Embassy Office Parks REIT · NSE:EMBASSY.RR
Embassy Office Parks REIT — Q4 FY2019 Earnings Presentation
46 slides from Embassy Office Parks REIT's earnings presentation, May 28, 2019
Slide 1: Embassy Office Parks REIT 4Q FY2019 Investor Materials
Embassy Office Parks REIT 4Q FY2019 Investor Materials May 28, 2019 1
Slide 2: Disclaimer
4Q FY2019 Investor Materials Disclaimer This presentation is prepared for unitholders and 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, withou
Slide 3: Table of Contents
4Q FY2019 Investor Materials Table of Contents I. Key Highlights 4 II. Overview 9 III. Market Outlook 14 IV. Commercial Office Update 18 V. Development Update 23 VI. Hospitality & Other Update 28 VII. Financial Update 32 VIII. Looking Ahead 36 IX. Appendix 38 3
Slide 4: I. Key Highlights
4Q FY2019 Investor Materials I. Key Highlights Embassy Manyata, Bengaluru
Slide 5: Who We Are: Quick Facts
4Q FY2019 Investor Materials I. Key Highlights Who We Are: Quick Facts We run a commercial office portfolio that serves as essential corporate infrastructure to multinational tenants 33 msf 160+ 94.3% Portfolio Blue-chip Occupancy tenants Noida (9%) 11 1,096 100 MW Commercial Hotel Keys Solar Park O
Slide 6: Listing Overview
4Q FY2019 Investor Materials I. Key Highlights Listing Overview Listing of Embassy Office Parks REIT was a landmark transaction and first of its kind in India Key Transaction Highlights First REIT to list on Indian stock exchanges Largest REIT in Asia by square footage (33 msf total portfolio ar
Slide 7: Business Highlights for FY2019
4Q FY2019 Investor Materials I. Key Highlights Business Highlights for FY2019 Active asset management has driven strong performance in FY2019 94.3% occupancy on 24.8 msf completed commercial office 1.8 msf of new leasing Leasing 0.9 msf of renewals 34.9% re-leasing spreads on 1.2 msf area re
Slide 8: Financial Highlights for FY 2019
4Q FY2019 Investor Materials I. Key Highlights Financial Highlights for FY 2019 Revenue from operations for FY2019 rose 16% YoY, NOI & EBITDA margins for FY2019 were at 84% and 81% respectively FY2019 (mn) FY2018 (mn) Variance % Revenue (₹ mn) 18,771 Revenue From ₹18,771 ₹16,118 +16% Operations 16,1
Slide 9: II. Overview
4Q FY2019 Investor Materials II. Overview Embassy Techzone, Pune
Slide 10: What We Do: Our Strategy
4Q FY2019 Investor Materials II. Overview What We Do: Our Strategy Maximize distributions and NAV per Unit through organic growth & new acquisitions 4 Prudent Capital Management 3 First-mover Acquisition Build leverage Advantage selectively 2 Use strong balance Deliver on Development 42.8 msf
Slide 11: Our Markets
4Q FY2019 Investor Materials II. Overview Our Markets Portfolio well positioned in India’s four key office markets Embassy REIT markets represent 75% of India’s office absorption 72% Of India’s Grade A office stock concentrated in Embassy REIT markets Others 25% Bengaluru 32% 32% Absorption growth s
Slide 12: Our Tenant Base
4Q FY2019 Investor Materials II. Overview Our Tenant Base Global business with a diversified portfolio across established & growth sectors Industry Diversification (1) 42% of Gross Rents originate from Top 10 Tenants(2) Others Top 10 % of 9% Technology Sector Tenants Rentals 49% Research, Consulting
Slide 13: Our Portfolio Summary
4Q FY2019 Investor Materials II. Overview Our Portfolio Summary 25 msf Portfolio of Grade A office assets (94% occupied, 7 years WALE and 31% MTM opportunity) Leasable Area (msf)/Keys/MW WALE (3) Occupancy Rent (₹ psf / mth) GAV (4) Asset Completed Development Total (yrs) (%) In-place Market (4) MTM
Slide 14: III. Market Outlook
4Q FY2019 Investor Materials III. Market Outlook Embassy One, Bengaluru
Slide 15: India – The Global Technology Innovation Hub
4Q FY2019 Investor Materials III. Market Outlook India – The Global Technology Innovation Hub India continues to attract global corporations for large services operations due to availability of abundant talent and cost savings; thereby leading to strong office demand Indian IT-BPM Landscape – Founda
Slide 16: Our Markets: Commercial Office Fundamentals
4Q FY2019 Investor Materials III. Market Outlook Our Markets: Commercial Office Fundamentals Strong demand-supply fundamentals resulting in robust demand and low vacancy across our markets Area (msf) 48 30% 25% 19.2% 34.7 32 20% 18.6% 31.7 30.4 29.6 29.3 26.9 14.5% 27.5 24.5 27.3 26.4 15% 15.5% 22.5
Slide 17: Our Markets: Bengaluru Luxury and Upscale Hospitality Performance
4Q FY2019 Investor Materials III. Market Outlook Our Markets: Bengaluru Luxury and Upscale Hospitality Performance Strong demand led by business travellers for the luxury and upper upscale segment; occupancy levels have increased steadily since 2014, ADRs are stabilizing Amount (₹) 12,000 80% 68% 8,
Slide 18: IV. Commercial Office Update
4Q FY2019 Investor Materials IV. Commercial Office Update FIFC, Mumbai
Slide 19: Continued Leasing Momentum
4Q FY2019 Investor Materials IV. Commercial Office Update Continued Leasing Momentum Leased 1.8 msf in FY2019, of this 1.2 msf re-leased at 34.9% re-leasing spread Particulars FY2016 FY2017 FY2018 FY2019 Average Total Completed Area msf 22.5 23.1 24.2 24.8 Occupancy % 93.4% 94.7% 93.5% 94.3% 94.0% V
Slide 20: Occupancy and Rent Growth Outperformance
4Q FY2019 Investor Materials IV. Commercial Office Update Occupancy and Rent Growth Outperformance High quality assets with robust infrastructure and amenities backed by active asset management has resulted in outperformance vis-à-vis the market Portfolio occupancy higher by 950 bps vis-à-vis market
Slide 21: Embedded Mark-to-Market Growth Potential
4Q FY2019 Investor Materials IV. Commercial Office Update Embedded Mark-to-Market Growth Potential Renewed 0.9 msf at higher than in-place rents, opportunity to re-lease additional 6.2 msf at market levels in next 4 years 23% of rentals expiring between FY2020–23 Current market rents are 31% above i
Slide 22: Leasing Highlights for 4Q FY2019
4Q FY2019 Investor Materials IV. Commercial Office Update Leasing Highlights for 4Q FY2019 430k sf new leases signed in 4Q FY2019 with existing tenant expansion accounting for 64% of space take-up 4Q FY2019 Highlights Key Leases Signed Tenant Asset City Area ('000 sf) Total leases signed (‘000 sf) 4
Slide 23: V. Development Update
4Q FY2019 Investor Materials V. Development Update Embassy Golflinks, Bengaluru
Slide 24: Development Pipeline
4Q FY2019 Investor Materials V. Development Update Development Pipeline 2.4 msf on-campus new build pipeline under various stages of development Development Track Record (msf) & Pipeline(1) Development Status as of May 28, 2019 Completed in Nov’18 Embassy Oxygen Received Occupancy Certificate (T
Slide 25: Embassy Manyata (Front Parcel)
4Q FY2019 Investor Materials V. Development Update Embassy Manyata (Front Parcel) Front Parcel at Embassy Manyata (0.8 msf commercial, 58k sf retail and 619 keys hotel) currently under development, targeting completion of commercial in 2Q FY2021 and hotels in 3Q FY2022 NXT Tower 1 399k sf NXT Tower
Slide 26: Embassy Oxygen
4Q FY2019 Investor Materials V. Development Update Embassy Oxygen 0.5 msf Tower 3 delivered in November 2018 on schedule and is currently 92%(1) leased. 0.6 msf Tower 2 currently under development, targeting completion in 1Q FY2021 Embassy Oxygen (Tower 3 – 0.5 msf) Embassy Oxygen (Tower 2 – 0.6 msf
Slide 27: Existing Asset Upgrades
4Q FY2019 Investor Materials V. Development Update Existing Asset Upgrades Select infrastructure, upgrade and ancillary projects underway to further enhance competitiveness Embassy 247 – Facade work Embassy Manyata – 220KV Substation (WIP, targeting 2Q FY2020 completion) (WIP, targeting 2Q FY2020 co
Slide 28: VI. Hospitality & Other Updates
4Q FY2019 Investor Materials VI. Hospitality & Other Updates Hilton at Embassy Golflinks, Bengaluru
Slide 29: Hospitality – Hilton and Four Seasons
4Q FY2019 Investor Materials VI. Hospitality & Other Updates Hospitality – Hilton and Four Seasons With recent launch of Four Seasons, 477 hotel keys are now operational and additional 619 keys under development Hilton at Four Seasons at Hilton & Hilton Garden Inn at Embassy Golflinks Embassy One Em
Slide 30: Hospitality: Four Seasons Hotel Launch Update
4Q FY2019 Investor Materials VI. Hospitality & Other Updates Hospitality: Four Seasons Hotel Launch Update Known for its world class hospitality, Four Seasons at Embassy One commenced operations in May 2019 Reception Lobby Pool Dining Area Sample Room Note: May 2019 pictures 30
Slide 31: Sustainability Initiatives
4Q FY2019 Investor Materials VI. Hospitality & Other Updates Sustainability Initiatives Our focus on energy sustainability and environment conservation differentiates us from our competition 100 MW Solar Plant 100MW Solar Plant (215 mn units capacity p.a.(1)) supplying green power to our Bengaluru
Slide 32: VII. Financial Update
4Q FY2019 Investor Materials VII. Financial Update Embassy Manyata, Bengaluru
Slide 33: Revenue Contribution by Segment & Geography
4Q FY2019 Investor Materials VII. Financial Update Revenue Contribution by Segment & Geography Commercial office segment contributed 88% of Revenue from Operations for FY2019 Revenue % of ₹ 18,771 mn Asset City FY2019 (₹ mn) Total Revenue from Operations (March 31, 2019) (1) Embassy Manyata Bengalur
Slide 34: Fortress Balance Sheet
4Q FY2019 Investor Materials VII. Financial Update Fortress Balance Sheet Post utilization of IPO Proceeds, our conservative Balance Sheet provides significant flexibility for growth NAV per Unit (₹) Particulars 31 March 2019 (₹ mn) Gross Asset Value (GAV)(1) 313,529 Add: Other Assets 61,913 Less: O
Slide 35: Post IPO Debt Update
4Q FY2019 Investor Materials VII. Financial Update Post IPO Debt Update Successfully priced and allotted ₹30,000 mn NCDs, to repay existing debt and for general corporate purposes Listed NCD Issuance post IPO ₹30,000 mn ₹30,000 mn NCDs priced and allotted on May 3, 2019 Listed NCD Issuance YTM o
Slide 36: VIII. Looking Ahead
4Q FY2019 Investor Materials VIII. Looking Ahead Embassy Oxygen, Noida
Slide 37: Key Growth Drivers
4Q FY2019 Investor Materials VIII. Looking Ahead Key Growth Drivers Growth Levers and near term priorities in FY2020 in-line with historic delivery Achieved Near term priority FY2019 FY2020 Four Seasons Hotel Stabilize Four Hotel launched and Seasons Hotel operational Stabilization Delivered 0.5 msf
Slide 38: IX. Appendix
4Q FY2019 Investor Materials IX. Appendix Embassy Galaxy, Noida
Slide 39: Bengaluru Office Market
4Q FY2019 Investor Materials IX. Appendix Bengaluru Office Market Bengaluru office market is forecasted to continue to lead India’s office market growth Supply Absorption (msf) (msf) 13.4 13.3 12.7 12.5 12.4 11.9 12.0 11.9 11.6 10.7 11.2 9.3 7.9 7.7 CY2014 CY2015 CY2016 CY2017 CY2018 CY2019F CY2020F
Slide 40: Mumbai Office Market
4Q FY2019 Investor Materials IX. Appendix Mumbai Office Market Supply is forecasted to moderate over next 2 years and domestic growth is likely to drive office absorption Supply Absorption (msf) (msf) 8.0 7.2 7.5 7.1 6.7 6.7 5.4 5.9 5.2 5.4 4.3 4.2 4.4 4.0 CY2014 CY2015 CY2016 CY2017 CY2018 CY2019F
Slide 41: Pune Office Market
4Q FY2019 Investor Materials IX. Appendix Pune Office Market Pune office market forecasted to witness sub-5% vacancy Supply Absorption (msf) (msf) 5.1 5.2 4.4 4.1 3.6 3.6 3.5 3.2 3.3 3.5 3.2 2.7 2.2 2.3 CY2014 CY2015 CY2016 CY2017 CY2018 CY2019F CY2020F CY2014 CY2015 CY2016 CY2017 CY2018 CY2019F CY2
Slide 42: NCR Office Market
4Q FY2019 Investor Materials IX. Appendix NCR Office Market Despite the high vacancy (primarily in Grade B assets), NCR has witnessed a 4.7% rent CAGR since 2014 Supply Absorption (msf) (msf) 10.2 9.5 8.1 6.8 7.0 6.5 6.2 5.3 5.6 5.3 4.6 4.3 4.2 2.8 CY2014 CY2015 CY2016 CY2017 CY2018 CY2019F CY2020F
Slide 43: Notes to Financials for FY2019
4Q FY2019 Investor Materials IX. Appendix Notes to Financials for FY2019 Revenue from Operation (Up 16% YoY to ₹18,771 mn) Realization of all contractual lease escalations Full year impact of leases signed in FY2018 Vacant area lease-up in FIFC, Embassy 247 & others Revenue from lease-up of
Slide 44: REIT structure
4Q FY2019 Investor Materials IX. Appendix REIT structure Blackstone Embassy Sponsor Groups Sponsor Entity Public Unitholders Management Trustee Embassy Services REIT Manager (Axis Acts on Behalf of (EOPMSPL) Trustee) Unitholder 100% Embassy Office Parks Private Limited (Embassy Techzone) 36% 80% 50%
Slide 45: Key Terms & Definitions
4Q FY2019 Investor Materials IX. Appendix Key Terms & Definitions Notes: 27. MW – Mega-Watt ► All figures in this presentation are as of March 31, 2019 unless specified otherwise 28. Mumbai: Refers to MMR – Mumbai Metropolitan Region ► All figures corresponding to year denoted with “FY” are as of or
Slide 46: Thank You
4Q FY2019 Investor Materials Thank You Investor Relations Contact: Ritwik Bhattacharjee ir@embassyofficeparks.com P: +9180 3322 2222 F: +9180 3322 2223 www.embassyofficeparks.com Embassy Golflinks, Bengaluru
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