Embassy Office Parks REIT posts 8% lower Q1 profits

Our Bureau Bengaluru | Updated on August 06, 2020

Embassy Office Parks REIT has posted an 8.01 per cent lower profit at ₹204.23 crore for first-quarter of FY 2020-21 as compared with ₹222.03 crore posted in the same period last year.

The company’s total income for the quarter is marginally lower at 0.88 per cent at ₹549.23 crore as compared with ₹554.13 crore posted last year.

The company’s board of directors at its meeting declared a distribution of ₹449.9 crore or ₹5.83 per unit. The record date for the distribution is August 14 and the distribution will be paid on or before August 21.

Mike Holland, CEO of Embassy Office Parks REIT, said “Amidst challenging market conditions, we are pleased to report a resilient set of results this quarter, marked by robust office rental collections, a healthy distribution payout, and our strong financial position. Embassy REIT continues to enable our occupiers to operate while keeping their employees safe. We remain well positioned to meet the anticipated increase in demand over the coming quarters for institutional grade office space, and to capitalise on the continued consolidation in the office market given considerable future supply shrinkage.”

Rental collections robust

The company’s net operating income was ₹456.9 crore, which is up one per cent year-on-year mainly due to resilient commercial office revenues despite adverse impact of Covid-19 pandemic on the hospitality business. Net operating income margin stood at 88 per cent, up 400 bps year-on-year reflecting efficiencies of scale and rigorous expense management.

Talking about rental collections, Holland said, “Our collections from office occupiers remained robust at 98.9 per cent, with office rental collections at 99.2 per cent for April 2020, 99.3 per cent for May 2020 and 98.2 per cent for June 2020 (as of August 5, 2020). The portfolio occupancy remained healthy at 92.2 per cent on our 26.2 million square feet operating office portfolio, with same-store occupancy of 94.1per cent.”

On the leases signed for the quarter stood, CEO said new leases signed were at 526k square feet, including 201k square feet of new leases at market rents, and 325k square feet of renewals at 20 per cent spreads to existing rentals.

The company achieved rental increases of 14 per cent on 1.8 million square feet from 22 office leases across its portfolio.

Business continuity

“Our priority remains delivering a safe workplace and business ecosystem for our occupiers and their employees; a daily average of 13,000 employees are operating from our properties across India,” said Vikaash Khdloya, Deputy CEO and COO, Embassy REIT.

“Properties remained open and complied with all government regulations to support the business continuity of our occupiers; over 90 per cent of our 160 plus corporate occupiers continue to operate their core business functions from our properties across India. The company’s operations team continued to actively engage with occupiers to support their ‘Return to Workplace’ strategies,” he added.

Published on August 06, 2020

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