Embassy Office Parks REIT · NSE:EMBASSY.RR
Embassy Office Parks REIT — Q2 FY2024 Earnings Presentation
50 slides from Embassy Office Parks REIT's earnings presentation, Oct 26, 2023
Slide 1: Q2 FY2024 Earnings Materials
Embassy Office Parks REIT Q2 FY2024 Earnings Materials October 26, 2023 1
Slide 2: Press Release
Q2 FY2024 Earnings Materials Press Release Embassy REIT Reports Strong Operating and Financial Results for 2Q FY2024: Delivers Record 2 Million Square Feet of Total Leases and Raises Leasing Guidance for FY2024 • Highest ever quarterly leasing of 2 msf across 25 deals including 7 new deals over 100k
Slide 3: Press Release (Cont'd)
Q2 FY2024 Earnings Materials Press Release (Cont’d) Financial Highlights • Revenue from Operations grew by 4% YoY to ₹889 crores • Delivered distributions of ₹524 crores or ₹5.53 per unit, marking the 18th consecutive quarter of 100% payout • Achieved lowest 121 bps spread over G-Sec and secured fir
Slide 4: Table of Contents
Q2 FY2024 Earnings Materials Table of Contents I. Key Highlights 5 II. Leasing Update 13 III. Development Update 18 IV. Financial Update 24 V. ESG & Total Business Ecosystem Update 31 VI. Market Outlook 39 VII. Appendix 42 4
Slide 5: I. Key Highlights
Q1 FY2022 Earnings Materials I. Key Highlights JP Morgan BTS, Embassy TechVillage, Bangalore
Slide 6: Continued Leasing Momentum, Strong Growth Outlook
Q2 FY2024 Earnings Materials I. Key Highlights Continued Leasing Momentum, Strong Growth Outlook LEASING DEVELOPMENT HOTELS Leased a record 2 msf, highest ever quarterly Accelerated 7.1 msf active development at Delivered a 24% YoY ADR growth across hotel leasing; 50% properties now at 90%+ occupanc
Slide 7: Robust Financial Performance
Q2 FY2024 Earnings Materials I. Key Highlights Robust Financial Performance Revenue and NOI for H1 up 7% and 5% year-on-year respectively. Commercial office margins stood at 85% and hotel margins at 43%, both continue to be best-in-class H1 FY2024 H1 FY2023 Variance % Remarks (mn) (mn) Revenue fro
Slide 8: Conservative Balance Sheet with Active Debt Management
Q2 FY2024 Earnings Materials I. Key Highlights Conservative Balance Sheet with Active Debt Management Raised ₹15 bn at an average rate of 8.1% to refinance maturing debt, achieved a competitive 121 bps spread over G-Sec on ₹10 bn NCD and secured first-time participation from pension funds Debt Compo
Slide 9: India: The Office to the World
Q2 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
Q2 FY2024 Earnings Materials I. Key Highlights 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 Te
Slide 11: Full Year FY2024 Guidance
Q2 FY2024 Earnings Materials I. Key Highlights 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. Annual leasing guidance revised upwards from 6.0 msf to 6.5 msf Delivered on Guidance Even in Challenging Markets Key Assum
Slide 12: Multiple Embedded Growth Levers
Q2 FY2024 Earnings Materials I. Key Highlights Multiple Embedded Growth Levers Embassy REIT’s strategy focuses on enhancing NOI and delivering long term total return value for Unitholders, driven by rental growth as well as leased area expansion Vacant area lease-up – occupancy expected to stabili
Slide 13: II. Leasing Update
Q1 FY2022 Earnings Materials II. Leasing Update Embassy Manyata, Bangalore
Slide 14: Highest Ever Quarterly Leasing
Q2 FY2024 Earnings Materials II. Leasing Update Highest Ever Quarterly Leasing Leased a record 2 msf across 25 deals in Q2 at 32% spreads, including new lease up of 1.2 msf, renewals of 0.7 msf and pre-commitments of 0.1 msf Area (msf) FY24 Guidance: 2 msf 6.5 msf Total Lease-up across 25 deals(1) 5
Slide 15: Leasing Highlights for the Quarter
Q2 FY2024 Earnings Materials II. Leasing Update Leasing Highlights for the Quarter Over 70% leasing by GCCs, spanning multiple sectors such as technology, BFSI and healthcare. Deals signed for 9 of 13 properties; 50% assets back to 90%+ occupancy and Embassy 247 100% occupied Area Q2 leasing driven
Slide 16: Embedded Rent Growth
Q2 FY2024 Earnings Materials II. Leasing Update Embedded Rent Growth Secured 12% rent escalations on 1.1 msf and achieved 56% spreads on 683k sf renewals in Q2. Of the 2.3 msf exits in H1, 1 msf already backfilled at market rents and remainder offer ~50% MTM potential Embedded Rent Escalations of ~1
Slide 17: High Quality, Diversified Occupier Base
Q2 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 6.5%
Slide 18: III. Development Update
Q1 FY2022 Earnings Materials III. Development Update Embassy Oxygen, Noida
Slide 19: Focused Growth Investments
Q2 FY2024 Earnings Materials III. Development Update Focused Growth Investments 7.1 msf active development at highly attractive yields with 90% concentrated in Bangalore, India’s best office market Development Pipeline(1) (msf) Current Development Status Area (msf) Block 8 (Tower A, B, C & D) – St
Slide 20: Project Progress at Site
Q2 FY2024 Earnings Materials III. Development Update Project Progress at Site Embassy Manyata – M3 Block A (1.0 msf) Embassy Business Hub – Phillips BTS (0.4 msf) Design Perspective Perspective Perspective Delivered in Sep’23 OC expected by Nov’23 Actual Progress at Site(1) Actual Picture Actual Pic
Slide 21: Project Progress at Site
Q2 FY2024 Earnings Materials III. Development Update Project Progress at Site Embassy Oxygen – Tower 1 (0.7 msf) Embassy Manyata – F2 Block (Refurbishment) Design Perspective Perspective Perspective On-track for Nov’23 delivery Targeting Jun’24 delivery Actual Progress at Site(1) Actual Picture Actu
Slide 22: Project Progress at Site
Q2 FY2024 Earnings Materials III. Development Update 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 Dec’25 delivery Actual Progress at Site(1) Actual Pictur
Slide 23: Project Progress at Site (Cont'd)
Q2 FY2024 Earnings Materials III. Development Update Project Progress at Site (Cont’d) Embassy TechVillage – Block 8 (1.9 msf) Embassy Manyata – L4 Block (0.7 msf) Design Perspective Perspective Perspective Perspective On-track for Sep’24 delivery On-track for Jun’25 delivery Actual Progress at Site
Slide 24: IV. Financial Update
Q1 FY2022 Earnings Materials IV. Financial Update Embassy TechVillage, Bangalore
Slide 25: Financial Performance during Q2 FY2024
Q2 FY2024 Earnings Materials IV. Financial Update Financial Performance during Q2 FY2024 Revenue and NOI for Q2 up 4% and 2% year-on-year respectively. Commercial office margins stood at 86% and hotel margins at 42%, both continue to be best-in-class Q2 FY2024 Q2 FY2023 Variance % Remarks (mn) (mn)
Slide 26: Delivering on Distributions
Q2 FY2024 Earnings Materials IV. Financial Update Delivering on Distributions Delivered distributions of ₹5,242 mn or ₹5.53 per unit, marking 18th quarter of 100% distribution payout. Cumulative distributions of over ₹89 billion since listing Distribution Highlights Distribution Mix – Q2 Particulars
Slide 27: Prudent Capital Management
Q2 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 28: Growth in Portfolio Value
Q2 FY2024 Earnings Materials IV. Financial Update Growth in Portfolio Value Gross Asset Value grew by 2% to ₹527 billion over Mar’23 and Net Asset Value by 1% to ₹398.86 per unit, as of Sep’23 September 30, % Change GAV Break-up by Segment Particulars (₹ mn) 2023 over Mar’23 Gross Asset Value (GAV)(
Slide 29: Expanding Unitholder Base
Q2 FY2024 Earnings Materials IV. Financial Update Expanding 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 30: Walkdown of Key Financial Metrics
Q2 FY2024 Earnings Materials IV. Financial Update Walkdown of Key Financial Metrics Particulars (₹ mn) Q2 FY2024 Q2 FY2023 YoY Var (%) H1 FY2024 H1 FY2023 YoY Var (%) Revenue from Operations 8,893 8,571 4% 18,029 16,865 7% NOI Property Taxes and Insurance (343) (328) 5% (669) (623) 7% Direct Operati
Slide 31: V. ESG & Total Business Ecosystem Update
Q1 FY2022 Earnings Materials V. ESG & Total Business Ecosystem Update Embassy GolfLinks, Bangalore
Slide 32: Hospitality Business Continued its Growth Trajectory
Q2 FY2024 Earnings Materials V. ESG & Total Business Ecosystem Update Hospitality Business Continued its Growth Trajectory Operating hotel portfolio continued to grow strongly with 53% occupancy, 27% YoY ADR growth and H1 EBITDA of ₹776 mn RevPAR (₹) and Occupancy (%) Revenue (₹ mn) and EBITDA (₹ mn
Slide 33: Ranked #1 in India for GRESB Public Disclosures
Q2 FY2024 Earnings Materials V. ESG & Total Business Ecosystem Update Ranked #1 in India for GRESB Public Disclosures Awarded 5-star rating by GRESB for the entire portfolio, second year in a row, reflecting Embassy REIT’s ESG leadership in the Indian real estate sector B-level B-level A-level Publi
Slide 34: ESG Certifications and Awards
Q2 FY2024 Earnings Materials V. ESG & Total Business Ecosystem Update ESG Certifications and Awards ESG certifications, awards and performance on global benchmarks reflect our commitment to sustainability, transparency and operational excellence Building Certifications World’s Largest USGBC LEED ‘We
Slide 35: ESG Roadmap – Progress Report
Q2 FY2024 Earnings Materials V. ESG & Total Business Ecosystem Update ESG Roadmap – Progress Report Continued progress on our 3-year sustainability targets defined and monitored across 19 ESG programs, aligned to our broader 2040 net zero commitment Pillar Metric Target(1) H1 FY24 Update Status ► Re
Slide 36: Widening Business Moat
Q2 FY2024 Earnings Materials V. ESG & Total Business Ecosystem Update Widening Business Moat Launched 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 picture
Slide 37: Energizing our Properties
Q2 FY2024 Earnings Materials V. ESG & Total Business Ecosystem Update Energizing our Properties Relaunched ‘Energize by Embassy REIT’, our signature occupier engagement program, aiming to engage over 250,000 park users across our portfolio Sports Events and ‘Pedal for the Planet 2023’ Note: (1) Oct’
Slide 38: Positively Impacting Local Communities
Q2 FY2024 Earnings Materials V. ESG & Total Business Ecosystem Update Positively Impacting Local Communities CSR projects across education, health, environment, infrastructure and sports continue to positively impact communities around our pan-India properties New Classrooms at Pune School, Benefitt
Slide 39: VI. Market Outlook
Q1 FY2022 Earnings Materials VI. Market Outlook Embassy Manyata, Bangalore
Slide 40: Market Fundamentals – Update
Q2 FY2024 Earnings Materials VI. Market Outlook Market Fundamentals – Update Gross office absorption continued to exceed supply during CY2023 YTD, resulting in range-bound vacancies and rent growth pressures in our key micro-markets Annual Demand and Supply Trends City-wise Performance (Jan’23 – Sep
Slide 41: Demand and Supply Outlook
Q2 FY2024 Earnings Materials VI. Market Outlook Demand and Supply Outlook Gross office absorption projected to exceed last year, driven by resilient offshoring trends in India. Supply remains balanced in our micro-markets, with only 23% comparable and competing supply Demand Outlook Supply Outlook G
Slide 42: VII. Appendix
Q1 FY2022 Earnings Materials VII. Appendix Embassy Manyata, Bangalore
Slide 43: Who We Are: Quick Facts
Q2 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 45.3 msf(1)(2) 240 83% Portfolio Blue-chip Occupancy occupiers 13
Slide 44: Portfolio Summary
Q2 FY2024 Earnings Materials VII. Appendix Portfolio Summary 35.3 msf completed Grade A office assets (83% occupied, 6.9 years WALE, 12% 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 45: Embassy REIT Structure
Q2 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 46: Nine Infrastructure-like Office Parks
Q2 FY2024 Earnings Materials VII. Appendix Nine Infrastructure-like Office Parks Embassy Manyata Embassy TechVillage Embassy Business Hub Bangalore (15.5 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
Slide 47: Four Prime City-center Offices
Q2 FY2024 Earnings Materials VII. Appendix 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) 47
Slide 48: Key Terms & Definitions
Q2 FY2024 Earnings Materials VII. Appendix Key Terms & Definitions Notes: 38. NCD – Non-Convertible Debentures ► All figures in this presentation are as of Sep 30, 2023 unless otherwise specified 39. NDCF refers to Net Distributable Cash Flows ► All figures corresponding to year denoted with “FY” ar
Slide 49: Disclaimer
Q2 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 50: 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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