Embassy REIT's net operating income grows 30% to Rs 624 crore in Q2

PAT declined 15.5% from Rs 232 crore in the September quarter last year to Rs 196 crore in the same quarter this year

Embassy REIT on Friday said that its net operating income grew 30 per cent to Rs 624 crore in the quarter ended September on a year on year basis. Revenue from operations shot up 36 per cent to Rs 7,352 crore in Q2 of FY22 compared to last year, whereas EBITDA grew 28 per cent to Rs 6,053 crore.

However, profit after tax (PAT) declined 15.5 per cent from Rs 232 crore in the September quarter last year to Rs 196 crore in the same quarter this year.

Embassy REIT’s board declared that it will distribute Rs 537 crores or Rs 5.66 per unit for Q2 FY2022. Of this, Rs 4.52 per unit or 80 per cent of distributions are tax-free for unitholders. The record date for the Q2 FY2022 distribution is November 10, 2021 and the distribution will be paid on or before November 13, 2021.

“The leasing enquiries and site visits have increased 65 per cent this quarter compared to last quarter. Bangalore is the number one city in the Indian office market currently and it's expected to drive the leasing rebound in India. We have a leasing pipeline of 500,000 square feet of new leases,” Embassy REIT deputy CEO Vikaash Khdloya told Business Standard in an interaction.

Embassy’s portfolio occupancy was at 89 per cent at the end of the September quarter, with 15 per cent rent increases on 1.4 million square feet of office spaces across 22 leases. It said that construction is in full swing on 5.7 million square feet of projects, of which an 1.1 million sq ft campus for JP Morgan is on track for handover by year-end.

“The majority of the occupiers whom we serve have not taken up space for the last six quarters. And now there is a ramp up of offices -- physical occupancy has already increased to 10 per cent, and based on our conversations with occupiers post-Diwali they're targeting 20 per cent physical occupancy and gradually move it up till March next year. Most have completed 100 per cent of the first dose and a major major chunk of the second dose of vaccination of their employees”.

Prashant Thakur, director and head of research, Anarock, said: “The growth in the net operating income of Embassy REITS was along the expected lines. With the vaccination drive across India gaining significant momentum post the second wave, there was a visible uptick in commercial activity in the past few months.”

“Many companies have already started to resume their offices – at least in a hybrid model. More than anything, the growth clearly reflects the overall market sentiments wherein we are seeing commercial activity pick up pace post the second wave,” he added.