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    Nexus Select

    NXSTGood
    Realty·6 Feb 2024
    Management Summary

    Nexus Select Trust delivered a robust Q3 FY24, characterized by record occupancy levels and strong Net Operating Income growth. While the fashion and value segments saw some moderation due to a high base and increased competition, premium categories like electronics and jewelry continued to grow at 20%+. The Trust remains on track to meet its FY24 NOI projections and is actively pursuing a 1 million sq ft acquisition in South India to further its inorganic growth strategy.

    Highlights

    6

    • Net Operating Income (NOI) grew 14% YoY to ₹4.2 billion; 9-month FY24 NOI growth stands at 17%.

    • Tenant sales reached a record ₹33 billion, representing 8% YoY growth despite a high base from the previous year.

    • Leasing occupancy hit an all-time high of 97.3%, an increase of 110 bps compared to the previous year.

    • Announced second distribution of ₹303 crores (₹2 per unit), bringing cumulative distribution since listing to ₹5 per unit.

    • Achieved a 26% releasing spread on ~210,000 sq ft of space, outperforming the prospectus target of 20%.

    • Refinanced ₹9.5 billion of debt at 8.1%, reducing the overall in-place debt cost by 10 bps to 8.2%.

    Key financials

    Single quarter

    06 metrics
    1. 01Net Operating Income (NOI)$4.2B+14.0%YoY
    2. 02Tenant Sales$33B+8%YoY
    3. 03Leasing Occupancy97.3%
    4. 04Distribution per Unit₹2
    5. 05Loan to Value (LTV)14%

    Guidance & targets

    5
    CategoryTargetPriority
    Profitability
    Net Operating Income (NOI)
    On track for FY24 projections
    		High
    Margin
    Releasing Spread
    20%
    		High
    Other
    Annual Lease Expiry
    0.8 million square feet
    		High
    Other
    Nexus One App Expansion
    10 malls
    		High
    Other
    Mark-to-Market (MTM) Spread
    20% to 22%
    		Medium

    Risks & concerns

    4
    RiskSeverity

    Moderation in Fashion and Value Categories

    Growth in fashion was flat this quarter compared to 21% growth in the same quarter last year, attributed to a high base and new competition (e.g., Zudio, Yousta). — Management acknowledged

    medium

    Hypermarket Category Performance

    Growth remains moderate; management is actively discussing resizing and repurposing these spaces with brands. — Management acknowledged

    low

    Parking Challenges in Large Malls

    Parking is noted as a 'pain point' for customers; management is leveraging technology (Fastag, app pre-booking) to mitigate this. — Analyst acknowledged

    low

    Areas of Evasion(1)

    • Specific debt-equity mix for the new acquisition was not disclosed due to an active NDA.

    Q&A highlights

    3

    “I think the fact is that after a very, very strong growth in Q3 last year, some moderation was expected... One quarter does not make a year, so we'll just have to wait and see what happens.”

    Addresses investor concerns about the sustainability of high double-digit consumption growth as the sector hits a high base.

    asked by Adhidev Chattopadhyay, ICICI Securities

    2 min read5 chapters

    Detailed Narrative

    01

    Operational Excellence and Leasing Momentum

    Nexus Select achieved an all-time high leasing occupancy of 97.3%, up 110 bps YoY. The Trust successfully leased approximately 250,000 square feet during the quarter, with a significant portion being releasing at a 26% spread, well above the 20% target set in the prospectus. Trading occupancy also remains healthy at 96%, ensuring consistent cash flow generation.

    02

    Consumption Trends: Premium Outperformance vs. Value Moderation

    A clear divergence in retail categories emerged this quarter. Premium segments like electronics, jewelry, and luxury brands (now 9% of total absorption) grew by over 20%. Conversely, the fashion and value segments saw flat growth due to a high base effect from the post-COVID surge and increased competition from new value-retail entrants like Zudio and Yousta.

    03

    Strategic Acquisitions and Portfolio Expansion

    The Trust is on track to acquire three malls in Southern India, totaling 1 million square feet, which will add approximately 10% to the existing portfolio area. Management plans to leverage its in-house turnaround expertise—demonstrated by the 50% sales growth and 33% NOI growth in its previously acquired South India portfolio—to enhance the value of these new assets post-acquisition.

    04

    Financial Prudence and Debt Management

    Nexus Select maintains a robust balance sheet with a low LTV of 14%. Recent refinancing of ₹9.5 billion at an 8.1% interest rate is expected to generate annual savings of ₹115 million. The overall in-place debt cost has been reduced to 8.2%, and the Trust currently faces no near-term debt maturities, providing significant headroom for future inorganic growth.

    05

    Technology and ESG Initiatives

    The 'Nexus One' app has seen strong traction with over 180,000 downloads, contributing ~5% of tenant sales in participating malls. On the ESG front, the Trust is constructing a 3.3 MW wind power plant in Chennai to meet 60% of a local mall's energy needs. This project is expected to deliver ₹60 million in annual EBITDA savings and a 20% yield on investment.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.