Embassy REIT Announces FY 2021 Results, Performs Strongly

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Distributes Rs 18,364 million and grows Net Operating Income YoY by 12%. Leases 1.2 msf across 40+ deals, achieves 15% leasing spreads. Pursues growth through 5.7 msf new development, 19% pre-committed to global banking major.

Bangalore, India: Embassy Office Parks REIT (NSE: EMBASSY / BSE: 542602) (‘Embassy REIT’), India’s first listed REIT and the largest in Asia by area, reported results today for the fourth quarter and full year ended March 31, 2021.

Michael Holland, Chief Executive Officer of Embassy REIT said,

“Despite the significant challenges caused by the Covid-19 pandemic, Embassy REIT has again performed strongly and delivered on its financial guidance. We continue to provide safe work environments for our occupiers and we are working with local authorities to support the response to the second wave of the pandemic, including initiating vaccination programmes at our parks. Despite second wave headwinds, our global occupiers continue to report strong earnings and hiring growth which we believe will translate into demand for quality offices in due course. With our leading presence in India’s highest absorption markets, our low leverage levels and our access to capital markets, we are well positioned to capitalize on the fundamental global demand for Indian office space that will long outlast this pandemic.”

Embassy REIT parent has declared a distribution of Rs 5,308 million or Rs 5.6 per unit for 4Q FY2021. The cumulative distribution for FY2021 totals Rs 18,364 million or Rs 21.48 per unit, which is on target with the guidance issued earlier by management. The record date for the 4Q FY2021 distribution is May 7, 2021 and the distribution will be paid on or before May 14, 2021.

Financial Highlights – Full Year FY2021

  1. Net Operating Income (‘NOI’) grew year-on-year by 12%, with operating margins of 86%
  2. Simplified the holding structure of Embassy Manyata, thereby increasing the tax-free component of distributions to 78% for 4Q FY2021
  3. Raised Rs 52 billion debt at attractive 6.9% coupon, refinanced Rs 32.8 billion leading to 336 bps interest savings
  4. Fortress balance sheet with liquidity of Rs 15.5 billion and low leverage of 22%; ample headroom to finance on-campus development and new acquisitions

Business Highlights – Full Year FY2021

  1. Stable occupancy of 88.9% with strong rent collections at 99.8% on 32.3 msf operating portfolio
  2. Achieved rent increases of 13% on 8.4 msf across 90+ leases
  3. Leased 1.2 msf across 40+ deals, achieved 15% re-leasing / renewal spread
  4. Achieved top-out of 1.1 msf JP Morgan campus in Mar’21, on track for Sep’21 delivery
  5. Continued construction on additional 4.6 msf new build, targeted completion in 2 to 3 years

Other Initiatives

  1. Our parks remain open with focus on ensuring safe workspaces and business continuity for our occupiers
  2. Set up vaccine centers at Embassy Manyata and Embassy TechVillage with vaccination roll out for 4,900 frontline staff underway
  3. Subscribed to WELL Portfolio™ program to create healthier office buildings and thriving business ecosystems
  4. Built a second government school in February 2021 in partnership with ANZ, school to benefit 1,200 students