Leading with confidence and conviction


Leading with confidence and conviction

I thank all our stakeholders who have contributed to our resilient performance in a challenging year.

Dear Unitholders,

As your Chairman, I am very pleased to present this annual report to you. In the two years since Embassy REIT's listing in April 2019, we have paid out more than `3,700 crores in distributions and delivered 24% in total returns to Unitholders .

Embassy REIT has been a trailblazer and our performance has helped other Indian REITs to list; since our IPO in April 2019, ~US$2.6 billion or `19,000 crores of REIT equity capital has been raised. This new capital formation underscores India’s potential as a vibrant REIT market, and it bodes well for the future of commercial real estate in the country.

It is a reality that as a publicly listed entity, Embassy REIT has operated under the shadow of the COVID-19 pandemic for a longer period than it has out of that shadow. Even then, our business has proven resilient. For the financial year ended March 31, 2021; we collected nearly 100% of our office rents; we leased 1.2 million square feet across our core markets; we acquired accretive growth in the form of a world-class business park in one of Bengaluru’s best-performing submarkets; and we were able to considerably reduce the cost of debt we use to grow our business.

Most importantly, our front line team has been relentless in its efforts to ensure the safety of all those who work in our offices, while across the board, our team members have delivered this strong performance for the financial year. We owe a debt of gratitude to them and to our many stakeholders.

I thank our Unitholders for believing in our business. From the global and domestic institutional holders who continue to be the largest holders of the Embassy REIT units to the growing number of retail holders who rely on our distributions, we continue to operate a best-in-class business so that our Unitholders can receive the periodic distributions and enjoy the capital appreciation that comes with owning a best-in-class office REIT.

I thank our regulators and our government stakeholders for unlocking the potential of the REIT structure in a nascent market like India. In the last year, the regulators have initiated numerous measures that have facilitated smoother financing routes for REITs, such as allowing classes of investors like Foreign Portfolio Investors (FPIs) and Insurers to invest in the debt issued by REITs. These measures are critical milestones in the evolution of the REIT capital markets, and they immeasurably enhance the global credibility of the structure.

I thank our occupiers for their unwavering support and cooperation, as we consistently delivered our business continuity plan throughout the pandemic. The bedrock of our business is the trust our occupiers place in our workspaces as productive environments for their employees. For the Indian employee, office parks will continue to be the venue for building company culture, collaboration, training and teamwork. Global companies will continue to hire and rely on the young and skilled technology‑focused talent pool that exists in India. This demand will only grow as the global technological landscape becomes more sophisticated at a faster pace.

I thank our Board of Directors for their guidance during this challenging time. The Board’s counsel has been invaluable to us as we have delivered quarter after quarter of solid performance in a difficult environment.

And finally, I thank the management team at Embassy REIT for creating a high-quality business for the long term. Amidst this volatility and the responsibility of constantly delivering information and reporting quarterly performance metrics, the team has built an enduring franchise that can withstand major dislocations while serving as the cornerstone of the office market in India for years to come. Let me explain why.

First, the conviction theme that we have in the Indian office remains as strong as it was when I started the Embassy commercial office business back in the early 2000s. The Indian office environment has always relied on the business park model compared to the urban standalone building models that define the office landscape of cities like New York, London, Tokyo and Hong Kong. Occupiers are already telling us that once the pandemic subsides in India, they will need to bring employees back to the office longer term for all the benefits that the office environment provides.

Second, we are witnessing a marked shift towards ESG as a leading indicator for how we operate our business, and how our stakeholders expect us to operate our business. We are defining our three-year ESG strategy to build further on our strong legacy and past ESG accomplishments. For many years, Embassy Group and now Embassy REIT have been at the forefront of ensuring that each component in ESG gets appropriate attention. For example, under Environmental initiatives, the REIT has owned and operated a 100 MW solar park which supplies energy across our Bengaluru office parks for the past two years. In our work in the community, Social and Sustainable space, we have partnered with our occupiers to transform, upgrade and build new schools that benefit over 2,800 students, adding to the work done previously to bring education and health to over 165 Government and Rural Schools across Bengaluru, Noida, Pune, Mumbai, Chennai, Hosur and Thiruvananthapuram. And in terms of Governance, there could have been no REIT listing without the exceptional governance standards our regulators created for the REIT structure. We live by those standards every day.

Embassy REIT is a vehicle that is primed for growth. Even in the midst of the pandemic, the team saw an opportunity to widen our business moat, and exercised the option to purchase Embassy TechVillage, Bengaluru, which is arguably one of India’s best business parks. The REIT was able to finance this acquisition by issuing equity via a placement, India’s first REIT equity placement, and by issuing debt at attractive rates. The financing speaks to how investors view the REIT as both a growth vehicle and safe credit. In addition to the on-campus development that the REIT possesses, we will continue to have opportunities to grow via accretive acquisitions, finance these acquisitions efficiently, and most importantly, deliver value to our Unitholders .

On behalf of all of us, thank you once again for your continued engagement with Embassy REIT.

From all of us at Embassy REIT to all of you, please stay safe.

Yours Sincerely,
Jitendra Virwani