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Brookfield India Real Estate Trust reported an 89 per cent increase in net operating income in the fourth quarter of FY24 on the back of robust leasing and rent escalations.
The REIT also announced signing of binding agreements to buy a 50 per cent stake in a 3.3 million square feet commercial portfolio from Bharti Enterprises for ₹1228 crore and at an enterprise value of ₹6,000 crore.
The REIT recorded NOI of ₹460.8 crore in Q4, achieving new leasing of 9 lakh square feet and 7.4 per cent average rent escalation on 1.6 million square of the gross leased area and mark-to-market of 29 per cent on 5 lakh square feet of re-leases.
For the full year, the NOI rose 57 per cent to ₹1,506.2 crore, with a gross leasing of 2.8 msf, which included 1.9 msf of new leasing. The REIT ended the year with a committed occupancy of 82 per cent, compared to 80 per cent at the end of December.
It announced a distribution of ₹4.75 per unit in the quarter translating into a total payout of ₹208.6 crore.
Performance
The REIT has already achieved 40 per cent of its new leasing guidance of 2-2.5 msf till FY25, said Alok Aggarwal, Chief Executive Officer and Managing Director, Brookfield India REIT.
“FY2024 was our best year since our IPO, driven by a broad-based recovery in leasing demand across sectors and a strong preference for our sustainability focused Grade A assets,” Aggarwal said.
He said the leasing was driven by demand from global capability centres, multinationals, as well as domestic tenants from diverse sectors such as BFSI, technology, and manufacturing.
Following the new rules on denotification of areas categorised as special economic zones, Aggarwal said that the REIT had applied for and received in-principle approval for conversion of 1 msf of SEZ office space to non-processing area while it was in the process of applying for denotification of an additional 2 lakh square feet. The leaseup of the vacant areas will have an embedded growth of 16 per cent in NOI.
The gross asset value of the REIT’s portfolio rose 78 per cent to ₹29,200 crore.
Acquisition
The portfolio of assets that have been acquired include operating Worldmark assets at Aerocity New Delhi, a mixed-use property covering 1.4 msf, Airtel Center, the state-of-the-art corporate facility of 7 lakh square in North Gurugram, and Worldmark Gurugram, a mixed-use asset spanning over 7 lakh square feet.
The total equity consideration for the stake will be fulfilled through a preferential allotment of 4.1 crore units in the REIT to Bharti at ₹300 per unit, making Bharti the second largest unitholder in the REIT, with an ownership stake of 8.53 per cent.
Rostrum Realty, the entity in which Brookfield is buying stake, is a joint venture between Brookfield Asset Management and the Bharti group. There is still a two-year lock-in for the parent entity in the assets and the REIT has the right of first offer for the Brookfield AMC’s 50 per cent stake in the portfolio. This can be exercised in the future, officials said.
As part of the acquisition Rostrum and its subsidiaries will also enter into a property management agreement with Brookprop Property Management Services for the management of properties owned by them.
There is a net debt of ₹3,100 crore for the acquired assets that has been availed from ICICI Bank and Axis Bank.
The properties acquired have a committed occupancy of 91 per cent, weighted average lease expiry of 4.7 years and in-place monthly rent of ₹140 per square feet.
The acquisition will increase the REIT’s consolidated gross asset value by 22 per cent and economic occupancy by 50 basis points.
Bharti is also investing in a large development pipeline of over 10 million square feet of top quality commercial real estate assets in Aerocity, New Delhi.
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