Embassy Office Parks REIT · NSE:EMBASSY.RR
Embassy Office Parks REIT — FY2021 Earnings Presentation
54 slides from Embassy Office Parks REIT's earnings presentation, Apr 29, 2021
Slide 1: 4Q FY2021 Earnings Materials
Embassy Office Parks REIT 4Q FY2021 Earnings Materials April 29, 2021 1
Slide 2: Press Release
4Q FY2021 Earnings Materials Press Release Embassy REIT Announces Full Year FY 2021 Results, Delivers a Resilient Performance • Distributes ₹18,364 million and grows Net Operating Income YoY by 12% • Leases 1.2 msf across 40+ deals, achieves 15% leasing spreads • Pursues growth through 5.7 msf new d
Slide 3: Press Release (Cont'd)
4Q FY2021 Earnings Materials Press Release (Cont’d) Financial Highlights – Full Year FY2021 • Net Operating Income (‘NOI’) grew year-on-year by 12%, with operating margins of 86% • Simplified the holding structure of Embassy Manyata, thereby increasing the tax-free component of distributions to 78%
Slide 4: Table of Contents
4Q FY2021 Earnings Materials Table of Contents I. Key Highlights 5 II. Overview 12 III. Market Outlook 19 IV. Navigating COVID-19 23 V. Commercial Office Update 26 VI. Development Update 30 VII. Asset Management Update 34 VIII. Financial Update 39 IX. Appendix 44 4
Slide 5: I. Key Highlights
4Q FY2021 Earnings Materials I. Key Highlights Embassy TechVillage, Bangalore
Slide 6: Business Highlights – FY2021
4Q FY2021 Earnings Materials I. Key Highlights Business Highlights – FY2021 LEASING JPM CAMPUS DEVELOPMENT Leased 1.2 msf across 43 deals, achieved Achieved top-out of 1.1 msf BTS in Continued construction on 4.6 msf new 15% re-leasing / renewal spreads Mar’21, on track for Sep’21 delivery build, ta
Slide 7: Financial Highlights – FY2021
4Q FY2021 Earnings Materials I. Key Highlights Financial Highlights – FY2021 NOI and EBITDA for FY2021 up 12% year-on-year with NOI and EBITDA margins at 86% and 83% respectively FY2021 FY2020 Variance % Remarks (mn) (mn) Revenue from ETV’s 6.1 msf completed area in 4Q FY2021(2) Revenue Contract
Slide 8: Distribution Highlights – FY2021
4Q FY2021 Earnings Materials I. Key Highlights Distribution Highlights – FY2021 Post successful restructuring of Embassy Manyata’s legacy two-tier holding structure, tax-free component of distributions has significantly increased to 78% for Q4 FY2021 Particulars 4Q FY2021 FY2021 FY2020 Distribution
Slide 9: Organic Growth through On-Campus Development
4Q FY2021 Earnings Materials I. Key Highlights Organic Growth through On-Campus Development Our 5.7 msf development pipeline helps us expand our existing campuses to meet occupier growth needs and helps us enhance NOI and Unitholder value Strong Balance Sheet Robust Development Pipeline 4 msf / 70%
Slide 10: On-track Near term Delivery
4Q FY2021 Earnings Materials I. Key Highlights On-track Near term Delivery On target to deliver 1.1msf JP Morgan campus in Sep’21. Integrated on-ground teams post ETV acquisition and achieved top-out milestone in Mar’21 JP Morgan built-to-suit Campus Note: (1) Apr’21 picture 10
Slide 11: Inorganic Growth Opportunities
4Q FY2021 Earnings Materials I. Key Highlights Inorganic Growth Opportunities Our strong balance sheet and network provides us with a steady acquisitions pipeline. We remain focused and disciplined to pursue opportunities which enhance Unitholder value Acquisitions Criteria ETV Backland ROFO(1)(2) (
Slide 12: II. Overview
4Q FY2021 Earnings Materials II. Overview Express Towers, Mumbai
Slide 13: Who We Are: Quick Facts
4Q FY2021 Earnings Materials II. Overview Who We Are: Quick Facts We run a commercial office portfolio that serves as essential corporate infrastructure to global occupiers, including many Fortune 500 corporations 42.4 msf(1) 195 88.9% Portfolio Blue-chip Occupancy occupiers 12 1,614(1) 100 MW NCR (
Slide 14: Eight Infrastructure-like Office Parks (40.1 msf)
4Q FY2021 Earnings Materials II. Overview Eight Infrastructure-like Office Parks (40.1 msf)(1) Embassy Manyata Embassy TechVillage Bangalore (14.8 msf) Bangalore (9.2 msf) Embassy Golflinks GolfLinks Embassy Quadron Embassy TechZone Bangalore (2.7 msf) (2.7 msf) Pune (1.9 msf) Pune (5.5 msf) Embassy
Slide 15: Four Prime City-center Offices (2.3 msf)
4Q FY2021 Earnings Materials II. Overview Four Prime City-center Offices (2.3 msf) Express Towers FIFC Mumbai (0.5 msf) Mumbai (0.4 msf) Embassy 247 Embassy One Mumbai (1.2 msf) Bangalore (0.3 msf) 15
Slide 16: What We Do: Our Strategy
4Q FY2021 Earnings Materials II. Overview What We Do: Our Strategy Maximize distribution and NAV per unit through leasing, on-campus developments and acquisitions 4 Capital 3 Management Acquisitions Build leverage 2 selectively On-campus Use strong balance Capitalize on 1 Development sheet to
Slide 17: Our Opportunity: India's 'Tech'vantage
4Q FY2021 Earnings Materials II. Overview Our Opportunity: India’s ‘Tech’vantage COVID response has significantly accelerated digital transformation and technology spends globally. With its large talent pool at reasonable costs, India continues to attract significant tech investments Digital Tech sp
Slide 18: Our Occupier Base
4Q FY2021 Earnings Materials II. Overview Our Occupier Base Global business with a diversified, resilient and high credit-quality occupier base Industry Diversification(1) 39% of Gross Rent From Top 10 Occupiers Financial Services 14% Top 10 % of Sector Technology Occupiers Rentals 43% Global Techno
Slide 19: III. Market Outlook
4Q FY2021 Earnings Materials III. Market Outlook FIFC, Mumbai
Slide 20: Market Fundamentals – Update
4Q FY2021 Earnings Materials III. Market Outlook Market Fundamentals – Update Concerns of spike in COVID-19 cases in Q1 CY2021 led the occupiers to press ‘pause’ again and postpone their real estate decisions Absorption Trends (CY2017 – to date) City-wise Performance (Apr’20 – Mar’21) 60.8 Absorptio
Slide 21: Market Fundamentals – Demand Trends
4Q FY2021 Earnings Materials III. Market Outlook Market Fundamentals – Demand Trends Office leasing expected to gain traction by end CY2021 based on broad-based vaccine rollout. Institutionally owned high quality properties with focus on wellness to benefit Proforma Demand Analysis Demand Trends Gro
Slide 22: Market Fundamentals – Supply Trends
4Q FY2021 Earnings Materials III. Market Outlook Market Fundamentals – Supply Trends Supply shrinkage of over 25% since the start of the pandemic. Supply expected to recover modestly post demand picks up momentum towards end of CY2021 Supply Trends Comparable and competing 13 msf supply in REIT Mark
Slide 23: IV. Navigating COVID-19
4Q FY2021 Earnings Materials IV. Navigating COVID-19 Embassy One, Bangalore
Slide 24: COVID-19 Operations Update
4Q FY2021 Earnings Materials IV. Navigating COVID-19 COVID-19 Operations Update Our response to the second wave is focussed on supporting business continuity of our occupiers and ensuring safety and well-being of their employees and all stakeholders COVID-19 in India ‒ Second wave surge, localized
Slide 25: Rent Collections and Rolling Renewals Update
4Q FY2021 Earnings Materials IV. Navigating COVID-19 Rent Collections and Rolling Renewals Update Rent collections for FY2021 from office occupiers remained robust at 99.8%; achieved rolling renewals of 2.9 msf FY2021 across 22 leases Robust Office Rent Collections Continued Momentum in Rolling Rene
Slide 26: V. Commercial Office Update
4Q FY2021 Earnings Materials V. Commercial Office Update Embassy Quadron, Pune
Slide 27: Leasing Highlights for FY2021
4Q FY2021 Earnings Materials V. Commercial Office Update Leasing Highlights for FY2021 1.2 msf total lease-up across 43 deals in FY2021, comprising of 581k sf new lease-up at 18% re-leasing spread and 589k sf renewals at 13% renewal spread FY2021 Highlights New Leases Signed New Leases signed (‘000
Slide 28: Embedded Rent Escalations
4Q FY2021 Earnings Materials V. Commercial Office Update Embedded Rent Escalations Achieved rent escalations of 13% on 8.4 msf across 94 leases in FY2021. On track for additional 14% rent escalations due on 7.7 msf across 89 leases in FY2022 Market rents 29% above in-place rents Embedded rent escala
Slide 29: Embedded Mark-to-Market Potential
4Q FY2021 Earnings Materials V. Commercial Office Update Embedded Mark-to-Market Potential Successfully backfilled 0.9 msf of expiries in FY2021 at 10% MTM spread despite overall pause in decision making. Of the 1.9 msf upcoming lease expiries in FY2022, 0.5 msf are likely renewals 25% of leases exp
Slide 30: VI. Development Update
4Q FY2021 Earnings Materials VI. Development Update Embassy TechVillage – JP Morgan BTS, Bangalore
Slide 31: Development Pipeline
4Q FY2021 Earnings Materials VI. Development Update Development Pipeline With the launch of an additional 1.9 msf of new office development at ETV in Q4, construction currently underway on 5.7 msf across portfolio Development Pipeline(1) (msf) Development Status as of April 28, 2021 Area (msf) JP
Slide 32: Under Development Projects
4Q FY2021 Earnings Materials VI. Development Update Under Development Projects Embassy TechVillage - JP Morgan BTS (1.1 msf) Embassy Manyata – M3 Block A (1.0 msf) Design Perspective Actual Progress at Site(1) Note: (1) Apr’21 pictures 32
Slide 33: Under Development Projects (Cont'd)
4Q FY2021 Earnings Materials VI. Development Update Under Development Projects (Cont’d) Embassy Oxygen – Tower 1 (0.7 msf) Embassy TechZone – Hudson and Ganges (0.9 msf) Design Perspective Actual Progress at Site(1) Note: (1) Apr’21 pictures 33
Slide 34: VII. Asset Management Update
4Q FY2021 Earnings Materials VII. Asset Management Update Embassy Qubix, Pune
Slide 35: Investing in our Asset Infrastructure
4Q FY2021 Earnings Materials VII. Asset Management Update Investing in our Asset Infrastructure Fortifying our properties for the next phase of growth through continued investments in infrastructure and amenities Flyover at Embassy Manyata (WIP, Jun’21) North Side Skywalk at Embassy Manyata (WIP, Ju
Slide 36: Infrastructure and Upgrade Projects
4Q FY2021 Earnings Materials VII. Asset Management Update Infrastructure and Upgrade Projects Construction underway for 619 key dual branded Hilton hotels at Embassy Manyata and pre- operational activities initiated Hilton Garden Inn: 3-Star Hilton Hotel: 5-Star 353 keys 266 keys ► Hilton – 5 Star (
Slide 37: Embassy Quadron Asset Re-positioning
4Q FY2021 Earnings Materials VII. Asset Management Update Embassy Quadron Asset Re-positioning Comprehensive asset re-positioning at Embassy Quadron on track for Sep’21 completion. Leased 51k sf to Australian telecom major at 32% re-leasing spread, with further 51k sf growth option New Revamped Lobb
Slide 38: Hospitality Update
4Q FY2021 Earnings Materials VII. Asset Management Update Hospitality Update While 477 key operating hotels witnessed an uptick in occupancy in Q4, recent second wave likely to adversely impact recovery timelines Hilton at Embassy GolfLinks Four Seasons at Embassy One Hilton Hotels at Embassy Manyat
Slide 39: VIII. Financial Update
4Q FY2021 Earnings Materials VIII. Financial Update Embassy TechZone, Pune
Slide 40: Simplified Embassy Manyata Holding Structure
4Q FY2021 Earnings Materials VIII. Financial Update Simplified Embassy Manyata Holding Structure Successfully simplified ownership structure of our largest asset i.e., Embassy Manyata, thereby enhancing dividend component of distributions to Unitholders Pre-Restructuring Post-Restructuring Embassy E
Slide 41: Financial Highlights – 4Q FY2021
4Q FY2021 Earnings Materials VIII. Financial Update Financial Highlights – 4Q FY2021 NOI and EBITDA for Q4 up 33% and 22% year-on-year respectively with NOI and EBITDA margins at 83% and 76%. Distributions for Q4 stood at ₹5,308 mn 4Q FY2021 4Q FY2020 Variance % Remarks (mn) (mn) Revenue from ETV’
Slide 42: Strong Balance Sheet with Ample Liquidity
4Q FY2021 Earnings Materials VIII. Financial Update Strong Balance Sheet with Ample Liquidity At 22% Net Debt to GAV, our conservative Balance Sheet provides flexibility to pursue growth through on-campus development and accretive acquisitions Total Enterprise Value (‘TEV’) Net Debt to Market Capita
Slide 43: Proactive Capital Management
4Q FY2021 Earnings Materials VIII. Financial Update Proactive Capital Management Successfully raised ₹52 bn in FY2021 at 6.9% and refinanced ₹32.8 bn in-place debt resulting in 336 bps interest savings Lowered cost of debt by 336 bps on ₹ 32.8 bn refinancing ₹15,502 mn 10.30% Cash & Undrawn Committe
Slide 44: IX. Appendix
4Q FY2021 Earnings Materials IX. Appendix Embassy Galaxy, Noida
Slide 45: Walkdown of Key Financial Metrics
4Q FY2021 Earnings Materials IX. Appendix Walkdown of Key Financial Metrics Particulars (₹mn) 4Q FY2021 4Q FY2020 Variance (%) FY2021 FY2020 Variance (%) Revenue from Operations 7,387 5,434 36% 23,603 21,449 10% NOI Property Taxes and Insurance (268) (210) 28% (849) (771) 10% Direct Operating Expens
Slide 46: Portfolio Summary
4Q FY2021 Earnings Materials IX. Appendix Portfolio Summary 32.3 msf completed Grade A office assets (88.9% occupied, 7 years WALE, 29% MTM opportunity) Property Completed Development Total (yrs) (%) In-place Market MTM (%) ₹ mn % of total Embassy Manyata 11.8 3.1 14.8 6.9 93.5% 61 92 50% 173,579 37
Slide 47: Valuation Contribution by Segment and Geography
4Q FY2021 Earnings Materials IX. Appendix Valuation Contribution by Segment and Geography Gross Asset Value of the best-in-class portfolio stood at ₹466 bn with 95% of value in commercial office segment and 72% of value in Bangalore, underpinning Embassy REIT’s asset quality March 31, September 30,
Slide 48: Environment, Social & Governance
4Q FY2021 Earnings Materials IX. Appendix Environment, Social & Governance Focus on addressing climate change risks along with enhancing Employee Health & Safety 100 MW (AC) Solar Plant Environment and Safety Certificates (Reduces 200mn kg CO2 emissions annually) Received British Safety Council Cert
Slide 49: Environment, Social & Governance (Cont'd)
4Q FY2021 Earnings Materials IX. Appendix Environment, Social & Governance (Cont’d) Partnering with local communities through our Corporate Connect Program Government School Project for 1,200 students Reading Room at 19 Government Schools (in collaboration with ANZ) (Library Program) Community Clean
Slide 50: Environment, Social & Governance (Cont'd)
4Q FY2021 Earnings Materials IX. Appendix Environment, Social & Governance (Cont’d) Embassy REIT has adopted strong corporate governance standards Minimum 80% of value in completed and income generating Asset Minimum 90% of distributable cash flows to be distributed Restrictions on vacant land
Slide 51: Embassy REIT Structure
4Q FY2021 Earnings Materials IX. 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% 100% Simplification of Simplification of ETV’s Manyata Prom
Slide 52: Key Terms & Definitions
4Q FY2021 Earnings Materials IX. Appendix Key Terms & Definitions Notes: 41. NAV – Net Asset Value ► All figures in this presentation are as of March 31, 2021 42. NCD – Non-Convertible Debentures ► All figures corresponding to year denoted with “FY” are as of or for the one-year period ending (as ma
Slide 53: Disclaimer
4Q FY2021 Earnings Materials IX. 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 the
Slide 54: Investor Contact
Investor Contact: Website: www.embassyofficeparks.com | Email: ir@embassyofficeparks.com | Office: +91 80 4722 2222
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