Skip to content

    Nexus Select

    NXSTGood
    Realty·4 Feb 2025
    Management Summary

    Nexus Select Trust reported a resilient Q3 FY25, characterized by a recovery in consumption growth and strong leasing momentum. The Trust achieved 6% YoY growth in both NOI and consumption, with management highlighting 'green shoots' following a softer first half. Financial discipline was evident in reduced debt costs and improved collection cycles, while the acquisition pipeline remains active despite some administrative delays.

    Highlights

    7

    • Net Operating Income (NOI) grew 6% YoY in Q3 FY25 with steady operating cashflows.

    • Quarterly consumption reached ₹35 billion, representing 6% YoY growth and a significant improvement from H1 FY25.

    • Announced sixth distribution of ₹3,327 million (₹2.196 per unit), up 10% YoY.

    • Leasing occupancy remains robust at 97.6% with 0.31 million sq ft re-leased at 20%+ spreads.

    • Debt cost reduced by 30 bps YoY, resulting in annualized savings of ₹120 million.

    • Rental collection timelines improved significantly, dropping from 12 days at listing to 5 days.

    • Management expects full-year FY25 organic distribution to be approximately ₹8.4 per unit.

    Key financials

    Single quarter

    05 metrics
    1. 01Net Operating Income—+6%YoY
    2. 02Consumption₹3,500 Cr+6%YoY
    3. 03Distribution per Unit₹2.196+10%YoY
    4. 04Leasing Occupancy97.6%
    5. 05Re-leasing Spreads20%

    Guidance & targets

    4
    CategoryTargetPriority
    Dividend
    Full year organic distribution
    ₹8.4 per unit
    		High
    Margin
    NOI Margin
    74%-75%
    		Medium
    Other
    Portfolio Size
    Double the portfolio
    		Medium
    Other
    Lease Expiry Spreads
    20%+
    		High

    Risks & concerns

    4
    RiskSeverity

    Acquisition Delays

    Vega City and Hyderabad acquisitions delayed due to administrative issues and government NOC requirements. — Both acknowledged

    medium

    Negative Carry

    Funds raised for Vega City acquisition are currently incurring a negative carry until the deal closes. — Management acknowledged

    low

    Consumption Sustainability

    Analysts questioned if 6% growth is sufficient; management relies on government budget impetus to drive future spending. — Analyst acknowledged

    medium

    Areas of Evasion(1)

    • Specific monthly consumption breakdown for January (declined to give monthly data, preferring quarterly).

    Q&A highlights

    3

    “If you look carefully our peers has few new malls which were started operations in last two years... As per our understanding, the like for like consumption growth for our peers will be between 6% and 7% which is in-line with our consumption growth.”

    Clarifies that NXST's 6% growth is competitive on a like-for-like basis despite headline numbers from peers appearing higher.

    asked by Pritesh Sheth, Axis Capital

    1 min read5 chapters

    Detailed Narrative

    01

    Consumption Recovery and 'Green Shoots'

    Management highlighted a significant rebound in consumption, which grew 6% YoY to ₹35 billion in Q3 FY25. This growth rate is approximately 2.3x the growth reported in the first half of the year. Specific categories like Jewellery, watches, and family entertainment centers showed strong performance, while F&B rentals doubled at Nexus Elante and Nexus Koramangala following food court revamps.

    02

    Leasing Momentum and High Occupancy

    Leasing occupancy remains a core strength at 97.6%. The Trust re-leased 0.31 million square feet during the quarter with spreads exceeding 20%. Looking ahead, approximately 1 million square feet of leases are set to expire annually over the next three years, representing 40% of total rentals, on which management is confident of maintaining 20%+ spreads.

    03

    Acquisition Pipeline and Regulatory Hurdles

    The Trust is pursuing 1.8 million square feet of acquisitions across Vega City, North India, and Hyderabad. While the North India deal is in the final documentation phase, Vega City and Hyderabad have faced administrative delays. Specifically, the Hyderabad acquisition requires a government NOC for lease transfer due to its proximity to the metro.

    04

    Financial Discipline and Debt Optimization

    Nexus Select successfully reduced its debt cost by 30 bps YoY, leading to ₹120 million in annualized savings. Operational efficiency also improved, with rental collection timelines hitting a record low of 5 days from the billing date. The Trust's NOI margin is trending toward a new normal of 74%-75%.

    05

    Marketing and Technology Initiatives

    The Nexus One App has reached a milestone of ₹1,000 crores in lifetime sales, with a 0.5 million consumer base contributing 10% of total consumption. The Trust is also pioneering in-mall advertising with anamorphic cuboid screens in Hyderabad, Navi Mumbai, and Chennai, creating a new non-rental income stream that has already attracted over 15 brands.

    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.