Embassy REIT posts marginal rise in operating income to Rs 457 cr

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Updated: Aug 07, 2020 8:33 AM

The company’s net operating income margin stood at 88%, up 400 basis points y-o-y, reflecting efficiencies of scale and rigorous expense management.

Embassy REIT, Embassy REIT net operating income, covid 19 pandemic, Michael Holland, Rental collections,Embassy Office Parks REITRental collections from office occupiers remained strong at 98.9%, with office rental collections at 99.2% for April, 99.3% for May and 98.2% for June.

Embassy REIT on Thursday reported a net operating income of Rs 457 crore, up 1% year-on-year for the quarter ended June 30. This was mainly due to commercial office revenues despite the adverse impact of the Covid-19 pandemic on the hospitality business.

The company’s net operating income margin stood at 88%, up 400 basis points y-o-y, reflecting efficiencies of scale and rigorous expense management. Distributions stood at Rs 450 crore or Rs 5.83 per unit, representing a 100% payout ratio. The REIT’s balance sheet remains strong, with ample liquidity and low leverage of 16% net debt to TEV; existing cash and undrawn committed facilities totals Rs 1,260 crore and only 1.3% of total debt maturities till FY22.

Rental collections from office occupiers remained strong at 98.9%, with office rental collections at 99.2% for April, 99.3% for May and 98.2% for June. Portfolio occupancy remained healthy at 92.2% on the company’s 26.2 million sq ft operating office portfolio, with same-store occupancy of 94.1%.

Leases signed stood at 5.26 lakh sq ft, including over 2 lakh sq ft of new leases at market rents, and 3.25 lakh sq ft of renewals at 20% spreads to existing rentals. The company also achieved rental increases of 14% on 1.8 million sq ft across 22 office leases across portfolio.

Commenting on the performance, Michael Holland, CEO, Embassy Office Parks REIT, said, “Amid challenging market conditions, we are pleased to report a resilient set of results, marked by robust office rental collections, a healthy distribution payout, and our strong financial position. We remain well-positioned to meet the anticipated increase in demand over the coming quarters for institutional grade office space and to capitalise on the continued consolidation in office market, given considerable future supply shrinkage.”

The company has resumed construction activity on its 2.7 million sq ft of ongoing on-campus development as well as operations on 477 key operating hotels in June 2020 after the lifting of lockdown restrictions.

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