April marks the beginning of the brand new financial year FY23 and the new year is going to be even more special as corporates have announced that the office re-openings are being scheduled for April too. This back to office is two months ahead of the school academic year which will begin in June. So it’s the parents who are going offline first and then the kids.
This is good news for office space REITs. Embassy Office Park REIT (EOPREIT) is the first publicly listed office space REIT in India and its quarterly payouts during the uncertain pandemic times have been steady. They have not missed out on any of the quarterly distributions so far and have proved to be reliable with the payouts. Going forward this can only get better.
The factors that are providing the tailwind for EOPREIT are the back to office plans of corporates, combined with the anticipated inflation which can result in an increase in the rent amount, demand for state-of-the art office spaces keeping in mind the wellbeing, security and comfort of the employees.
Looking back, the EOPREIT’s IPO was in March 2019 issued at Rs. 300/- per unit and current market price is Rs. 372.93 /- per unit (NSE) as on 10 Mar 2021
For FY 22, the total payout for the past three quarters totals to Rs. 16.5/- per unit and their payout guidance for FY 22 was Rs. 21.5/- per unit, which now due to the improved leasing activities, they have increased to Rs. 21.7/- per unit.
EOPREIT has about 200 corporates and claim 87% occupancy; 74% of their office space is concentrated in Bangalore which is a preferred location for tech companies and back office operations of global financial majors. EOPREIT is now looking at a new office park in Chennai.
India will be a major destination for “cost-effective STEM talent” and companies will need physical office spaces to start rebuilding their work culture, foster better networking and nurture relationships across hierarchy. They need clean, safe and green spaces where employees can look forward to stepping out on a daily basis to put forth their best efforts and in these aspects, quality office spaces are important and EOPREIT are ready with their world class office buildings.
And with the worst behind🤞, investors can look forward with much more confidence to steady and increased distributions going forward.
Till next post, take care !!