Embassy Office Parks REIT
🏢 Embassy REIT FY26: Revenue Up 13.5% to ₹45,824M, Profit Dips Amid MAT Credit Write-Off
- Embassy Office Parks REIT's key related parties include co-sponsors Embassy Property Developments and BRE/Mauritius Investments, trustee Axis Trustee Services, and manager Embassy Office Parks Management Services.
- Significant transactions with related parties: Property management fees paid to manager totaled Rs. 967.68 million (FY26) and Rs. 850.94 million (FY25).
- Distribution paid to co-sponsor Embassy Property Developments was Rs. 1,769.36 million (FY26) and Rs. 1,616.49 million (FY25).
- Major borrowings from Axis Bank: Long-term borrowings availed Rs. 11,483.80 million (FY26) and Rs. 1,760.56 million (FY25); Non-convertible debentures outstanding Rs. 14,150 million (FY26).
- Joint venture Golflinks Software Park Private Limited (50% ownership) reported revenue of Rs. 7,915.32 million (FY26) and profit of Rs. 2,364.81 million (FY26).
- Employee benefit expenses: Defined contribution plans cost Rs. 37.33 million (FY26); Gratuity liability increased to Rs. 16.13 million (FY26) from Rs. 9.15 million (FY25).
- Lease rental income recognized Rs. 32,959.22 million (FY26) with future undiscounted lease payments totaling Rs. 54,173.07 million.
- Deferred tax liability position: Net deferred tax liability of Rs. 41,338.20 million (FY26) primarily due to property valuation differences.
- Tax reconciliation shows effective tax rate impact from non-deductible expenses (Rs. 4,069.17 million) and exempt income (Rs. -6,207.10 million) in FY26.
- Key management personnel changes: Amit Shetty appointed CEO from August 2025, Ritwik Bhattacharjee served as interim CEO from November 2024 to July 2025.
- Embassy Office Parks REIT has not made provisions for contingent claims in its consolidated financial statements, based on expert legal opinion and current estimates.
- A demand note from Bangalore Water Supply and Sewerage Board (BWSSB) for Rs.25.69 million is under dispute, with a stay on Rs.22.49 million and Rs.3.2 million paid for a no-objection certificate.
- An appeal is pending against a Karnataka High Court order upholding some charges and declaring others illegal, with a new BWSSB notice for Rs.22.49 million.
- A demand from BBMP for ground rent and charges of Rs.22.36 million was set aside by the High Court, but the matter is under appeal by the State of Karnataka.
- Another BWSSB demand for Rs.5.12 million is under legal challenge, with an interim stay on Rs.1.72 million and partial payment made.
- An arbitration claim of Rs.137.56 million plus interest is ongoing against Embassy Sponsor and an SPV over construction delays.
- GST authorities have restricted input tax credit for certain SPVs, with a writ petition filed to challenge the orders.
- Export obligations for EPCG credits were not met due to COVID-19, with extensions granted and potential future liabilities.
- Financial instruments include Rs.156.43 million in fair value investments and significant borrowings, with fixed-rate debt at Rs.134,768.64 million.
- Market risk exposure includes variable-rate borrowings of Rs.89,079.25 million, sensitive to interest rate changes.
- Credit risk is managed with allowances for impairment, with trade receivables at Rs.989.56 million and provisions of Rs.11.87 million.
- Liquidity risk is monitored with cash and equivalents of Rs.9,696.66 million and undrawn borrowing facilities available.
- Net debt to gross asset value ratio improved to 30% from 31% year-over-year.
- Segment reporting shows Commercial Offices revenue of Rs.39,762.13 million and Hospitality revenue of Rs.5,321.49 million for the year ended March 2026.
- Net operating income was Rs.37,601.54 million, with profit before tax of Rs.11,335.71 million and profit after tax of Rs.3,385.45 million.
- India consolidated 29 labour laws into 4 Labour Codes effective from November 21, 2025.
- Estimated incremental impact of new labour codes is immaterial and recognized under Employee Benefit expense.
- Operating and maintenance expenses for FY2026: Rs. 5,855.26 million, up from Rs. 5,613.66 million in FY2025.
- Other expenses increased to Rs. 3,738.89 million in FY2026 from Rs. 3,223.48 million in FY2025.
- Finance costs (net) rose to Rs. 14,950.42 million in FY2026 from Rs. 13,286.25 million in FY2025.
- Depreciation and amortization increased to Rs. 12,657.85 million in FY2026 from Rs. 11,415.15 million in FY2025, including accelerated depreciation for redevelopment.
- Tax expense was Rs. 7,950.26 million in FY2026, compared to a tax credit of Rs. 14,313.94 million in FY2025, due to MAT credit revaluation.
- Earnings per unit (EPU) dropped to Rs. 3.57 in FY2026 from Rs. 17.14 in FY2025.
- Capital commitments increased to Rs. 13,224.04 million as of March 31, 2026, from Rs. 8,216.07 million in FY2025.
- Contingent liabilities include Income Tax matters (Rs. 295.26 million), Indirect Tax matters (Rs. 345.67 million), and Property Tax matters (Rs. 2,739.49 million).
- Embassy REIT's total borrowings as of 31 March 2026 were Rs. 225,353.03 million, up from Rs. 199,570.93 million in 2025.
- Key term loans include Rs. 7,873.20 million from Axis Bank for Four Seasons Hotel in Bangalore and Rs. 4,456.40 million from State Bank of India for Embassy Tech Village.
- Interest rates on borrowings range from 7.10% to 8.60% p.a., based on benchmarks like Repo rate, 3M T-Bill, or MCLR plus spread.
- Net Borrowings Ratio stood at 30% as of 31 March 2026, with REIT assets valued at Rs. 705,399.53 million.
- Revenue from operations increased to Rs. 45,823.56 million in FY26 from Rs. 40,389.32 million in FY25, driven by facility rentals and maintenance services.
- The group reported no defaults in repayment of principal or interest as of 31 March 2026 and 2025.
- Financial covenants include Net Debt/EBITDA ratios (e.g., ≤5.5 for some NCDs) and LTV limits (e.g., ≤40%), with compliance maintained in FY26.
- Embassy REIT issued 140,000 Series XVI NCDs in February 2026 with a total value of Rs.14,000 million, coupon rate 7.49% p.a., listed on BSE.
- Security for Series XVI NCDs includes mortgages on properties in First International Financial Centre (226,663 sq.ft) and Embassy Manyata Business Park (Block M3 Phase I - Acacia, 1,50,787.44 sq.m), plus pledges and guarantees.
- Series XVI NCDs mature on 27 February 2036, with interest payable quarterly; security cover is 2.69x as of March 2026.
- VTPL Series I NCDs (4,950 debentures, Rs.4,950 million) were issued in August 2022 and fully redeemed on 29 August 2025.
- ECPL Series I NCDs (25,000 debentures, Rs.2,500 million) issued in May 2023 with coupon 8.10% p.a., maturing on 12 May 2026.
- MPPL Series I NCDs (102,500 debentures, Rs.10,250 million) issued in July 2023 with coupon 6.91% p.a., redeemed early on 24 April 2026 via put option.
- QBPL Series I NCDs (40,000 debentures, Rs.4,000 million) issued in February 2025 with coupon 7.80% p.a., structured redemption ending April 2028.
- ECPL Series II NCDs (27,500 debentures, Rs.2,750 million) issued in January 2025 with coupon 7.95% p.a., maturing January 2028.
- Commercial papers issued: Series D (Rs.3,945.09 million) maturing February 2026, Series G (Rs.3,835.55 million) maturing June 2026, Series I (Rs.4,667.21 million) maturing March 2027.
- Key financial ratios as of March 2026: Asset cover ratio 3.15, Debt-equity ratio 1.08, Debt service coverage ratio 2.57, Net worth Rs.207,801.79 million.
- Multiple term loans and overdraft facilities from banks like ICICI, HSBC, Axis, SBI, with varying interest rates and security structures, some foreclosed or repaid during the year.
- All NCDs and loans are secured by mortgages on specific properties, hypothecation of assets, and corporate guarantees, with AAA/Stable ratings from CRISIL and CARE.
- Cash and cash equivalents increased to Rs. 9,696.66 million in March 2026 from Rs. 6,630.18 million in March 2025, with significant growth in current accounts.
- Other bank balances decreased to Rs. 107.10 million in March 2026 from Rs. 135.68 million in March 2025.
- Other current financial assets rose to Rs. 2,446.21 million in March 2026 from Rs. 1,849.02 million in March 2025, driven by unbilled revenue and receivables.
- Unit capital remained stable at Rs. 288,262.11 million with 947.90 million units outstanding as of March 2026.
- Major unitholders include Parag Parikh Mutual Fund (9.51%), ICICI Prudential Mutual Fund (9.01%), and Embassy Property Developments (7.69%) as of March 2026.
- Non-current borrowings increased to Rs. 172,107.45 million in March 2026 from Rs. 141,196.64 million in March 2025, with multiple new debenture issuances.
- New debenture series issued include Series XV (Rs. 20,000 million), Series XIII (Rs. 20,000 million), and Series XIV (Rs. 7,500 million), all with quarterly interest payments.
- Debentures are secured by mortgages on properties, pledges on shareholdings, and corporate guarantees, with security covers exceeding regulatory requirements.
- Retained earnings showed a negative balance of Rs. 12,128.81 million in March 2026, worsening from Rs. 7,769.67 million in March 2025.
- General reserve was introduced at Rs. 495.00 million in March 2026, while debenture redemption reserve decreased to Rs. 1,025.00 million from Rs. 1,520.00 million.
- Embassy Office Parks REIT disclosed amendments to Ind AS 1 and Ind AS 10, effective from 1 April 2026, impacting classification of liabilities with covenants.
- Property, plant, and equipment net carrying amount decreased to Rs. 25,068.10 million in March 2026 from Rs. 25,587.64 million in March 2025.
- Impairment loss of Rs. 2,460.62 million was recognized in property, plant, and equipment for the previous year ended 31 March 2025.
- Capital work-in-progress increased to Rs. 5,835.13 million in March 2026 from Rs. 3,129.01 million in March 2025, mainly due to Hilton Hotels at ETV project.
- Investment properties net carrying amount rose to Rs. 340,841.53 million in March 2026 from Rs. 324,404.67 million in March 2025.
- Rental income from investment properties increased to Rs. 39,762.13 million in March 2026 from Rs. 34,359.91 million in March 2025.
- Fair value of investment properties was Rs. 612,768.35 million in March 2026, up from Rs. 533,659.78 million in March 2025, as valued by Ms. L. Anuradha and Cushman & Wakefield.
- Goodwill net carrying value decreased slightly to Rs. 61,246.38 million in March 2026 from Rs. 61,537.67 million in March 2025, with no new impairment loss recorded.
- Impairment loss of Rs. 2,507.68 million was recognized in goodwill for the previous year ended 31 March 2025, primarily in QBPL and EEPL.
- Other intangible assets net carrying amount was Rs. 5,177.61 million in March 2026, down from Rs. 6,387.79 million in March 2025, with an impairment loss of Rs. 1,242.63 million in the previous year.
- Investment properties under development decreased to Rs. 10,689.85 million in March 2026 from Rs. 17,735.30 million in March 2025.
- Investment in joint venture Golflinks Software Park Private Limited was Rs. 22,295.94 million in March 2026, slightly down from Rs. 22,706.02 million in March 2025.
- Non-current investments in debentures totaled Rs. 6,243.13 million in March 2026, down from Rs. 6,823.10 million in March 2025.
- Trade receivables increased to Rs. 989.56 million in March 2026 from Rs. 820.24 million in March 2025, with allowances for impairment losses applied.
- Impairment loss on goodwill is not reversible; reversal for other assets is limited to the carrying amount excluding depreciation if no impairment had occurred.
- Foreign currency transactions are translated at transaction date rates; monetary items at reporting date rates; non-monetary items at fair value or historical cost rates.
- Financial instruments are initially recognized at fair value plus transaction costs (except trade receivables at transaction price) and classified into amortized cost, FVOCI (debt or equity), or FVTPL.
- Financial assets are measured based on business model and cash flow characteristics; reclassification occurs only if business model changes.
- Loss allowances for expected credit losses are recognized for amortized cost and FVOCI debt assets, with lifetime or 12-month ECL based on credit risk assessment.
- Leases as lessee: Right-of-use assets recognized at cost, depreciated over lease term; lease liability measured at present value of lease payments.
- Revenue recognition: Rental income recognized straight-line over lease term; revenue from contracts with customers recognized when control transfers.
- Employee benefits: Defined contribution plans expensed when rendered; defined benefit plans measured with actuarial gains/losses in OCI.
- Taxation: Current tax based on enacted rates; deferred tax recognized on temporary differences, excluding certain items like initial goodwill.
- Cash distributions to unitholders recognized as liability when approved by board; REIT must distribute ≥90% of net distributable cash flows quarterly.
- Total comprehensive income for the year ended 31 March 2026 was Rs. 3,375.69 million, down from Rs. 16,244.85 million in the previous year.
- Changes in fair value not recognized in total comprehensive income increased significantly to Rs. 65,697.73 million for 2026, compared to Rs. 24,758.40 million in 2025.
- Total return for the year ended 31 March 2026 was Rs. 69,073.42 million, up from Rs. 41,003.25 million in the previous year.
- Fair value changes were based on valuations by independent external valuer L. Anuradha, in conjunction with Cushman & Wakefield, covering investment properties, development assets, and other holdings.
- ERHIPL was acquired on 2 March 2026, and ESNP was acquired on 3 June 2024, with fair value assumptions detailed for each acquisition period.
- Embassy Office Parks REIT comprises multiple subsidiaries and a joint venture, including MPPL, UPPL, EEPL, and GLSP, focused on office space development, leasing, and related services across India.
- The REIT is sponsored by Embassy Property Developments Private Limited and BRE/Mauritius Investments, with Axis Trustee Services Limited as trustee and Embassy Office Parks Management Services Private Limited as manager.
- Units of the trust are listed on NSE and BSE, with the principal activity of owning and investing in income-generating real estate assets.
- Accounting policies include amendments to Ind AS 1 regarding liability classification, effective from 1 April 2025, impacting financial statement presentation.
- Fair value measurements use a three-level hierarchy, with significant reliance on external valuers and observable market data where available.
- Revenue from operations increased to Rs. 45,823.56 million in FY26 from Rs. 40,389.32 million in FY25.
- Profit for the year decreased to Rs. 3,385.45 million in FY26 from Rs. 16,244.36 million in FY25, impacted by a Rs. 5,922.17 million write-off of MAT credits due to amendments in the Finance Act, 2025.
- Earnings per unit (basic and diluted) fell to Rs. 3.57 in FY26 from Rs. 17.14 in FY25.
- Net cash flow from operating activities improved to Rs. 35,217.32 million in FY26 from Rs. 30,793.18 million in FY25.
- Total distribution to unitholders for FY26 was Rs. 23,962.75 million (Rs. 25.28 per unit), including Rs. 6,161.31 million for Q4 FY26.
- Net Asset Value (NAV) per unit based on fair value increased to Rs. 491.62 in FY26 from Rs. 423.22 in FY25.
- Fair value of total assets rose to Rs. 757,417.63 million in FY26 from Rs. 661,876.56 million in FY25, while liabilities increased to Rs. 291,418.40 million from Rs. 260,705.00 million.
- Key executives involved include Jitendra Virwani (Director), Amit Shetty (CEO), and Abhishek Agrawal (CFO), with audits conducted by S R Batliboi & Associates LLP.
- Interest rate sensitivity: A 1% change in rates would impact profit/loss and equity by ±Rs.35.36 million for March 2026 and ±Rs.28.72 million for March 2025.
- Net debt to GAV ratio increased to 16.96% in March 2026 from 14.03% in March 2025, with net debt rising to Rs.119,606.13 million and GAV to Rs.705,399.53 million.
- Financing activities: Proceeds from non-convertible debentures were Rs.61,261.34 million in 2026, up from Rs.18,991.79 million in 2025.
- Investment management fees accrued Rs.282.87 million for 2026, compared to Rs.257.59 million in 2025.
- Secondment fees increased to Rs.1.90 million in 2026 from Rs.1.81 million in 2025, with a 5% annual escalation.
- Proceeds from Embassy REIT Series XIII, XIV, XV, and XVI were fully utilized for debt repayment and SPV funding, totaling Rs.61,500 million.
- Acquisition of ESNP Property Builders completed in 2025 for Rs.120.06 million, including transaction costs.
- Acquisition of Eleanor Realty Holdings in 2026 for Rs.5,961.59 million, partially held in escrow.
- Sale of strata blocks at MPPL for Rs.5,300 million funded the ERHIPL acquisition.
- SEBI issued settlements and notices to the Manager, including a Rs. settlement amount paid in October 2025.
- Current ratio declined to 0.07 in 2026 from 0.11 in 2025, while debt-equity ratio rose to 0.56 from 0.36.
- Return on equity improved to 5.92% in 2026 from 2.69% in 2025.
- Auditor highlighted uncertainties including a Rs.2,739.49 million property tax demand and classification of unit capital as equity.
- Embassy REIT issued Series VII NCDs worth Rs. 10,500 million in June 2023, with a coupon rate of 7.77% p.a., redeemable on 05 June 2025.
- Series VII NCDs are secured by a first-ranking mortgage on Embassy Property Developments' First International Financial Centre and hypothecation on receivables.
- Commercial Papers were issued: Series I (Rs. 5,000 million), Series G (Rs. 4,000 million), and Series D (fully redeemed by February 2026).
- Total borrowings increased to Rs. 121,142.56 million as of March 2026, up from Rs. 80,647.14 million in March 2025.
- Profit after tax rose to Rs. 13,134.95 million in FY2026, with basic EPS at Rs. 13.86 per unit, compared to Rs. 6,311.52 million and Rs. 6.66 per unit in FY2025.
- Interest expense on borrowings increased to Rs. 8,104.13 million in FY2026 from Rs. 6,520.53 million in FY2025.
- Trade payables increased to Rs. 14.15 million as of March 2026, with Rs. 2.89 million owed to micro and small enterprises.
- Contingent liability of Rs. 30.92 million exists due to an indirect tax dispute related to a corporate guarantee.
- Significant related party transactions include loans to subsidiaries like Manyata Promoters (Rs. 49,846.50 million short-term) and dividend income from subsidiaries.
- Foreign currency exposure was Rs. 192.69 million as of March 2026, primarily in USD, with sensitivity to exchange rate changes.
- Embassy REIT's total borrowings increased to Rs. 90,973.96 million as of 31 March 2026, up from Rs. 51,170.07 million in the previous year.
- Multiple new non-convertible debenture (NCD) issuances in FY26: Series XVI (Rs. 13,939.07 million), Series XV (Rs. 19,889.09 million), Series XIII Series A (Rs. 14,973.74 million), Series XIII Series B (Rs. 4,992.02 million), and Series XIV (Rs. 7,498.88 million).
- All NCDs are secured, listed on the Bombay Stock Exchange, and carry AAA ratings from agencies like CRISIL and CARE, with coupon rates ranging from 6.97% to 8.17%.
- Security cover ratios for NCDs are above stipulated limits, e.g., Series XVI at 2.69x (vs. 1.75x required), Series XV at 2.52x (vs. 2x required), and Series XII at 2.87x (vs. 2x required).
- Short-term borrowings totaled Rs. 30,168.60 million as of 31 March 2026, including commercial papers Series I (Rs. 4,682.62 million) and Series G (Rs. 3,948.20 million).
- Term loan from Bajaj Housing Finance Limited amounted to Rs. 3,248.96 million, secured by mortgage on Embassy Qubix properties in Pune.
- Key financial ratios: Asset cover ratio decreased to 5.82 (from 7.58), debt-equity ratio rose to 0.56 (from 0.36), and net profit after tax increased to Rs. 13,134.95 million (from Rs. 6,311.52 million).
- NCDs have various redemption dates, e.g., Series XVI due February 2036, Series XV due July 2035, and Series XII due December 2029.
- Covenants include Net Debt/EBITDA limits (e.g., ≤5.5 for Series VI, VIII, XI, XII; ≤5.75 for Series XIII and XV) and LTV ratios (e.g., ≤40% for most series, ≤49% for Series XVI).
- The Trust maintains compliance with all financial covenants and has no outstanding preference shares or debenture redemption reserves.
- Embassy Office Parks REIT accounts for foreign currency transactions using exchange rates at transaction dates, with exchange differences recognized in profit or loss or OCI as applicable.
- Financial instruments are initially recognized at fair value, with subsequent measurement based on classification: amortized cost, FVTPL, or FVOCI, depending on business model and cash flow characteristics.
- Financial assets are derecognized when rights to cash flows expire or are transferred, with risks and rewards assessed; liabilities are derecognized when obligations are discharged or modified.
- Impairment of financial assets is assessed using expected credit losses, with lifetime ECL for trade receivables and certain debt securities, and 12-month ECL for low-risk instruments.
- Revenue recognition follows the effective interest method for interest income, and dividend income is recognized when probable; distributions to unitholders require at least 90% of net distributable cash flows.
- Non-current investments include subsidiaries and joint ventures, with impairments noted: Rs. 7,062.37 million for Quadron Business Park and Rs. 732.79 million for Embassy Energy as of March 2026.
- Investments in debentures of joint venture Golflinks Software Parks total Rs. 6,243.13 million (non-current) and Rs. 579.96 million (current), with interest rates at 8.50% p.a. and security over Embassy Golflinks Business Park.
- Loans to subsidiaries amount to Rs. 87,970.61 million (non-current) and Rs. 0 million (current) as of March 2026, with interest at 12.50-14.00% p.a. and bullet repayment terms.
- Unit capital consists of 947.90 million units valued at Rs. 288,262.11 million, with major unitholders including Parag Parikh Mutual Fund (9.51%), ICICI Prudential Mutual Fund (9.01%), and Embassy Property Developments Private Limited (7.69%).
- Retained earnings show a negative balance of Rs. 1,471.98 million as of March 2026, improved from Rs. 6,872.10 million in the previous year.
- Embassy REIT reported audited standalone and consolidated financial statements for the year ended March 31, 2026, subject to unitholder approval.
- Total assets increased to Rs. 338,607.90 million in FY2026 from Rs. 307,895.71 million in FY2025.
- Profit for the year rose significantly to Rs. 13,134.95 million in FY2026, compared to Rs. 6,311.52 million in FY2025.
- Earnings per unit (basic and diluted) increased to Rs. 13.86 in FY2026 from Rs. 6.66 in FY2025.
- Total equity decreased to Rs. 216,938.62 million in FY2026 from Rs. 226,989.17 million in FY2025, mainly due to distributions to unitholders.
- Net distributable cash flows at the trust level were Rs. 24,008.31 million for FY2026, with a declared distribution of Rs. 6.50 per unit for Q4 FY2026.
- Net asset value (NAV) per unit based on fair value increased to Rs. 491.62 in FY2026 from Rs. 423.22 in FY2025.
- Total return at fair value was Rs. 69,073.42 million for FY2026, up from Rs. 41,003.25 million in FY2025.
- Borrowings increased, with non-current borrowings at Rs. 90,973.96 million and current borrowings at Rs. 30,168.60 million as of March 31, 2026.
- The financial statements were audited by S R Batliboi & Associates LLP and signed by key management including Jitendra Virwani, Amit Shetty, and Abhishek Agrawal.