Embassy Office Parks REIT · NSE:EMBASSY.RR
Embassy Office Parks REIT — FY2023 Earnings Presentation
49 slides from Embassy Office Parks REIT's earnings presentation, Apr 27, 2023
Slide 1: Embassy Office Parks REIT FY2023 Earnings Materials
Embassy Office Parks REIT FY2023 Earnings Materials April 27, 2023 1
Slide 2: Press Release
Q4 FY2023 Earnings Materials Press Release Embassy REIT Leases Record 5.1 msf And Delivers On ₹2,058 crores Distributions Guidance For FY2023 • Leased 5.1 msf across 100 deals at 16% leasing spreads, highest deal activity over last 7 years • Grew NOI by 11% YoY to ₹2,766 crores, delivered on annual
Slide 3: Press Release (Cont'd)
Q4 FY2023 Earnings Materials Press Release (Cont’d) Financial Highlights • Grew Net Operating Income (NOI) by 11% YoY to ₹2,766 crores • Delivered distributions of ₹2,058 crores or ₹21.71 per unit, marking the 16th consecutive quarter of 100% payout • Refinanced ₹5,340 crores debt at 101 bps positiv
Slide 4: Table of Contents
Q4 FY2023 Earnings Materials Table of Contents I. Key Highlights 5 II. Leasing Update 11 III. Development Update 17 IV. Acquisition Update 23 V. ESG & Total Business Ecosystem Update 28 VI. Financial Update 34 VII. Market Outlook 38 VIII. Appendix 41 4
Slide 5: I. Key Highlights
Q1 FY2022 Earnings Materials I. Key Highlights Hilton Hotel Complex, Embassy Manyata
Slide 6: Delivered on Guidance, Accelerated Growth Investments
Q4 FY2023 Earnings Materials I. Key Highlights Delivered on Guidance, Accelerated Growth Investments LEASING REDEVELOPMENT DEVELOPMENT Leased 5.1 msf across 100 deals at 16% Launched 1.2 msf redevelopment at Embassy Accelerated 7.9 msf active development at spreads, surpassing annual guidance Manyat
Slide 7: Financial Performance for FY2023
Q4 FY2023 Earnings Materials I. Key Highlights Financial Performance for FY2023 FY23 NOI and EBITDA up 11% each year-on-year respectively with NOI and EBITDA margins at 81% and 79% respectively FY2023 FY2022 Variance % Remarks (mn) (mn) Revenue from new lease-up at attractive re-leasing spreads Re
Slide 8: Fortress Balance Sheet with Active Debt Management
Q4 FY2023 Earnings Materials I. Key Highlights Fortress Balance Sheet with Active Debt Management Refinanced ₹53 bn debt at 101 bps positive spreads, maintained best-in-class balance sheet with low 28% leverage, attractive 7.2% debt cost and AAA/Stable credit ratings Active Debt Management Leading t
Slide 9: India: The Office to the World
Q4 FY2023 Earnings Materials I. Key Highlights India: The Office to the World India office remains a long-term growth opportunity, led by dual structural drivers of cost efficiency and abundant STEM talent offered by India’s gateway cities India’s Dual Structural Advantage Continues GCC additions in
Slide 10: Bangalore Continues to Lead India's Office Resurgence
Q4 FY2023 Earnings Materials I. Key Highlights Bangalore Continues to Lead India’s Office Resurgence Bangalore continues to be Asia’s leading office market given its strong tech ecosystem. Embassy REIT’s portfolio concentration in Bangalore market remains a key advantage Largest Tech, Start-up and G
Slide 11: II. Leasing Update
Q1 FY2022 Earnings Materials II. Leasing Update Embassy TechVillage, Bangalore
Slide 12: High Quality, Diversified Occupier Base
Q4 FY2023 Earnings Materials II. Leasing Update High Quality, Diversified Occupier Base Tech occupiers and Global Captives constitute over 70% of our occupier base Industry Diversification(1) Top 10 % of Sector Financial Services Occupiers Rentals Technology 20% JP Morgan Financial Services 6.7% 38%
Slide 13: Record Leasing Performance
Q4 FY2023 Earnings Materials II. Leasing Update Record Leasing Performance Leased a record 5.1 msf across 100 deals at 16% leasing spreads, surpassing annual guidance Highest 100 overall deal activity over 100 Nos. 80 last 7 years Total Deals Signed 61 64 Record leasing 53 49 exceeded 5 48 45 msf FY
Slide 14: Record New Occupiers Added, Primarily GCCs
Q4 FY2023 Earnings Materials II. Leasing Update Record New Occupiers Added, Primarily GCCs Global Captives continue to set up and expand their India centers, thereby driving leasing. Added 44 new occupiers in FY2023 highest since listing GCC share in FY2023 New Leasing(1) American German Luxury New
Slide 15: Leasing Highlights for Q4
Q4 FY2023 Earnings Materials II. Leasing Update Leasing Highlights for Q4 712k sf total lease-up across 26 deals in Q4, comprising of 505k sf new lease-up at 18% re-leasing spread and 45k sf renewals at 2% MTM spread Area Occupier Property Sector ('000 sf) United Health Group New Leases 505 Engineer
Slide 16: Embedded Rent Growth
Q4 FY2023 Earnings Materials II. Leasing Update Embedded Rent Growth Secured 14% rent escalations on 8.2 msf and achieved 16% spreads on 1.8 msf renewals. 2.2 msf exits offer significant 25% MTM potential Embedded Rent Escalations of ~15% aids NOI Growth 27% of Leases Expire Between FY2024–27 Area (
Slide 17: III. Development Update
Q1 FY2022 Earnings Materials III. Development Update Embassy TechVillage – JP Morgan BTS, Bangalore
Slide 18: Focused Growth Investments
Q4 FY2023 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 enjoying attractive development economics and strong demand Development Pipeline(1) (msf) Develop
Slide 19: Unlocking Growth at Embassy Manyata
Q4 FY2023 Earnings Materials III. Development Update Unlocking Growth at Embassy Manyata Continued progress on the recently launched 1.2 msf redevelopment at Embassy Manyata. Highly accretive 22% yield, driven by increase in leasable area through utilization of unused FAR ~1.7x Increase in Leasable
Slide 20: Project Progress at Site
Q4 FY2023 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 May’23 delivery Targeting Mar’25 delivery Actual Progress at Site(1) Actual Picture Actual
Slide 21: Project Progress at Site (Cont'd)
Q4 FY2023 Earnings Materials III. Development Update Project Progress at Site (Cont’d) Embassy Manyata – L4 Block A (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
Slide 22: Project Progress at Site (Cont'd)
Q4 FY2023 Earnings Materials III. Development Update Project Progress at Site (Cont’d) Embassy TechZone – Hudson and Ganges (0.9 msf)(1) Embassy Oxygen – Tower 1 (0.7 msf) Design Perspective Perspective Perspective Delivered in Oct’22 On-track for Jun’23 delivery Actual Progress at Site(2) Actual Pi
Slide 23: IV. Acquisition Update
Q4 FY2023 Earnings Materials IV. Acquisition Update Embassy Business Hub, Bangalore
Slide 24: Attractive Tuck-in Acquisition in North Bangalore
Q4 FY2023 Earnings Materials IV. Acquisition Update Attractive Tuck-in Acquisition in North Bangalore Embassy Business Hub, a campus-style Grade A office property, expands Embassy REIT’s presence in North Bangalore. Attractive acquisition metrics with financing secured at 8.1% debt cost 1.4 msf 93%
Slide 25: Accretive Acquisition at Attractive Financing
Q4 FY2023 Earnings Materials IV. Acquisition Update Accretive Acquisition at Attractive Financing Total enterprise value of ₹3,348 mn ($41 mn) is at a discount of 4.5% and is primarily funded through debt. NAV accretive transaction at a positive spread to REIT’s trading cap rate Discount of 4.5% to
Slide 26: Stable Cash Flow and MTM Upside on Area Nearing Completion
Q4 FY2023 Earnings Materials IV. Acquisition Update Stable Cash Flow and MTM Upside on Area Nearing Completion Phase 1 of Embassy Business Hub comprises 0.4 msf of leasable area of which 93% is already pre- committed to Philips, thereby providing stable cash flow visibility with embedded rent growth
Slide 27: Growth Upside through Active Development
Q4 FY2023 Earnings Materials IV. Acquisition Update Growth Upside through Active Development Phase 2 of Embassy Business Hub comprises 1.0 msf of leasable area and is currently in early stages of development, thereby providing further growth potential at an attractive 12% yield Phase 2 Phase 1 – Phi
Slide 28: V. ESG & Total Business Ecosystem Update
Q1 FY2022 Earnings Materials V. ESG & Total Business Ecosystem Update Flyover at Embassy Manyata, Bangalore
Slide 29: Green Impetus across Investing, Operations and Financing
Q4 FY2023 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 Hosted Flagshi
Slide 30: ESG Memberships, Certifications and Awards
Q4 FY2023 Earnings Materials V. ESG & Total Business Ecosystem Update ESG Memberships, Certifications and Awards ESG memberships, certifications and performance on global benchmarks reflect commitment to sustainability, transparency and operational excellence Current Achievements Future Initiatives
Slide 31: ESG Roadmap – Progress Report
Q4 FY2023 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) FY2023 Update Status ► Ren
Slide 32: Hospitality Business Continued its Growth Trajectory
Q4 FY2023 Earnings Materials V. ESG & Total Business Ecosystem Update Hospitality Business Continued its Growth Trajectory Hospitality business rebounded to 50% occupancy, 57% YoY ADR growth and annual EBITDA of ₹982 million, more than double the guidance Occupancy (%) and RevPAR (₹) Revenue (₹ mn)
Slide 33: Deepening Business Moat
Q4 FY2023 Earnings Materials V. ESG & Total Business Ecosystem Update Deepening Business Moat Continued investments in campus infrastructure and amenities deepen business moat and fortify REIT’s properties for the next phase of growth 85k sf Retail Plaza at Embassy Manyata (WIP, Jun’23) Sports Zone,
Slide 34: VI. Financial Update
Q1 FY2022 Earnings Materials VI. Financial Update Embassy TechZone, Pune
Slide 35: Delivering on Distributions
Q4 FY2023 Earnings Materials VI. Financial Update Delivering on Distributions Delivered distributions of ₹20.6 billion or ₹21.71 per unit, in-line with our guidance Distribution Distribution Highlights Highlights Distribution Mix – FY2023 Particulars Q4 FY2023 FY2023 Distribution period Jan’23 – Mar
Slide 36: Prudent Capital Management
Q4 FY2023 Earnings Materials VI. 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 37: Portfolio Valuation Update
Q4 FY2023 Earnings Materials VI. Financial Update Portfolio Valuation Update 75% of the portfolio value concentration in Bangalore, India’s best performing office market, underpins Embassy REIT’s asset quality Particulars (₹ mn) March 31, 2023 GAV Break-up by Segment Gross Asset Value (GAV)(1,2) 507
Slide 38: VII. Market Outlook
Q1 FY2022 Earnings Materials VII. Market Outlook FIFC, Mumbai
Slide 39: Market Fundamentals – Update
Q4 FY2023 Earnings Materials VII. Market Outlook Market Fundamentals – Update Despite near-term macro uncertainty and cautionary stance by global businesses, gross office demand continued to exceed supply driven by resilient offshoring trends Annual Demand and Supply Trends City-wise Performance (Q1
Slide 40: Demand and Supply Outlook
Q4 FY2023 Earnings Materials VII. 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 23% comparable and competing supply Demand Outlook Supply Outlook Gross Absorption (m
Slide 41: VIII. Appendix
Q1 FY2022 Earnings Materials VIII. Appendix Embassy Galaxy, Noida
Slide 42: Who We Are: Quick Facts
Q4 FY2023 Earnings Materials VIII. 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) 230 86% Portfolio Blue-chip Occupancy occupiers 1
Slide 43: Portfolio Summary
Q4 FY2023 Earnings Materials VIII. Appendix Portfolio Summary 34.3 msf completed Grade A office assets (86% occupied, 6.6 years WALE, 17% 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 44: Walkdown of Key Financial Metrics
Q4 FY2023 Earnings Materials VIII. Appendix Walkdown of Key Financial Metrics Particulars (₹ mn) Q4 FY2023 Q4 FY2022 YoY Var (%) FY2023 FY2022 YoY Var (%) Revenue from Operations 8,676 7,488 16% 34,195 29,626 15% NOI Property Taxes and Insurance (355) (293) 21% (1,295) (1,175) 10% Direct Operating E
Slide 45: Financial Performance for Q4
Q4 FY2023 Earnings Materials VIII. Appendix Financial Performance for Q4 NOI and EBITDA for Q4 up 9% and 8% YoY, with overall NOI and EBITDA margins at 78% and 75% respectively Q4 FY2023 Q4 FY2022 Variance % Remarks (mn) (mn) Revenue from new lease-up at attractive re-leasing spreads Revenue and c
Slide 46: Embassy REIT Structure
Q4 FY2023 Earnings Materials VIII. 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) Recent acquisition of 100% Embassy Business Hub, Bangalore Man
Slide 47: Key Terms & Definitions
Q4 FY2023 Earnings Materials VIII. Appendix Key Terms & Definitions Notes: 25. GRESB – Formerly known as Global Real Estate Sustainability Benchmark ► All figures in this presentation are as of Mar 31, 2023 unless otherwise specified 26. Holdco – Refers to MPPL ► All figures corresponding to year de
Slide 48: Disclaimer
Q4 FY2023 Earnings Materials VIII. 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 t
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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