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ICICI Securities Report
The Embassy Office Parks REIT delivered a resilient Q1 FY21 performance with 99% collection efficiency in office rentals resulting in net distributable cash flows distribution of Rs 4.5 billion, which was up 8% YoY.
Leases signed for the quarter stood at 0.53 million square feet and the Embassy Office Parks achieved rental increases of 14% on 1.8 million square feet across 22 office leases in the portfolio.
The only dampener was negligible income from the two hotels and a Rs 291 million rebate given for FY21 to food courts and ancillary services (1.4% of annual rent). At a portfolio level, Embassy Office Parks maintained an overall occupancy of 92.2% with same-store occupancy of 94.1%.
While Covid-19 related concerns may impact incremental leasing in FY21E, we believe that the Embassy Office Parks low leverage (net debt to equity ratio of 0.2 times), marquee tenant profile and de-densification of offices making up for increased work from home by occupiers stands the Embassy Office Parks' portfolio in good stead over the medium term.
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