Embassy Office Parks REIT · NSE:EMBASSY.RR
Embassy Office Parks REIT — Q1 FY2024 Earnings Presentation
44 slides from Embassy Office Parks REIT's earnings presentation, Jul 26, 2023
Slide 1: Embassy Office Parks REIT Q1 FY2024 Earnings Materials
Embassy Office Parks REIT Q1 FY2024 Earnings Materials July 26, 2023 1
Slide 2: Press Release
Q1 FY2024 Earnings Materials Press Release Embassy REIT Reports Robust Operating and Financial Results for 1Q FY2024: Delivers 1.1 Million Square Feet of Total Leases and Provides Guidance for Full-Year FY2024 • Leases 1.1 msf across 22 deals; 407k sf of new leasing at 68% re-leasing spreads • Portf
Slide 3: Press Release (Cont'd)
Q1 FY2024 Earnings Materials Press Release (Cont’d) Financial Highlights • Grew Net Operating Income by 9% YoY to ₹738 crores with commercial office segment margins at 85% • Delivered distributions of ₹510 crores or ₹5.38 per unit, marking the 17th consecutive quarter of 100% payout • Raised Non-Con
Slide 4: Table of Contents
Q1 FY2024 Earnings Materials Table of Contents I. Key Highlights 5 II. Leasing Update 12 III. Development Update 17 IV. Financial Update 24 V. ESG & Total Business Ecosystem Update 29 VI. Market Outlook 35 VII. Appendix 38 4
Slide 5: I. Key Highlights
Q1 FY2022 Earnings Materials I. Key Highlights Hilton Hotel Complex, Embassy Manyata
Slide 6: Strong Leasing Momentum, Continued Growth Investments
Q1 FY2024 Earnings Materials I. Key Highlights Strong Leasing Momentum, Continued Growth Investments LEASING REFURBISHMENT DEVELOPMENT Leased 1.1 msf which includes 407k sf new Refurbished Block D3 in Embassy Manyata; 41% Accelerated 7.9 msf active development at lease up at 68% spreads area leased
Slide 7: Robust Financial Performance
Q1 FY2024 Earnings Materials I. Key Highlights Robust Financial Performance NOI and EBITDA for Q1 up 9% and 12% YoY respectively, with overall NOI and EBITDA margins at 81% and 80% respectively Q1 FY2024 Q1 FY2023 Variance % Remarks (mn) (mn) Revenue from new lease-up at attractive re-leasing spre
Slide 8: Conservative Balance Sheet with Active Debt Management
Q1 FY2024 Earnings Materials I. Key Highlights Conservative Balance Sheet with Active Debt Management Raised ₹21 bn at an average rate of 7.8%, achieved our lowest-ever 120 bps rate spread over G-Sec and secured 146 bps proforma savings vs the expected repriced rate on these loans Significant Portio
Slide 9: India: The Office to the World
Q1 FY2024 Earnings Materials I. Key Highlights 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 Structu
Slide 10: Bangalore is Asia's and India's Leading Office Market
Q1 FY2024 Earnings Materials I. Key Highlights Bangalore is Asia’s and India’s Leading Office Market Embassy REIT’s portfolio concentration in Bangalore is competitive advantage Largest Tech, Innovation and GCC Hub Dominant share of Leasing Demand in H1 CY23(5) 30% Total Indian GCCs in Bangalore Ban
Slide 11: Full Year FY2024 Guidance
Q1 FY2024 Earnings Materials I. Key Highlights Full Year FY2024 Guidance FY24 NOI Guidance of ₹29 to ₹31 bn and distributions guidance of ₹20.5 to ₹22.0 per unit assumes 6.0 msf of gross leasing during the year Delivered on Guidance Even in Challenging Markets Key Assumptions for FY24 Guidance Distr
Slide 12: II. Leasing Update
Q1 FY2022 Earnings Materials II. Leasing Update Embassy TechVillage, Bangalore
Slide 13: Continued Leasing Momentum
Q1 FY2024 Earnings Materials II. Leasing Update Continued Leasing Momentum Leased 1.1 msf across 22 deals in Q1 at 39% spreads, including new lease up of 407k sf and pre- commitments of 448k sf Area (msf) FY24 Guidance: 1.1 msf 6.0 msf Total Lease-up(1) 5.1 407k sf 3.9 3.8 New Leases at 68% Re- leas
Slide 14: Leasing Highlights for the Quarter
Q1 FY2024 Earnings Materials II. Leasing Update Leasing Highlights for the Quarter 71% of Q1 leasing by GCCs, spanning multiple sectors such as research, consulting and analytics, and engineering and manufacturing Area Q1 leasing driven by GCCs Occupier Property Sector ('000 sf) New Leases 407 Resea
Slide 15: Embedded Rent Growth
Q1 FY2024 Earnings Materials II. Leasing Update Embedded Rent Growth Secured 22% rent escalations on 1.1 msf and achieved 15% spreads on 209k sf renewals. 0.7 msf exits offer significant 26% MTM potential Embedded Rent Escalations of ~15% aids NOI Growth 26% of Leases Expire Between FY2024–27 Area (
Slide 16: High Quality, Diversified Occupier Base
Q1 FY2024 Earnings Materials II. Leasing Update High Quality, Diversified Occupier Base Global Captives and Tech occupiers constitute over 70% of our occupier base Industry Diversification(1) Top 10 % of Sector Occupiers Rentals Technology Financial Services 36% 21% JP Morgan Financial Services 6.7%
Slide 17: III. Development Update
Q1 FY2022 Earnings Materials III. Development Update Embassy TechVillage – JP Morgan BTS, Bangalore
Slide 18: Focused Growth Investments
Q1 FY2024 Earnings Materials III. Development Update Focused Growth Investments 7.9 msf active development at highly attractive yields with over 90% concentrated in Bangalore, India’s best office market Development Pipeline(1) (msf) Current Development Status Area (msf) Towers A, B, C & D – Baseme
Slide 19: Value Creation Case Study | Block D3, Embassy Manyata
Q1 FY2024 Earnings Materials III. Development Update Value Creation Case Study | Block D3, Embassy Manyata Refurbished 0.4 msf of Block D3, a vacant SEZ building in Embassy Manyata which is under advanced stages of SEZ denotification. Post refurbishment, re-leased 41% of the building at 210% spreads
Slide 20: Value Creation Case Study | Block K, Embassy Manyata
Q1 FY2024 Earnings Materials III. Development Update Value Creation Case Study | Block K, Embassy Manyata Refurbished 0.2 msf Block K at Embassy Manyata, post exit of an occupier on ultimate expiry. Re- leased 72% of the building at 215% spreads with a strong pipeline for the balance space 0.2 msf P
Slide 21: Project Progress at Site
Q1 FY2024 Earnings Materials III. Development Update Project Progress at Site Embassy Manyata – M3 Block A (1.0 msf) Embassy Manyata – M3 Block B (0.6 msf) Design Perspective Perspective Perspective Targeting Aug’23 delivery Targeting Mar’25 delivery Actual Progress at Site(1) Actual Picture Actual
Slide 22: Project Progress at Site (Cont'd)
Q1 FY2024 Earnings Materials III. Development Update Project Progress at Site (Cont’d) Embassy Manyata – L4 Block (0.7 msf) Embassy TechVillage – Block 8 (1.9 msf) Design Perspective Perspective Perspective On-track for Jun’25 delivery On-track for Sep’24 delivery Actual Progress at Site(1) Actual P
Slide 23: Project Progress at Site (Cont'd)
Q1 FY2024 Earnings Materials III. Development Update Project Progress at Site (Cont’d) Embassy Business Hub – Phillips BTS (0.4 msf) Embassy Oxygen – Tower 1 (0.7 msf) Design Perspective Perspective Perspective On-track for Sep’23 delivery On-track for Nov’23 delivery Actual Progress at Site(1) Actu
Slide 24: IV. Financial Update
Q1 FY2022 Earnings Materials IV. Financial Update Embassy TechZone, Pune
Slide 25: Delivering on Distributions
Q1 FY2024 Earnings Materials IV. Financial Update Delivering on Distributions Delivered distributions of ₹5,100 mn or ₹5.38 per unit, marking 17th quarter of 100% distribution payout. Cumulative distributions of over ₹83 billion since listing Distribution Highlights Distribution Mix – Q1 FY2024 Part
Slide 26: Prudent Capital Management
Q1 FY2024 Earnings Materials IV. Financial Update Prudent Capital Management Balance1:sheet Option ₹30 strongly bn Bondpositioned at REIT Level amidst andcurrent ₹15 bnvolatile LRD atmacro Manyata and rate to refinance environment ZCB–atlow anleverage, average coupon rate attractive interest of 7%,c
Slide 27: Growing Unitholder Base
Q1 FY2024 Earnings Materials IV. Financial Update Growing Unitholder Base Unitholder base continues to expand and diversify since listing; public float well distributed among institutions and retail unitholders Evolving Unitholder Base Increasing Acceptance of REIT as an Investment Class Sponsors –
Slide 28: Walkdown of Key Financial Metrics
Q1 FY2024 Earnings Materials IV. Financial Update Walkdown of Key Financial Metrics Particulars (₹ mn) Q1 FY2024 Q1 FY2023 YoY Variance (%) Q4 FY2023 QoQ Variance (%) Revenue from Operations 9,136 8,294 10% 8,676 5% NOI Property Taxes and Insurance (326) (295) 10% (355) (8%) Direct Operating Expense
Slide 29: V. ESG & Total Business Ecosystem Update
Q1 FY2022 Earnings Materials V. ESG & Total Business Ecosystem Update Flyover at Embassy Manyata, Bangalore
Slide 30: Hospitality Business Continued its Growth Trajectory
Q1 FY2024 Earnings Materials V. ESG & Total Business Ecosystem Update Hospitality Business Continued its Growth Trajectory All four operating hotels continued their strong rebound with 53% occupancy, a 30% YoY ADR growth and a quarterly EBITDA of ₹401 mn Occupancy (%) and RevPAR (₹) Revenue (₹ mn) a
Slide 31: Widening Business Moat
Q1 FY2024 Earnings Materials V. ESG & Total Business Ecosystem Update Widening Business Moat Launched the 8-acre Central Garden at Embassy TechVillage. With an amphitheater, multiple sports zones, F&B and break-out spaces, this amenity is expected to further widen the moat of the property Actual pic
Slide 32: Green Impetus across Investing, Operations and Financing
Q1 FY2024 Earnings Materials V. ESG & Total Business Ecosystem Update Green Impetus across Investing, Operations and Financing Leadership position in ESG a strong differentiator and long-term business advantage. ESG commitments aligned with the broader goals of occupiers and investors Launched Annua
Slide 33: ESG Memberships, Certifications and Awards
Q1 FY2024 Earnings Materials V. ESG & Total Business Ecosystem Update ESG Memberships, Certifications and Awards ESG memberships, certifications and performance on global benchmarks reflect our commitment to sustainability, transparency and operational excellence Certifications Building ESG Benchmar
Slide 34: ESG Roadmap – Progress Report
Q1 FY2024 Earnings Materials V. ESG & Total Business Ecosystem Update ESG Roadmap – Progress Report In-line with our 2040 net zero commitment, 3-year sustainability targets defined and monitored across 19 ESG programs. Significant progress in FY2023 Pillar Metric Target(1) Q1 FY24 Update Status ► Re
Slide 35: VI. Market Outlook
Q1 FY2022 Earnings Materials VI. Market Outlook FIFC, Mumbai
Slide 36: Market Fundamentals – Update
Q1 FY2024 Earnings Materials VI. Market Outlook Market Fundamentals – Update Gross office absorption continued to exceed supply during the quarter, driven by resilient offshoring trends. Sustained leasing activity anticipated for India office, despite global headwinds Annual Demand and Supply Trends
Slide 37: Demand and Supply Outlook
Q1 FY2024 Earnings Materials VI. Market Outlook Demand and Supply Outlook Long-term fundamentals of India office remain robust, with global captives driving demand. Supply continues to remain constrained with only 21% comparable and competing supply Demand Outlook Supply Outlook Gross Absorption (ms
Slide 38: VII. Appendix
Q1 FY2022 Earnings Materials VII. Appendix Embassy Galaxy, Noida
Slide 39: Who We Are: Quick Facts
Q1 FY2024 Earnings Materials VII. Appendix Who We Are: Quick Facts Embassy REIT owns and operates a commercial office portfolio that serves as essential corporate infrastructure to global occupiers, including many technology companies 45.0 msf(1)(2) 234 85% Portfolio Blue-chip Occupancy occupiers 13
Slide 40: Portfolio Summary
Q1 FY2024 Earnings Materials VII. Appendix Portfolio Summary 34.3 msf completed Grade A office assets (85% occupied, 6.6 years WALE, 15% MTM opportunity) Leasable Area (msf)/Keys/MW (2) (2) Occupancy Rent (₹ psf / mth) (3) (3) WALE GAV Property Completed Development Total (yrs) (%) In-place Market M
Slide 41: Embassy REIT Structure
Q1 FY2024 Earnings Materials VII. Appendix 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
Slide 42: Key Terms & Definitions
Q1 FY2024 Earnings Materials VII. Appendix Key Terms & Definitions Notes: 38. NCD – Non-Convertible Debentures ► All figures in this presentation are as of Jun 30, 2023 unless otherwise specified 39. NDCF refers to Net Distributable Cash Flows ► All figures corresponding to year denoted with “FY” ar
Slide 43: Disclaimer
Q1 FY2024 Earnings Materials VII. Appendix 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 th
Slide 44: 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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