Embassy REIT posts ₹462-crore Q4 operating income

Embassy Office Parks REIT’s net operating income for 4Q FY2020 grew year-on-year (YoY) by 10 per cent to ₹461.80 crore and also grew YoY by 15 per cent for FY2020.

Revenue from operations for 4Q FY2020 grew YoY by 8 per cent to ₹543.40 crore and grew YoY by 14 per cent for FY2020.

The company has declared a distribution for 4Q FY2020 of ₹531.70 crore or ₹6.89 per unit, representing cumulatively 100 per cent payout ratio and full year cumulative distribution totals ₹1,882.10 crore or ₹24.39 per unit representing 99.8 per cent payout ratio.

Strong balance sheet with ample liquidity and low leverage of 15 per cent net debt to TEV as of March 31, 2020, existing cash and undrawn committed facilities totals ₹1,350 crore and only 1.3 per cent of total debt matures in the next two years.

Vikaash Khdloya, Deputy CEO and COO, said, “Our Q4 operating performance was resilient, led by business continuity support for our occupiers and employee wellness support. We would like to thank all our employees, the civic authorities, and healthcare professionals who continue to work tirelessly during this challenging period. Our immediate focus remains ensuring the health and safety of all our stakeholders as they return to work in our parks.”

Covid-19 update

The company activated its business continuity plan on March 4, and its centralised taskforce focussed on ensuring safe workspaces, on-premise health screenings, and business continuity for occupiers.

“Our properties remained open to support core business functions of our occupiers throughout the national lock-down within the parameters laid out by the government,” said Khdloya.

“Rent collections from office occupiers remained strong at cumulatively 92 per cent for April,” he added.

Company halted all construction activity and hotel operations to comply with government directives during the lock-down. “We will resume these activities once the government eases lockdown restrictions,” said Khdloya.

Outlook

Michael Holland, Chief Executive Officer, said, “We are very pleased with our strong business performance in fiscal 2019-20. Since Embassy REIT listed in April 2019, we have delivered a total return of 25 per cent. Our fourth quarter income and distribution payout once again illustrate the stability and resilience of Embassy REIT delivering cash flows that are backed by the covenants of our 160 plus largely multinational occupier base.”

He added: “While the Covid-19 pandemic has resulted in an uncertain near-term outlook for many businesses worldwide, we are uniquely positioned to weather this pandemic-induced storm with our best-in-class office portfolio and strong balance sheet. While demand is likely to moderate considerably through 2020, we believe that in this environment, Grade-A supply will reduce considerably over the medium term, consolidation in the office market will continue and high-quality institutional landlords, such as Embassy REIT, will gain market share.”