Real Estate

For Embassy REIT, stress in realty is a boon

Varun Aggarwal Mumbai | Updated on August 15, 2019 Published on August 14, 2019

Allows us to be competitive in the market for acquiring new assets, says CEO

While the real estate sector in the country is embroiled in liquidity crunch caused by NBFC crisis, the country’s first real estate investment trust (REIT), Embassy REIT, feels it is actually a boon for them.

“While there is a lot of a headwind in the market, it is also an opportunity because the industry is in a shake-out mode — especially the residential developers. This allows us to be competitive in the market when it comes to acquiring new assets from hybrid developers who want to sell their commercial assets because they are over-leveraged in residential space. We find ourselves in a sweet spot because the industry has consolidated itself into very few developers who can actually have access to capital and we believe we are one of those few players,” Embassy REIT Chief Executive Officer Mike Holland told BusinessLine.

Eyeing stressed assets

Holland said the company is actively looking at acquiring new assets and the liquidity crisis gives Embassy Office Parks REIT an opportunity to buy stressed assets that should come at a bargain.

“We are in discussions with more than a dozen stressed assets for potential acquisition. In the first round itself, 85 per cent of them don’t make the cut. We are looking for assets with no litigations against them,” Holland said.

To reach its limit for raising debt, Holland said the company had a headroom of over ₹14,000 crore, which can theoretically be used to acquire assets. However, he said the company will be looking at a debt and equity mix, giving the company even higher capital for acquisitions.

Holland also pointed out at the shortage of commercial realty space in the country, which is helping the group to grow rapidly while the residential real estate market is going through its worst slump ever.

“Over 80 per cent of our tenants are global MNCs, each of whom are rapidly expanding in India. Each of them we’ve met recently consistently spoke about expanding their employee base in India. In fact, we also spoke to some MNCs who are now looking at entering India for the first time. As the world becomes technologically complex, what puts India ahead is the availability of technology talent,” Holland said.

Q1 net jumps

On Monday, Embassy Office Parks announced its quarterly results first time after listing on the Indian bourses.

Revenue from operations for the quarter increased by 19 per cent to ₹535 crore against ₹449 crore logged during the previous fiscal, driven by continued leasing momentum across the portfolio.

New leasing during the quarter was 0.6 million square feet (msf) with 50.6 per cent re-leasing spreads, while occupancy as on June 30, 2019 stood at 94.3 per cent on the 24.8 msf completed office portfolio.

Published on August 14, 2019

A letter from the Editor

Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.