Embassy Office Parks REIT sees a 4% rise in revenue, profit remains flat

By: |
November 3, 2020 3:30 AM

The net operating income saw an increase of 10% at Rs 481.4 crore (y-o-y) with contracted lease escalations on 7.5 million square feet and 60% pre-commitments in 1.4 million sq.ft. new completions. The net operating income (NOI) increased 5% cumulatively for the first six months of the financial year 2020-2021 to Rs 938.3 crore.

The net operating income (NOI) increased 5% cumulatively for the first six months of the financial year 2020-2021 to Rs 938.3 crore.

Embassy Office Parks REIT reported an increase of 4% in revenue from operation at Rs 540.1 crore, year-on-year (y-o-y) basis, with contracted lease escalations on 7.5 million square feet and 60% pre-commitments in 1.4 million sq.ft. new completions. However, the Bengaluru-based reported a flat consolidated net profit at Rs 232.56 crore for the quarter ended September.

The net operating income saw an increase of 10% at Rs 481.4 crore (y-o-y) with contracted lease escalations on 7.5 million square feet and 60% pre-commitments in 1.4 million sq.ft. new completions. The net operating income (NOI) increased 5% cumulatively for the first six months of the financial year 2020-2021 to Rs 938.3 crore.

This was on the back of an increase in revenue from operations, savings due to cost control initiatives and lower hotel, power and fuel expenses. However, the gains were offset by a decrease in the hotel revenue due to Covid-19 impact.

The REIT’s operating margin stood at 88%, a rise of 700 basis points for the second quarter ended September compared to last year. The operating margin was higher due to the increase in NOI and interest income on purchase consideration advanced for a part of Embassy Manyata.

It distributed Rs 424.4 crore or Rs 5.50 per unit for the quarter and cumulatively Rs 874.3 crore or Rs 11.33 per unit for the first half of FY21, representing a 100% payout ratio for both the periods.

“Embassy REIT continues to deliver amidst challenging conditions caused by the global pandemic. We have been successful in collecting rents, keeping expenses low, and maintaining a healthy balance sheet. Most notably, we are distributing cash flows to our unitholders that compares to the payouts of the top yield-paying Indian corporates,” said Mike Holland, chief executive officer, Embassy REIT.

The balance sheet for the REIT continues to remain strong, with ample liquidity and low leverage of 16% net debt to total enterprise value (TEV); existing cash and undrawn commitments total Rs 1,220 crore and less than 1% of total debt maturing before FY22. It successfully raised listed debentures of Rs 1,500 crore at an average 6.98% quarterly coupon. This was utilised towards financing the recent acquisition of Embassy Manyata and Embassy TechZone property maintenance, refinancing existing debt, construction development and for general corporate purposes.
Rental collections from the office occupiers remained strong at 99.5%, in-line with office rental collections of 99.7% for Q1FY21. The portfolio occupancy remained healthy at 91.7% on the REIT’s 26.2 million square feet of the operating portfolio, with same-store occupancy of 93.4%.

New leases and renewals signed for September quarter stood at 2.10 lakh sq.ft., including 1.24 lakh sq.ft of new leases at 10% above market rents. The year-to-date new leases and renewals stand at 7.35 lakh sq.ft., including 4.10 lakh sq.ft. of renewals at 17% spread to existing rents.

The REIT achieved rental increases of 11% on 1.9 million sq.ft. in the second quarter across 18 office leases, with year-to-date rental increases of 12% on 3.7 million sq.ft. across 40 office leases. Construction work continues across 2.7 million sq.ft. ongoing development within existing campuses; with labour ramp-up at the site now at 85% of peak capacity.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1India’s IT and business services market to reach $13 billion by December 2020: IDC
2Govt approves merger of Lakshmi Vilas Bank with DBIL
3HDFC Ltd to acquire 19.9 per cent stake in Renaissance Investment Solutions ARC