing tenants within the mall to other locations and creating luxury zones, et cetera. So there is an improvement in the tenant mix that we are looking at across these locations. If you would like to really understand what was the exact vacancy in this quarter on account of renewals or on account of such churn, you can reach out to Varun and Advait for more granular information.

Okay, that's fine, sir. No issues. Second thing is just trying to understand on the footfall level. Consumption level, you have given us clarity. On the footfall level, has any of -- in any of these months or weeks, has the footfall level crossed the average of pre-COVID level?

See, footfalls are at about 70% to 75% of pre-COVID levels.

Okay. Still it is at around 70% to 75%. Last time also, that's what you...

Yes. But again, if you look at this, this is the average for the quarter, right?

Yes, sir.

So again, bulk of our malls in Maharashtra have seen -- have not been opened for -- till end of October as such.

Okay. Okay. So that's what you were...

There were restrictions on the timing as well. There were timing restrictions as well. At different locations, there were different restrictions. For some period of time in Bangalore, you had a weekend curfew, and you had again an early closing time.

So is it okay to say that once these restrictions goes away, we are -- you would be most probably in terms of footfall back to pre-COVID level, almost?

See I'll again clarify for us, this consumption is what we focus on driving to the malls. There's a certain profile of customer that comes and spends money at the mall, and they are coming in. Therefore, the average ticket price per person is higher, and we'll continue to focus on consumption.

Okay. And one final question, sir, of this under construction malls that are nearing completion at the advanced stages, sir, all these 4 malls, when do you expect the full-fledged rentals to kick in, in all these 4 malls? Full-fledged rentals.

So we expect Indore to open -- Indore and Ahmedabad to open in H1 of FY '23, right? So typically, it takes about 3 to 6 months for all the stores to become operational. I would think FY '24 would be the first full year of full potential rental in Indore and Ahmedabad. And for our Phoenix Mall of the Millennium in Pune and Phoenix Mall of Asia in Bangalore, which will open in FY '24, one can expect that by middle of FY '25, we will start seeing the full run rate on the rental side.

Thank you. Ladies and gentlemen, due to time constraint, we take that as the last question for today. On behalf of the Phoenix Mills Limited, that concludes this conference call. We thank you all for joining us, and you may now disconnect your lines.