Embassy Office Parks REIT · NSE:EMBASSY.RR
Embassy Office Parks REIT — Q3 FY2024 Earnings Presentation
49 slides from Embassy Office Parks REIT's earnings presentation, Feb 2, 2024
Slide 1: Embassy Office Parks REIT Q3 FY2024 Earnings Materials
Embassy Office Parks REIT Q3 FY2024 Earnings Materials February 02, 2024 1
Slide 2: Press Release
Q3 FY2024 Earnings Materials Press Release Embassy REIT Achieves Full Year Leasing Guidance of 6.5 Million Square Feet in 9 Months; Delivers Best Quarter with 3.5 Million Square Feet of Total Leases • Best leasing quarter achieved with 3.5 msf across 22 deals; 6.5 msf leased year-to-date meeting ful
Slide 3: Press Release (Cont'd)
Q3 FY2024 Earnings Materials Press Release (Cont’d) Financial Highlights • Revenue from Operations grew by 8% YoY to ₹936 crores • Delivered distributions of ₹493 crores or ₹5.2 per unit • Refinanced ₹2,600 crores at an average rate of 8.25% including first-time commercial paper issuance of ₹1,000 c
Slide 4: Table of Contents
Q3 FY2024 Earnings Materials Table of Contents I. Key Highlights 5 II. Leasing 14 III. Financials 18 IV. Growth Levers 23 V. Market Outlook 32 VI. ESG and Total Business Ecosystem 35 VII. Appendix 41 4
Slide 5: I. Key Highlights
Q1 FY2022 Earnings Materials I. Key Highlights JP Morgan BTS, Embassy TechVillage, Bangalore
Slide 6: Record Leasing Performance, Strong Growth Outlook
Q3 FY2024 Earnings Materials Record Leasing Performance, Strong Growth Outlook LEASING DEVELOPMENT PROJECT DELIVERY Leased a record 3.5 msf, highest ever quarterly Ongoing 6.9 msf development at highly Delivered 0.4 msf in Embassy Business Hub, leasing; 2.2 msf of large marquee pre-leases attractive
Slide 7: Marquee Pre-Commitment Deals
Q3 FY2024 Earnings Materials Marquee Pre-Commitment Deals Signed three large pre-commitment deals, totaling 2.2 msf in our under-development projects in Bangalore Embassy Manyata – Blocks D1 & D2 Embassy TechVillage – Block 8 Embassy Manyata – Block L4 Perspective Perspective Perspective Asset Detai
Slide 8: Robust Financial Performance
Q3 FY2024 Earnings Materials Robust Financial Performance Revenue and NOI for YTD up 7% and 6% year-on-year respectively. Commercial office margins stood at 85% and hotel margins at 45% YTD FY2024 YTD FY2023 Variance % Remarks (mn) (mn) Revenue from new lease-up at attractive re-leasing spreads Re
Slide 9: Conservative Balance Sheet with Active Debt Management
Q3 FY2024 Earnings Materials Conservative Balance Sheet with Active Debt Management Refinanced ₹26 bn at 8.25% and issued commercial paper for the first time. Given anticipated reduction in rates, tactically focused on raising shorter maturity fixed debt Diversified Debt Composition(2) 30% Leverage(
Slide 10: India: The Office to the World
Q3 FY2024 Earnings Materials India: The Office to the World India remains optimally positioned to drive global offshoring demand, led by favorable demographics, skilled talent availability and cost-efficient high-quality spaces offered in India’s gateway cities India’s Dual Structural Advantage Cont
Slide 11: Bangalore is Asia's and India's Leading Office Market
Q3 FY2024 Earnings Materials Bangalore is Asia’s and India’s Leading Office Market Embassy REIT’s portfolio concentration in Bangalore remains a key competitive advantage, as the city continues to lead India’s office absorption on the back of sustained interest from GCCs Largest Tech, Innovation and
Slide 12: Full Year FY2024 Guidance
Q3 FY2024 Earnings Materials Full Year FY2024 Guidance On track with FY24 NOI guidance of ₹29 to ₹31 bn and distributions guidance of ₹20.5 to ₹22.0 per unit Delivered on Guidance Even in Challenging Markets Key Assumptions for FY24 Guidance Distributions (₹ mn) Leasing Guidance (msf) Pre-commitment
Slide 13: Expanding Unitholder Base
Q3 FY2024 Earnings Materials Expanding Unitholder Base Unitholder base continues to expand and diversify since listing; public float of 92% well distributed among foreign and domestic institutions and retail unitholders Well-diversified Investor Base Increasing Acceptance of REIT as an Investment Cl
Slide 14: II. Leasing
Q1 FY2022 Earnings Materials II. Leasing Embassy Manyata, Bangalore
Slide 15: Highest Ever Quarterly Leasing
Q3 FY2024 Earnings Materials Highest Ever Quarterly Leasing Leased a record 3.5 msf in Q3, met FY2024 annual leasing guidance in 9 months. Occupancy increased by over 100 bps to 84% at quarter-end Area (msf) 3.5 msf 6.5 Total Lease-up across 22 deals(1) 5.1 1.1 msf New Leases across 3.9 3.8 16 deals
Slide 16: Leasing Highlights for the Quarter
Q3 FY2024 Earnings Materials Leasing Highlights for the Quarter Around 80% leasing by GCCs, spanning multiple sectors such as BFSI, Retail and Technology Area Q3 leasing driven by GCCs Occupier Property Sector ('000 sf) Pre – Commitments 2,240 American Retail Major Embassy Manyata Retail 831 Others
Slide 17: High Quality, Diversified Occupier Base
Q3 FY2024 Earnings Materials High Quality, Diversified Occupier Base Global Captives and Tech occupiers constitute over 70% of our total occupier base, which now boasts of 244 marquee names Industry Diversification Top 5 Occupiers Sector % of Rentals Financial Services JP Morgan Financial Services 6
Slide 18: III. Financials
Q1 FY2022 Earnings Materials III. Financials Embassy TechVillage, Bangalore
Slide 19: Financial Performance during Q3 FY2024
Q3 FY2024 Earnings Materials Financial Performance during Q3 FY2024 Revenue and NOI for Q3 up 8% each year-on-year. Commercial office margins stood at 85% and hotel margins at 50%, both continue to be best-in-class Q3 FY2024 Q3 FY2023 Variance % Remarks (mn) (mn) Revenue Revenue from new lease-up
Slide 20: Delivering on Distributions
Q3 FY2024 Earnings Materials Delivering on Distributions Delivered distributions of ₹4,929 mn or ₹5.20 per unit, marking 19th quarter of 100% distribution payout. Cumulative distributions of over ₹93 bn since listing Distribution Highlights Distribution Mix – Q3 Particulars Q3 FY2024 YTD FY2024 Dist
Slide 21: Prudent Capital Management
Q3 FY2024 Earnings Materials Prudent Capital Management Option 1: ₹30 bn Bond at REIT Level and ₹15 bn LRD at Manyata to refinance ZCB at an average Debt book well-balanced across diverse investor pools, debt instruments and tenures coupon rate of 7%, average maturity period of 4 years, with potenti
Slide 22: Walkdown of Key Financial Metrics
Q3 FY2024 Earnings Materials Walkdown of Key Financial Metrics Particulars (₹ mn) Q3 FY2024 Q3 FY2023 YoY Var (%) YTD FY2024 YTD FY2023 YoY Var (%) Revenue from Operations 9,364 8,654 8% 27,393 25,519 7% NOI Property Taxes and Insurance (342) (318) 8% (1,011) (940) 8% Direct Operating Expenses (1,42
Slide 23: IV. Growth Levers
Q1 FY2022 Earnings Materials IV. Growth Levers Embassy Oxygen, Noida
Slide 24: Multiple Embedded Growth Levers
Q3 FY2024 Earnings Materials Multiple Embedded Growth Levers Embassy REIT’s strategy leverages on multiple levers to enhance NOI and delivering long term total return value for Unitholders Vacant area lease-up – occupancy expected to stabilize at pre-Covid 5.7 msf levels of mid-90s in the next few
Slide 25: Embedded Rent Growth
Q3 FY2024 Earnings Materials Embedded Rent Growth Secured 14% rent escalations on 1.3 msf and 29% spreads on 0.2 msf renewals in Q3. Of the 2.9 msf exits in YTD, 1.5 msf already backfilled at market rents and the remainder offers 46% MTM potential Embedded Rent Escalations of ~15% aids NOI Growth 19
Slide 26: Active Development Pipeline
Q3 FY2024 Earnings Materials Active Development Pipeline 6.9 msf active developments at highly attractive yields with 90% concentrated in Bangalore, India’s best office market Development Pipeline(1) (msf) Area (msf) 38% 81% 87% - - 2.5 2.2 2.2 0.7 1.4 2.5 1.0 0.9 1.4 0.4 0.9 1.0 0.8 0.4 FY2023 FY20
Slide 27: Embassy Business Hub Phase 1 – Delivered in Nov'23
Q3 FY2024 Earnings Materials Embassy Business Hub Phase 1 – Delivered in Nov’23 Received occupancy certificate for the 0.4 msf Phase 1 in Embassy Business Hub in Bangalore, which is 92% leased to the Dutch major Philips Actual Picture Note: (1) Jan’24 Picture 27
Slide 28: Project Progress at Site
Q3 FY2024 Earnings Materials Project Progress at Site Embassy Oxygen – Tower 1 (0.7 msf) Embassy Manyata – F2 Block (Refurbishment) Design Perspective Perspective Perspective Completed, Awaiting OC Targeting Sep’24 delivery Actual Progress at Site(1) Actual Picture Actual Picture Note: (1) Jan’24 Pi
Slide 29: Project Progress at Site
Q3 FY2024 Earnings Materials Project Progress at Site Embassy Manyata – M3 Block B (0.6 msf) Embassy Manyata – D1/D2 Redevelopment (1.4 msf) Design Perspective Perspective Perspective Targeting Mar’25 delivery Targeting Feb’26 delivery Actual Progress at Site(1) Actual Picture Actual Picture Note: (
Slide 30: Project Progress at Site (Cont'd)
Q3 FY2024 Earnings Materials Project Progress at Site (Cont’d) Embassy TechVillage – Block 8 (1.9 msf) Embassy Manyata – L4 Block (0.8 msf) Design Perspective Perspective Perspective Perspective On-track for Oct’24 delivery On-track for Sep’25 delivery Actual Progress at Site(1) Actual Picture Actua
Slide 31: Inorganic Growth Pipeline
Q3 FY2024 Earnings Materials Inorganic Growth Pipeline ROFO pipeline of approx. 9 msf in attractive micro-markets of Chennai and Bangalore. Inorganic expansion is key to growing our distributions Embassy Splendid TechZone, Chennai Embassy Whitefield (ETV Backland), Bangalore(3) Actual Image Actual I
Slide 32: V. Market Outlook
Q1 FY2022 Earnings Materials V. Market Outlook Embassy Manyata, Bangalore
Slide 33: Market Fundamentals – Update
Q3 FY2024 Earnings Materials Market Fundamentals – Update Indian office real estate rebounded in CY2023 with annual gross absorption within striking distance of an all-time high of 60 msf Annual Demand and Supply Trends City-wise Performance (Jan’23 – Dec’23) 70.0 32% City Gross Supply Vacancy 60.8
Slide 34: Demand and Supply Outlook
Q3 FY2024 Earnings Materials Demand and Supply Outlook Gross office absorption projected to continue this year’s highs, driven by resilient offshoring demand. Supply remains balanced in our micro-markets, with only 22% comparable and competing supply Demand Outlook Supply Outlook Gross Absorption (m
Slide 35: VI. ESG & Total Business Ecosystem
Q1 FY2022 Earnings Materials VI. ESG & Total Business Ecosystem Embassy GolfLinks, Bangalore
Slide 36: Hospitality Business Continued its Growth Trajectory
Q3 FY2024 Earnings Materials Hospitality Business Continued its Growth Trajectory Operating hotel portfolio continued to grow strongly with 53% occupancy, 24% YoY ADR growth and YTD EBITDA of ₹1,277 mn RevPAR (₹) and Occupancy (%) Revenue (₹ mn) and EBITDA (₹ mn) 3,394 42% 10% 26% 50% 53% Revenue EB
Slide 37: Certifications and Awards
Q3 FY2024 Earnings Materials Certifications and Awards ESG certifications, awards and performance on global benchmarks reflect our commitment to sustainability and transparency Building Certifications World’s Largest USGBC LEED ‘Well at Scale’ Score of 56; ‘WELL Health Safety Rating’ for 5-star Rati
Slide 38: ESG Roadmap – Progress Report
Q3 FY2024 Earnings Materials ESG Roadmap – Progress Report Continued progress on our 3-year sustainability targets, which are defined and monitored across 19 ESG programs and aligned to our broader 2040 net zero commitment Pillar Metric Target(1) YTD FY24 Update Status ► Renewable energy consumption
Slide 39: Energizing our Properties
Q3 FY2024 Earnings Materials Energizing our Properties Multiple events held under ‘Energize by Embassy REIT’ , our signature occupier engagement program, that engage over 250,000 park users across our portfolio Sports Events across Properties 39
Slide 40: Continued Stakeholder Engagement
Q3 FY2024 Earnings Materials Continued Stakeholder Engagement Launched multiple stakeholder engagement initiatives, including broker events for industry interaction, and retail roadshows for investor education Retail Roadshows in 11 Cities, 550+ Investors Broker Events across 3 Markets, 300+ Partici
Slide 41: VII. Appendix
Q1 FY2022 Earnings Materials VII. Appendix Embassy Manyata, Bangalore
Slide 42: Who We Are: Quick Facts
Q3 FY2024 Earnings Materials Who We Are: Quick Facts Embassy REIT is India’s first listed REIT and the largest office REIT in Asia by area. It owns and operates a commercial office portfolio across 4 major cities in India 45.4 msf(1)(2) 244 84% Portfolio Blue-chip Occupancy occupiers 13 1,614(2) 100
Slide 43: Portfolio Summary
Q3 FY2024 Earnings Materials Portfolio Summary 35.8 msf completed Grade A office assets (84% occupied, 6.9 years WALE, 10% MTM opportunity) (2) (2) (3) (3) Leasable Area (msf)/Keys/MW WALE Occupancy Rent (₹ psf / mth) GAV Property Completed Development Total (yrs) (%) In-place Market MTM (%) ₹ mn %
Slide 44: Embassy REIT Structure
Q3 FY2024 Earnings Materials Embassy REIT Structure Blackstone Embassy Sponsor Group Sponsor Entity Public Unitholders Acts on behalf Management of Unitholders Embassy Services Trustee Manager (Axis Trustee) REIT (EOPMSPL) 100% Manyata Promoters Private Limited (Embassy Manyata) 80% 50%(1) 100% 100%
Slide 45: Nine Infrastructure-like Office Parks
Q3 FY2024 Earnings Materials Nine Infrastructure-like Office Parks Embassy Manyata Embassy TechVillage Embassy Business Hub Bangalore (15.6 msf) Bangalore (9.6 msf) Bangalore (1.4 msf) Embassy GolfLinks Embassy Quadron Embassy TechZone Bangalore (2.7 msf) (3.1 msf) Pune (1.9 msf) Pune (5.5 msf) Emba
Slide 46: Four Prime City-center Offices
Q3 FY2024 Earnings Materials Four Prime City-center Offices Express Towers FIFC Embassy One Mumbai (0.5 msf) Mumbai (0.4 msf) Bangalore (0.3 msf) Embassy 247 Mumbai (1.2 msf) 46
Slide 47: Key Terms & Definitions
Q3 FY2024 Earnings Materials Key Terms & Definitions Notes: 37. NAV – Net Asset Value ► All figures in this presentation are as of Dec 31, 2023 unless otherwise specified 38. NCD – Non-Convertible Debentures ► All figures corresponding to year denoted with “FY” are as of or for the one-year period e
Slide 48: Disclaimer
Q3 FY2024 Earnings Materials Disclaimer This presentation is issued by Embassy Office Parks Management Services Private Limited (the “Manager”) in its capacity as the Manager of the Embassy Office Parks REIT (“Embassy REIT”), for general information purposes only, without regards to the specific obj
Slide 49: Investor Contact
Q1 FY2022 Earnings Materials Investor Contact: Website: www.embassyofficeparks.com | Email: ir@embassyofficeparks.com | Office: +91 80 4722 2222
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