Embassy Office Parks REIT (NSE: EMBASSY / BSE: 542602) ('Embassy REIT'), India's first listed REIT and the largest in Asia by area, reported results today for the fourth quarter and full year ended March 31, 2020.
The Board of Directors of Embassy Office Parks Management Services Private Limited ('EOPMSPL'), Manager to Embassy REIT, at its Board Meeting held earlier today, declared a distribution of Rs. 5,317 million or Rs. 6.89 per unit for 4Q FY2020. The cumulative distribution for FY2020 totals Rs. 18,821 million or Rs. 24.39 per unit. The record date for the 4Q FY2020 distribution is May 28, 2020 and the distribution will be paid on or before June 3, 2020.
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 c.25%. 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+ largely multinational occupier base.
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."
Financial Highlights for the Fourth Quarter and Fiscal Year
- Revenue from Operations for 4Q FY2020 grew year-on-year by c.8% to Rs. 5,434 million and cumulatively grew year-on-year by c.14% for FY2020
- Net Operating Income for 4Q FY2020 grew year-on-year by c.10% to Rs. 4,618 million and cumulatively grew year-on-year by c.15% for FY2020
- Distribution for 4Q FY2020 of Rs. 5,317 million or Rs. 6.89 per unit, representing c.100% payout ratio and full year cumulative distribution totals Rs. 18,821 million or Rs. 24.39 per unit representing c.99.8% payout ratio
- Strong balance sheet with ample liquidity and low leverage of c.15% Net Debt to TEV as of March 31, 2020, existing cash and undrawn committed facilities totals Rs. 13.5 billion and only c.1.3% of total debt matures in the next two years
Business Highlights for the Fourth Quarter and Fiscal Year
- Achieved overall occupancy of c.92.8% on c.26.2 msf operating office portfolio, with same-store occupancy of c.94.5% considering March 2019 as base year
- Leased c.389k sf new area during the fourth quarter, with full year lease-up of c.2.4 msf being the highest absorption in previous 5 years
- Re-leased c.1.1 msf during the year at c.53% releasing spread, renewed an additional c.600k sf at c.19% renewal spread, illustrating the embedded growth in our portfolio
- Delivered c.1.4 msf new office buildings within existing campuses during the year, c.62% of these new completions already committed
- Activated our business continuity plan on March 4, 2020, and our centralized taskforce focused 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 lockdown within the parameters laid out by the government
- Rent collections from office occupiers remained strong at c.92% for the month of April 2020
- Halted all construction activity and hotel operations to comply with government directives during the lockdown. We will resume these activities once the government eases lockdown restrictions
Vikaash Khdloya, Deputy CEO and COO, said, "Our fourth quarter 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."