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Brigade Enterprises Ltd
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Ladies and gentlemen, good day, and welcome to the Brigade Group's Q4 FY '22 Financial Results Conference Call. We have with us on the call today the management of Brigade Enterprises Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. M.R. Jaishankar, Chairman and Managing Director, Brigade Enterprises Limited. Thank you, and over to you, sir.
Yes. Thank you. Good afternoon, ladies and gentlemen. Welcome to the Brigade Enterprises' Q4 financial year 2022 earnings call. I'm joined by our Executive Director, Mr. Roshin Mathew, Ms. Pavitra Shankar, Ms. Nirupa Shankar, Mr. Amar Mysore. Our senior management team is also present: Mr. Atul Goyal, CFO, Mr. Rajendra Joshi, Mr. Subrata Sharma, Mr. Karthi Baskar, Mr. Om Prakash, the company Secretary, and Pradyumna Krishnakumar, Senior VP.
It gives me great pleasure to report that financial year 2022 has surpassed all our yearly performances till date with the highest-ever sales value as well as collections. This is notwithstanding the deadly second wave of COVID-19 in 2021 as well as huge jump in construction costs over the last 3 to 4 months.
All raw material costs like steel, aluminum, copper, finishing materials, and fuel, among others, have been -- have seen huge increases due to the global supply chain issues made worse by the geopolitical situation in Europe. As a result, the total construction costs have increased almost up to 15% and are expected to rise or at least remain at elevated levels for the next 12 to 18 months.
Nevertheless, the price increase affected buyers in quarter 4 on the back of higher input costs has been accepted by our customers, reflecting positive buyer sentiment and the strength of our brands. We will continue to take up prices in line with the market absorption in order to maintain profitability.
Our real estate business recorded our highest ever new bookings by value in the quarter 4 at INR 1,028 crores, translating to [ 1.3 million ] square feet area. For the financial year, we recorded 4.7 million square feet of net new bookings after cancellations with a value of INR 3,022 crores. The residential business also registered our best performance in collection, that is our quarter 4 collections is upwards of INR 1,000 crores and for the year in whole the collections were INR 3,162 crores.
Our best performing projects in Bangalore were Brigade Cornerstone Utopia and Brigade El Dorado, while our projects in Hyderabad and Chennai continue to be significant value and volume driver for us. Overall, we are positive about the outlook for the residential business. This is supported by our continuing focus on land acquisition in our key markets of Bangalore, Chennai, Hyderabad.
In financial year 2022, we were able to launch only 3.65 million square feet of new projects due to various delays in civic authorities, of which quarter 4 -- in quarter 4, we launched Brigade Komarla Heights, Brigade Laguna, Goldspire, and Ivory in Brigade Orchards, all in Bangalore, and the final phase in our Hyderabad project, Brigade Citadel.
In financial year '23, we expect to launch about 8 million square feet of residential business, of which 2 million square feet will be plotted development across 3 projects in Bangalore and Mysore. This is apart from the launches we are going to do in commercial.
Our office business has remained stable with close to 99% collections. We transacted close to 0.5 million square feet in the quarter 4 and about 1 million square feet in the financial year '22. We have an existing pipeline of over 1 million square feet across all properties. Brigade Tech Gardens and World Trade Center, Chennai, our market developments, were the most sought-after business addresses.
Financial year '22 also witnessed robust transactions in Brigade International Financial Centre, GIFT City, Gujarat, with the building achieving 80% occupancy. In the office segment, we expect to launch about 2 million square feet in commercial lease and for sale project.
Our hospitality portfolio had a slow start in quarter 4 due to the Omicron virus, due to which the first half of the quarters are low occupancies. But the bounce back has been impressive with occupancies and ARRs growing strongly, reaching 94% and 72% of the pre-COVID levels, respectively. This is mainly due to the increase in corporate bookings and MICE, which means meetings, incentives, conferences and exhibitions, MICE business.
The retail vertical achieved higher retailer sales consumption over pre-COVID levels by more than 100% for like-to-like trading units. Rental collections have also increased and crossed pre-COVID levels. There was a recovery for multiplexes due to big box office releases. We are also seeing consistent traction on the leasing front with new rentals greater than 20% of the pre-COVID levels on an average.
I'm also happy to inform you that we are expanding our business portfolio by initiating a warehousing and logistics and data center vertical. We are currently in the preliminary stages and will be in a position to share more information in the coming months. Mr. Karthi Baskar has joined us as COO for this vertical.
This brings me to the end of our business highlights. I now request Atul Goyal, our CFO, to take you through the financial highlights. Take care, and stay safe, and thank you.
Thank you, sir. Good afternoon, ladies and gentlemen. On behalf of the company, we welcome you to the earning call of Q4 FY '22. To start with complete update, most of them has been given by CMD, but we have achieved the highest ever pre-sales in real estate of 4.7 million square feet with sales value of INR 3,023 crores in FY '22, an increase of 9% from FY '21. This quarter has been better than last quarter in terms of business performance.
We recorded real estate sales of 1.5 million square feet during this quarter vis-a-vis 1.1 million during last quarter, an increase of 42% from previous quarter. Sales value stayed at INR 1,028 crores during Q4 FY '20 (sic) - [ FY '22 ], an increase of 50% from previous quarter. As on 31st March, Brigade had 18 million square feet of ongoing projects and 10 million of upcoming projects, including both residential and commercial project, which is going to be launched.
We have achieved highest collection of INR 4,083 crores in FY '22, an increase of 51% from FY '21. Overall, collections in residential was up by 52%, office up by 30%, retail up by 73%, hospitality up by 79%. On consolidated level, the cash flow from operating income was INR 1,125 crores in FY '22, an increase of 23% compared to FY '21.
We saw demand revival in leasing vertical. Leasing of more than 1 million square feet during FY '22. We have an active pipeline of 1 million, achieved office renewals of 0.5 million square feet during FY '22. Hospitality showed strong signs of recovery post third wave with the occupancy reaching pre-COVID levels, about 64% in March, ARR touched 78% of pre-COVID levels during March '22.
Coming to consolidated financial performance of our FY '22, the consolidated revenue of FY '22 stood at INR 3,066 crores versus INR 2,010 crores in the previous year, an increase of 53%, whereas the same for Q4 stood at INR 964 crores versus INR 933 crores in previous quarter. The real estate segment clocked a turnover of INR 2,289 crores, an increase of 50% from the previous year with an EBITDA of 18% in FY '22. The leasing segment clocked a turnover of INR 596 crores, an increase of 60% from previous year with EBITDA of 67% in FY '22. The hospitality segment clocked a turnover of INR 179 crores, an increase of 57% from previous year and an EBITDA of 13% in FY '22. The consolidated EBITDA for FY '22 stood at INR 833 crores, an increase of 56% from previous year. EBITDA margin stood at 27%. Consolidated PAT after minority interest for FY '22 was INR 83 crores.
Coming to the debt and liquidity position, we continue to have adequate liquidity and undrawn credit lines from the financial institutions. Our average cost of debt has been coming down consistently over last few quarters and was at 7.65% as on March 2022 versus 9% as on December '20, 135 bps reduction.
The cash and cash equivalents stood at INR 1,579 crores as on 31st March, 2022. Consequently, the company's net debt outstanding as on 31 March, 2022 is INR 2,540 crores, out of which BEL share is INR 1,619 crores. Our real estate debt reduced by 45% during FY '22 from previous year and stood at INR 272 crores as on March '22, driven by higher sales and collections. Almost 78% of debt pertains to commercial portion, of which 74% is backed by rental income. We have a credit rating of A+ with stable outlook, which has been assigned by both CRISIL and ICRA.
I now hand it back to the moderator for questions. Thanks.
[Operator Instructions] The first question is from the line of Adhidev Chattopadhyay from ICICI Securities.
Yes. Firstly congratulations on a very strong quarter in across business segments. Sir, first question is, what you alluded to in the beginning of the call over this 15% rise in costs, so is this at an overall portfolio level you're referring to across ongoing completed inventory or it is only for the new projects which we are going to start?
And follow-up on that, you said that we have increased prices to maintain the margins. So could you quantify what is, sort of, price increase you have had to take? And for the new projects which you are going to launch in the coming year, how have you worked around the pricing for those projects? And do you see the demand sustaining with these price increases? That is the first question.
See, the price increase of about 15% is for new projects to be launched and that too subject to various issues. It is an approximate figure. Nobody can say it is exactly 15%, it can be 13%, it can be 16%. But for some of the ongoing projects, where it is, the structure of the building is incomplete. There will be certain amount of price increase that depends on case-to-case basis.
And I repeat this price increase is on the construction costs, not on the selling value or anything. So the impact on selling value can be anywhere between 5% to 8% on a project to project basis and, in some cases, it may go to 10%. It all depends what your selling rate is, what your land value is, whether it is a purchased property, whether it is historical, whether it is present, joint development, not joint development. It depends on whole lot of issues.
So that way we will definitely try to pass on any businessman, even in the morning CNBC also have said any businessman or industrialist would like to pass on the cost increases as long as it is acceptable or ready to be observed by the customer. So the entire pricing policy in any business is what the market can afford. So, ultimately, we will go on that concept and so somewhere we may be able to increase the price by 10% even if the cost increase is only 5%, somewhere we may be able to increase 8% even if the cost increase is 7%. So it is -- these are all pricing policies, but the intention is to pass on the price -- cost increase.
Okay. So just as a housekeeping question, sir, what is the quantum of -- what is the range of price hikes you have taken in this last quarter, range, if you could?
5% to 8%. 5% to 8% is the increase in prices in the last quarter.
Okay. 5% to 8%. Okay, fine. Sir, second question, which is on the leasing. So, I think, last call, we had said by the end of maybe FY '23, right, under 12 months from now you are targeting to lease out the entire vacant area, which we have around 2 million square feet, so any fresh update on that?
No, you know that is the target. That is certainly the target. Our team is working hard to do that. And I think based on the number of inquiries that we are receiving or what we have finalized in Q4, it is encouraging. And, at this point of time, while we are saying we will do 1 million square feet, the target is certainly to come out of the existing stock.
Okay. So sir, but when do we see a good visibility or some of these lifting closed, it will be -- you expect it to be back ended in the second half of this year or?
Yes. Okay. Our Subrata will talk.
So, Adhidev, this is Subrata. So, yes, what we are saying currently like -- see, the momentum is there since the last 2 quarters and particularly in this quarter we are seeing, like, some active pipeline and very active. Like, in the next 2 to 3 months, we are having an outlook of like 3 lakh to 4 lakh square feet. But having said that, the number of inquiries have significantly increased. The populous across the parks have increased significantly, it's now currently 25% to 30% as people come -- are coming back to offices, the requirements are maturing, okay. So that's why we have a very positive outlook and we still maintain the same outlook of exhausting the inventories in this financial year.
Okay. Got that. Got that. Sir, last question is, sir, we had said that we will launch 8 million square feet this year, so if I understood correctly, out of this 2 million square feet will be the commercial, 6 million square feet will be resi, of which 2 million square feet will be plots, is that correct?
No, actually it is other way. It is 8 million square feet of residential, of which 2 million is the plotted development plus 2 million of commercial, totally 10 million square feet.
Okay. Totally 10 million. And sir, this 2 million in office includes this Twin Towers, [indiscernible] Dec Heights, which you are marketing as Deccan Heights, is it...
No, no, no, it doesn't include Twin Towers. We are launching another project called Brigade Padmini Tech Valley, and also we are launching a commercial block in Brigade Cornerstone Utopia called Elysium and 1 or 2 smaller projects.
Okay. Sir, any guidance you would like to share for resi for the coming year based -- since we have such a strong launch pipeline now, next 12 months?
See, morning in the TV, I said -- interview, I said we should aim at 20% plus as the growth.
Okay. INR 3,500 crores plus. Yes, INR 3,500 crores plus at an aggregate.
No, no, I meant in terms of volume, not in terms of revenue primarily, because revenue can be even higher considering the inflationary aspects. I also said in the morning that our current average realization is about INR 6,400 and it may go up to INR 6,900 to INR 7,000 in the -- as average realization depending on the kind of mix it will have. So if that happens, God willing, it will reach INR 4,000 crores.
[Operator Instructions] The next question is from the line of Karan Khanna from AMBIT Capital.
Yes. Congratulations on another resilient quarter. So, firstly, sir, on the real estate business, you mentioned you have 8.3 million square feet of launch pipeline for FY '23. Can you help us understand for how much area the approvals were already be in place and your target quarterly launches?
Yes. I will try to say that. Yes. I would say, other than about 2 million -- I would say 2.5 million is yet to be approved. Rest are all approved.
Sure. And just extending the previous question, what we also noticed that the launch pipeline is spread across Bangalore and Hyderabad. You've recently added the Chennai line parcel, 4 million square feet. Any thoughts with respect to the outlook on this micro market and your plans in terms of the project mix?
Yes. I think it is a combination of commercial and residential, if you're talking specifically about the TVS deal. If you are talking specifically about the TVS deal. Other than that, rest are all residential.
Sure. And in the last call, you mentioned you were actively evaluating a 1.5 million square feet land parcel in Hyderabad, so any developments on that since we last interacted in the last earnings call?
It is still work in progress.
Okay. And, lastly, on the retail portfolio with the consumption surpassing the pre-COVID levels, will it be fair to assume that rentals would have been normalized April onwards or there would be a few tenant classes which are still impacted and hence would have rental waivers?
Yes. Nirupa Shankar will answer.
Yes. I think with the sales volume coming back into the retail business almost -- I don't think there are any more COVID rental reliefs given for the larger malls. 1 or 2 of the smaller malls might have some revenue share deals, but by and large collections will be as per the lease date.
The next question is from the line of Girish Choudhary from Spark Capital Advisors.
On the Chennai market, given your portfolio has now doubled to around 8 million square feet, so if you could give when can we -- if you could give any sense on when can we see from a launch perspective, because this is not a figure in your upcoming project pipeline of 8 million square feet?
It's primarily because they're in different stages of seeking various approvals and in 1 or 2 cases the final due diligence aspect, though we have incurred substantial amount. So I would -- since we still have 10 months' time, if we are lucky, we can launch in this financial year. So we didn't want to be overoptimistic about the Chennai launches. So, yes, there is just a possibility it can get pushed into the next financial year. So, maybe, around quarter 3 when we talk about Q3 results of FY '23 we will be in a better position to make a commitment.
Okay. Also there has been a recent FSI changes for the land parcel which you've bought in Chennai, the Mount Road property, so is there -- can we see any increase in the development potential because of that or is that already adjusted in the 4 million square feet going to 8 million square feet.
See, right now, it is all media reports. It is -- nothing has been translated into a government policy. If the government policy happens, definitely they will be benefited and it is beneficial to us in terms of higher FSI. Currently, we are looking at 1 million square feet the way we have taken. If that happens, if the higher FSI, which we do not know whether it is 6, 7, 8, as the media speculating, if that happens it can go to 1.3 million to 1.5 million square feet and our overall FSI cost is abound to come down significantly.
My last question on the land balance payable of INR 940 crores, if you can share any timelines by when can -- by when this has to be paid?
See, out of this, bulk of it is for the TVS land in Chennai, that is -- should happen in Q3, Q3 FY '23, and the other remaining thing is Government of Karnataka, the Industrial Development Board has allotted us 75 acres land near the Bangalore Airport. We have paid about 30% so far. The remaining 70%, which need to be paid, it is definitely going to take 9 months or so. It all depends on -- they also need to comply with certain formalities, but it is likely to happen in this financial year, but not in the next 2, 3 quarters. It can happen in Q4 or Q1 of next financial year.
The next question is from the line of Pritesh Sheth from Motilal Oswal.
Yes. So first question is again on the land pipeline. So we had this 66 acre plotted development signed up in Bangalore, in Devanahalli and I see there is 89 acre in total, so can you highlight where the rest of the land on product development sits? Is it Mysore or somewhere else?
I'll tell you. I'll tell you. See, one is about 15 acres in Mysore, about 66 acres in Devanahalli, and another 7 acres-and-odd as part of Brigade Orchards.
Okay. Okay. Got it. And can you just share the details about the TVS land, the size that we are looking at and what was the consideration that we had to pay?
See, it is there in the media also, it is totally about INR 500 crores is the transaction for value and currently about more than 10% is paid and the balance will happen beginning this quarter and it should get completed in Q3.
Okay. Potential is 1 million square feet, is it right?
Potential is 1 million, which in the previous question I said, it has a possibility or probability of going to 1.3 million to 1.5 million if the authorities in Chennai relax the FSI rules like in Hyderabad.
Okay. Okay. And, lastly, the breakup of collections that you normally give, the INR 1,300 crores split between residential, retail, commercial?
Our CFO will give.
Yes. So, for Q4, the collections are for residential is INR 1,008 crores, commercial sale is INR 49 crores, commercial lead is INR 108 crores, retail is INR 47 crores, hospitality is INR 73 crores and our maintenance PMS is around INR 49 crores, which totaled to INR 1,334 crores.
Okay. And, sorry, one last question, if I may. So residential collections have been very robust reaching INR 1,000 crore now, so should we see this run rate sustaining from here on at least for next couple of years and obviously from thereon it will grow, because for this to have our residential sales has to sustain at around INR 1,000 crore, which we clocked this quarter, but previously we haven't had that consistency in terms of sales. So how do you see this trajectory going forward?
Yes. I will tell. Only time will tell, but, yes, you're right. Residential sales in Q1 is not generally the same as Q4 in any of our financial year -- in any financial year, but the team is working hard for collections. But it's not always be related to sales, it can also be related to the already existing sales that have happened and collections that have to come in.
The next question is from the line of Mohit Agrawal from IIFL.
Yes. Congratulations to the team for a good quarter. Sir, my question is on business development. Now, if I see the change in land reserves, it's about 9 million square feet net in this quarter and you've launched about 2 million square feet, so probably gross land bank addition of 11 million square feet. So could you explain how much would you have spent for this land addition? And what would be the GDV addition expected on this? And also what would -- what should we look for the next 1 year? What is your target in terms of business development? Is there -- like, you had earlier said 15 million square feet, I remember, till September, so any targets for FY '23 on business development?
See the amount that is to be incurred, it was sort of indicated, it was sort of indicated in INR 942 crores. And of which I did give the breakup for the previous question, the big ticket items I mentioned concerning the TVS and the government allotted land. And as far as adding the more lands are concerned, definitely it is a continuous work in progress. We will -- we would have found something, but it may still be in due diligence, so it is too premature for us to share all the details in this call. Unless we have definitive agreements or memorandum of agreement, it is difficult to share, but the team is working towards signing this 10 million square feet to 15 million square feet.
Sure. Sir, INR 940 crores is the total payable, I actually wanted to ask for this quarter how much would you have paid for the land, including the TVS transaction?
It will be under INR 100 crores.
It will be under INR 100 crores, okay. And, sir, just one clarification, this -- before COVID you used to give exit rental guidance, which for about 8 million -- 8.7 million square feet portfolio used to be about INR 730 crores, INR 740 crores gross rental, so assuming now you're already there, you've completed 8.7 million square feet, when should we expect that INR 730 crores, INR 740 crores to start coming in?
Yes. So as we have been saying that we have already achieved INR 600 crores and we think by next year, as Subrata said that, we are targeting our total leasing this year. So if it happens, maybe, this year we will achieve the full leasing and, of course, the total impact may come in mid of the next year.
Yes. Just to add a point, it all depends -- again, I mentioned it in the morning interview with CNBC. So it is a bit difficult to predict when the rent commencement dates will be even if you conclude a transaction. So it all depends on the rent commencement dates. So based on that, it will happen, as indicated by our CFO.
Yes. Sure, sir. And, sir, just last one. You've mentioned that you've taken a -- in the resi portfolio have taken a price hike of 5% to 8% for fourth quarter, could you give this number for the full year FY '22?
Yes. The price -- this is Pavitra. Price hike for the whole year is around the same, 5% to 8%. Basically we've taken it wherever possible. So in some projects, we've been able to push it earlier in the year, in some we've taken it later, and definitely the new launches that we mentioned in Q4 have also been able to launch at much higher rates than we previously thought possible and all of that has been absorbed by the market. So based on that we feel confident to take our prices up even in the next -- this upcoming Q1, which we have already communicated to the market.
Okay. So, Q1, you're expecting another hike, what would that be approximately?
Another 5% or so. And, again, we are looking at it on a project-by-project basis, it's very hard to also very aggressively increase prices, because that has to be absorbed by the markets. So we're taking it up slowly. The goal is to take it up slowly over the course of the year, so that we also can keep an eye on the increase in cost side as well and do it that way.
[Operator Instructions] The next question is from the line of Parikshit Kandpal from HDFC Securities.
My first question...
Mr. Kandpal, if you can take the phone off speaker, please. There is a lot of background noise that can be heard.
Hello. Is it better now?
Yes, sir.
So my first question is on the overall TVS land bank addition, so how much has been added in this year and what is your total consideration which needs to be paid?
See, that total consideration was already indicated in the previous 2 questions, about INR 900 and odd crores that are there. What is going to be added, we did say, it could be about INR 10 million. Our team is working towards INR 10 million. But how much consideration will go towards that, it is too premature for us to comment. It depends on where the land is, whether it is of purchase, ownership, lease, all those joint development. It all depends on all that. So it is premature, but whatever we do, we will do keeping in mind our financial capabilities and whatever leeway we have in the debt equity.
So my question is, because if you see out of this INR 900 crores, INR 500 crores is committed for the 1 million square feet development and balance INR 400 crore is for roughly about 9 million square feet development. And then we are looking to also add warehousing and data centers, so we have INR 900 crores of [indiscernible] data and some allocation will go towards data centers and warehousing, so plus some CapEx on Twin Towers of almost INR 400 crores. So I just wanted to understand, first of all, on the TVS land, what is the intent? What are you going to develop there? Is there any CapEx that will come up there? How much is the CapEx on that? And how are you going to fund this entire INR 900 crore of land bank plus INR 400 crore of Twin Towers CapEx, INR 1,300 crores, plus if there is anything commercial coming on TVS, so can you just give a glideway, a pathway of how you are going to fund this?
So it will be a combination as always. As always, it's a combination of internal resources, financial institution borrowings in some cases or in this particular case, there is a lot of interest shown by private equity players, so discussions are in -- at a different stages. So, naturally, we may -- I won't be able to share anything more on that, but naturally there will be some amount of private equity which is coming.
Okay. So -- but what is the strategic intent of getting into data center and warehousing. We have very strong...
Sir, you are not clear, please. Sir, you are not clear.
So I'm saying what is the strategic intent of going into warehousing and data centers, we already have a very robust residential business and we are also doing CapEx on [indiscernible] assets. So what was the rationale in going behind warehousing and data centers would be the first claim on that?
See, the rationale is, it is a new growth area. It is a new growth area as the country progresses, there is huge amount of demand for logistics and warehousing. Sometime back I had mentioned, there are developers in China who have got warehousing and logistics of 450 million square feet, just 1 developer. Whereas in India, we have not even scratched the surface. All -- everybody together, we are under 100 million square feet, so you have 100 million square feet. If you consider, in China, it has exceeded the [indiscernible] square feet of warehousing and all that, much more. So that way, as the country progresses the economy from 2.5 trillion if it goes to 5 trillion, the demand for warehousing will not just double, it will go up by 5x. So we just want to examine. We are -- we'll proceed with caution, not indiscriminately.
The next question is from the line of [ Akshat Mehta ] from Pioneer Investments.
Congratulations on a great set of numbers. My first question is, what would be the demand scenario if interest rate hikes happen aggressively?
Yes. So, see, as Pavitra and CMD has said, there is a good demand in the market. Yes, of course, rate hike will happen and you see from 6.75% it has gone to 7.15%. But if you see EMI, EMI increase has only been 3% and affordability has been very, very great for the people who have been working and since these South cities are majorly IT, ITES hub and the salary increase there are looking -- I think, interest rate may not affect that much, but it all depends how much RBI increases a rate and -- see, because retail market is a very competitive market. Today, I was listening that banks are today going to the wholesale/retail market, because retail market has become very competitive and for them to increase price is very, very difficult. So I think it may not affect that much, but let's see. Because it is an uncertain scenario like the way repo rate was increased by RBI, so let's see, it's very difficult to say right now, but we are hopeful that the demand will sustain.
Okay. And, sir, another question. In Q3, we added 0.4 million square feet and in Q4 we added 0.2 million square feet. So on the leasing side, the momentum of fresh leasing has slowed down as compared to last quarter, so what are the reasons behind slow growth?
Leasing?
Office, in fact, we have seen robust growth over the last 2 quarters and the total financial year we ended approximately 1 million square feet and this quarter also we are seeing quite a good momentum in terms of the inquiries, in terms of closure possibilities. And in fact the real requirements are coming by, because office re-occupancy has increased significantly. So the outlook is quite robust.
Okay, sir. And, sir, one last question, what's the guidance on incremental leasing from here on?
Incremental leasing, see, we have an outlook currently based upon the pipeline, we have a pipeline of almost 1 million square feet. Out of that, we feel that around 3 lakh to 4 lakh will be closed over the next 2 to 3 months and going forward -- see, most of the transactions that have happened pan-India in the first quarter is majorly due to the [indiscernible]. And going forward, we also feel that big size requirements will come. So I personally feel that going forward the pipeline size will also increase, the transaction size also will increase. So our outlook is quite positive.
The next question is from the line of Yashwin Bangera from Knight Frank. Seems like we lost the connection for the participant. We will move to the next question from the line of Samar Sarda from Axis Capital. Mr. Sarda, we were unable to hear you, if you can please repeat your question.
Hello. Can you hear me now?
Yes. Now we can hear you, sir.
Yes. I had a couple of questions. One, we've taken roughly 3 years to go from INR 2,000 crores to INR 3,000 crores of sales. If you could guide us like over what timeframe, 18, 24 months or 36 months, we could target like INR 4,000 crores of yearly sales? That is my first question.
So just to correct, we've taken 3 years to go from INR 1,500 crores to INR 3,000 crores. In 2018-2019, we had -- in residential we clocked a sales about INR 1,450 crore, adding everything together we were around INR 1,500 odd crore. So in 3 years, we have kind of doubled. We see that given the land bank that we have, our execution capability and sales capability, we should continue to deliver similar levels of growth in the next 2 to 3 years. As our Chairman said, we are looking at about 20% area growth in the year to come, FY '23.
Since realizations are going up, probably value growth will be faster, right?
Yes. I did mention in the earlier thing, like, if we are looking at a 20% -- aiming for a 20% growth, it is not from INR 3,000 crores to INR 3,600 crores, but if you consider the inflationary aspects and price increases, sometimes for the same volume we knew -- will -- it can go up. So -- but it is premature to commit, which all depends on the mix that happens. And I did mention the current average selling price is INR 6,400. If the likelihood including the inflationary costs, et cetera, it can reach INR 6,900 to INR 7,000 at the end of the year.
Okay. My second question with respect to some of these notices on property tax and the assessment of stamp duty, which was completed, the Brookefield property also like, the assessment on stamp duty ended up a little higher, plus we've got a INR 90 plus crore property tax notice on a hotel this year. If you could, A, give a little more clarity on these notices? And, B, whether it is like across the market or it's like more particular to do with our property?
No, it is across the market depending on where the properties or hotels are located. So there was a move by the -- see, while for residential, for commercial offices and commercial offices, the property tax applicability depends on location. There are 6 zones in Bangalore, called A, B, C, D, E, F, okay. So the rates change from Zone A to Zone F. Zone A is always the central business district and Zone F is the peripheral area. So that is the variation the authorities have kept for residential and office building. Whereas when it comes to hospitality, erroneously they have kept one rate for all hotels, so that has been challenged. So that is work in progress. We won't be able to share any -- yes, anything more, the matter is also in the High Court. So that way, I don't think that kind of liability will be there, but it is a job of the statutory auditors to make a note. We can't help that.
Fair enough. Sir, since it is for a period of 8 years, what would be the penalty -- sorry, what would be the property tax demand and the penalty and interest. Can you share that breakup at least?
No, we won't be able to share the breakup, but it is including all that.
The next question is from the line of Venkat Samala from Tata AMC.
Sir, with respect to the 10 million square feet to 11 million square feet that you've added, if you could give a breakup of how much would be outright and how much would be through JDA? And also as an extension...
Readily I cannot -- hello. Readily I cannot give, but it can always been informed maybe in the next week by our CFO.
Okay. Okay.
I don't want to off-hand give a wrong figure.
Right, right, right. Sure, sir. And with respect to the TVS land parcel that you acquired, I understand at this point in time the development potential is about 1 million square feet, but what would we be expecting in terms of -- I mean, overall bookings or rental revenue whatever -- I mean, whatever you are envisaging to build there. Any color?
Sorry, I'm not very clear of the question. Question is not clear.
So I think you mentioned that as on this date you are planning a mix of residential plus commercial there, right, on the Mount Road TVS land parcel?
Correct. 10 million, 8 million is residential, 2 million is commercial. Yes.
Okay. Okay. So what I'm trying to understand is, what kind of realizations can be expected on residential? And if we are building a commercial, what are the rentals there?
No, we have not even calculated so far. It is -- everything depends on the mix. So it is all work in progress. We will be doing the exact how much is residential, how much is commercial, how much is retail, it is all work in progress, but whatever uses the best feasibility we are going for that. Retail is on the drawing board.
Right, right, right. Sure, sir. So the only reason that I was asking particularly about this project is because INR 500 crore seems to be slightly on the higher side, so, therefore, I just wanted to understand I mean...
Actually it is not on the higher side if I want to sell the property...
No, that is the reason I was asking. Sorry, sir.
If I want to sell the property today, I can sell it at 20% more. So it is not high.
Okay. Okay. Sure. Maybe I'll take it offline as to what the expectations are. And, lastly, sir, I mean, this -- so the 8 odd million square feet launches that you have planned, will it be well distributed throughout the year or it will be more lag ended?
It is -- I think, normally, it is distributed, but the bulk of them will come during Q1, Q2.
Okay. Okay. Okay. So given...
Half of Q1 is done. Yes, Q2, Q3.
Okay. Okay. So, sir, then, I mean, INR 900 crores to INR 1,000 odd crores per quarter should then be doable, right? I mean, this could be like the base moving forward assuming the launches come through, would that be a fair assumption?
We'll keep our fingers crossed and work towards that and also overall sentiments in the market macro environment to be seen. As long as our buyers don't look at the stock indices, it is okay.
The next question is from the line of Rohit Shimpi from SBI Funds Management.
So my question was on the plotted market and how you look at that as a business opportunity. Do you see it as more of one-off kind of opportunity led by the pandemic, or do you think this is a more structural long-term opportunity for the market and for the company?
See, Bangalore and many Southern cities have always been -- there has always been a market for plotted development. It is only that the recognized developers or the developers who build apartments had not got into it in the recent past. So now, I think, COVID -- it is -- COVID is one of the reasons for many developers getting into it as an avenue of business. And also as far as buyers are concerned, they are also looking for an avenue for investment. So currently plotted market development is a flavor of the season.
Right. So I just get from a thought process, would you want to continue to invest in more projects on the plotted side or you think you would like to look at the current ones and then take a view looking at how the market is?
No, as long as they're geographically distributed and we don't mind looking at them and as long as -- see, it's a continuous process of feasibility calculation. If there is a market where we don't mind entering, subject to usual due diligence process and all that.
Okay. And just last one from me was that during the pandemic and the work from home scenario, we understood that many buyers are preferring actually larger apartments, are you seeing that trend continue or is work from office and return to schools causing any change in that buyer thought process?
We expect it to continue at least in the FY '22 it has happened. FY '23, we expect it to continue primarily [Audio Gap]. Right now, at least in the IT sector, it is going to be more a hybrid situation than in other financial sectors and other businesses, corporates, where it is almost back to 100% back to office. So in the IT scenario, I think this hybrid will be there -- hybrid situation will be there. That should continue to make people go for a larger size of the apartments or the houses.
The next question is from the line of Parvez Akhtar Qazi from Edelweiss Securities.
Congratulations for a great set of numbers. A couple of questions from my side. First, a bit of data specific thing. What would have been the contribution from or launches to our pre-sales in Q4?
Sorry, we'll come back to you with the correct figures next week.
About 20%. 20%.
My team tells me it is 20%.
Sure. And how much of the sales -- I mean, I just need a ballpark number -- would have come from outside Bangalore?
In terms of total sales for the year, about 40% came from outside of Bangalore and 60% came from Bangalore by value.
Sure. And in terms of -- what was the rental income from the BTG and WTC Chennai this year?
Yes, it was around INR 90 crores from Tech Gardens and PREPL or Chennai was INR 105 crores.
The next question is from the line of Alpesh Thacker from Antique Stock Broking.
Sir, this is more on the new business initiatives that we have. So as you mentioned that you see that Bangalore being a tech heavy industry, and you see that the trend would be more into a work-from-home kind of situation or the hybrid situation for the office side. So is that one of the reasons that you are looking for a growth avenue in terms of data centers and warehousing, in terms of annuated business for yourself over a longer period of time?
There is no -- between work from home and the data center business. I would say, the data center and the logistics business is a reflection of the government policies on -- connected with the data security, and as far as logistics is concerned, it is the way the e-commerce is growing across the country and also the GST policy or the GST introduction has made things much more, I would say, easy for people to do business across the country. That is the reason. And Bangalore is one of the -- going to be one of the hubs. Of course, the data center, something here, like Chennai or Mumbai, they have a great potential. So it does not mean Bangalore has no potential. It has potential. Similarly, the land is near to the airport. So that way -- it is in the high-tech zone and the aeropark zone, with so many aerospace companies like Boeing, Collins and other -- several others having already established in the aeropark. There is also and always be demand for high tech components, storage and logistic issues.
Okay. And second, sir, can you like on a broader scale, how does the business economics stack up for warehousing and data center, compared to like office leasing on the retail side? So is it like much more lucrative, given the fact that there would be some players who would be doing it already right now? So how does the business economics stack up in terms of IRR or the kind of business economy for us as a business?
Each one has to be seen in its own individual basis, sectors. If everything is compared to residential, then it will be difficult for other business as well to happen. So I think the data center has to be viewed in its own merit. And so sometimes, it may be more beneficial IRR, sometimes it will be slightly less. But as long as this meets the IRR requirements of the developer and the investor, I think there is nothing wrong, give or take 1% or 2%. It is another revenue of business.
We take the last question for today, from the line of Adhidev Chattopadhyay from ICICI Securities.
Yes. Just a quick one. So now that the hotels have again seen pickup in momentum, so are there talks for again, divesting stake to the PE investors? Is that back on the table?
It is always on the table. [indiscernible] the right valuation. And certainly, in the last COVID period, we have kept it in cold storage, because there is no point of trying to get the PE investors looking for [indiscernible]. Also we did not look at it. Now as we talk, I got a mail from a PE investor expressing interest in hospitality. So I'm just saying, which is in the last 1 hour. So that way whenever the right proposal comes, we are open to look at it. But post-COVID, things have started looking up [Audio Gap]. So I don't think we're in a great hurry to finalize a PE investor who would like to ride on the wave. Also we would like to ride on the wave first and then invite the PE investor.
Okay. But any ballpark you would like to share with all the newer hotels, obviously, because of COVID they could not contribute, right, the scale up we did not see. I mean if all the hotel -- the entire hotel portfolio does well enough, what is the sort of revenue or EBITDA potential, does your existing portfolio have any ballpark number you'd like to share?
Nirupa will talk about it.
Yes. So Hi Adhidev. So all the hotels, at least in Q4, have -- are all profitable. If it's -- for FY you already know what the -- FY '22, the AQIP was around close to INR 36 crores, INR 37 crores. How April and May have been the hotel [Audio Gap] doing extremely well. The ARRs have crossed pre-COVID levels, the occupancies in most cases have also crossed pre-COVID levels. So very bullish because of the [Audio Gap] travel. We are hoping to definitely cross pre-COVID year FY '20, and get EBITDA multiples, at least 15% to 20% higher than what it was pre-COVID in FY '20.
I now hand the conference over to Ms. Pavitra Shankar, Executive Director, for closing comments. Over to you, ma'am.
Good afternoon, everyone. Apart from financials, we have a few highlights to share with you today in closing. It's a great pride I share with you that our Chairman and MD, Mr. M.R. Jaishankar, has been conferred with an Honorary Doctorate for his contributions in infrastructure development and philanthropic approach to social calls by the Bangalore City University. Over the last 35 years, Mr. Jaishankar has through Brigade, led by example as a visionary in the industry, and an outstanding citizen who has given back to the community. It's indeed a proud moment for all of us at Brigade.
I'm also very proud to share that our Executive Director, Ms. Nirupa Shankar, was recognized in the Elite 40 under 40 list 2022 across India by Economic Times. The Brigade Foundation, a not-for-profit Trust was established, with an objective to promote education, healthcare and community development. FY '21 and FY '22, the foundation spend crores on CSR and other welfare activity.
In line with its focus on community development, Brigade Foundation in association with BCIC, that's Bangalore Chamber of Industry and Commerce, will be establishing the Brigade BCIC Skill Development Academy, a Center of Excellence and not-for-profit Academy in the field of construction, hospitality and tourism, manufacturing and retail. Brigade Foundation will also fund the Go Sports Foundation to conceptualize and implement a cricket excellence program for women's ticketer in India, under the name Equal Hue Cricket Excellence program. This program will aim to create pathways for aspiring female cricketers from across the country. Go Sports Foundation is a non-profit venture working towards the development of India's top talents in Olympic and Paralympic discipline, through athlete scholarships and knowledge building programs.
The Indian Music Experience Museum founded and supported by Brigade Group, curates interesting events and exhibitions. One such being, Birdsong, which is getting greater use from music lovers and naturalists alike. It's running through June this year. The Museum is also running an amazing huge mentorship program in partnership with the Manchester Museum, for its international festival in October in Bangalore, and next February in the U.K.
And with that, it's a wrap for the financial year '22. We look forward to the coming year and hope you will all stay healthy and stay safe. Thank you.
Thank you. Ladies and gentlemen, on behalf of Brigade Enterprises Limited, that concludes this conference. We thank you all for joining us, and you may now disconnect your lines.