Embassy Office Parks REIT (EMBASSY) Earnings Call Transcript & Summary

We welcome you to the fifth annual meeting of the Unitholders of Embassy REIT. I'm Shweta Reddy, Head of Marketing and PR at Embassy REIT and your host for today's meeting. We're hosting today's meeting in a hybrid format. So besides the unit holders present with us live here at the venue, we also have participants joining us online through a videoconferencing facility in accordance with the SEBI guidelines. First, a few instructions for our online participants. The videoconferencing facility enabling virtual participation in this fifth annual meeting opened 30 minutes prior to the scheduled time and will be available for 15 minutes after the scheduled period ends. Unitholders can use this facility on a first come first serve basis to join today's meeting. Embassy REIT is also hosting this fifth annual meeting live on its website at www.embassyofficeparks.com. We encourage all online participants to refer to the instructions provided in the notice convening the annual meeting. Please note that after the fifth annual meeting proceedings, NSDL portal will remain open for 15 minutes to enable the unitholders to cast their e-votes. We will also host a question-and-answer session towards the end of the meeting, and any unitholders who wish to express their views or ask any query may do so then. The unitholders present in the room may preregister the questions at the registration desk outside the room. Also, the unitholders joining us virtually may ask their queries by clicking on the Q&A tab on their respective video conferencing screens. All unitholders will need to mention their full name along with their DPID and client ID or folio number along with their question. A relevant person from our team shall answer your query during the Q&A session. Now let me take the opportunity to introduce you to your Board of Directors who are attending this meeting today. Joining us from this conference room, we have with us Mr. Jitu Virwani. He's a Non-Executive Director and Chairman on the Board of the Manager of Embassy REIT. He's also the Chairman and Managing Director of the Embassy Group of Companies. He has over 25 years of experience in the real estate and property development sector. He is a fellow of the Royal Institute of Chartered Surveyors and a member of the Equestrian Federation of India. Mr. Aditya Virwani, he's a Non-Executive Director on our Board. He's also the Chief Operating Officer of the Embassy Group and is on the Board of several Embassy Group companies. Also joining us online, we have with us Mr. Vivek Mehra, he's an independent director on our Board and Chairperson of the Audit Committee. He was with PricewaterhouseCoopers for 19 years and retired as a partner in 2016. Mr. Anuj Puri, he's an independent director on our Board and Chairperson of the Investment Committee. He is a fellow of the Royal Institution of Chartered Surveyors and a fellow of the Indian Institute of Insurance surveyors and loss assessors. He holds the title of Chartered insurance practitioner from the Chartered Insurance Institute. Dr. Punita Kumar-Sinha, she's an independent director on our Board and Chairperson of the stakeholders relationship committee. She is the founder of the Pacific Paradigm Advisors, LLC. Previously, she was the CIO for the Indian Fund, Inc. and the Asia Tigers funding. She was also an MD at Oppenheimer Asset Management. Mr. Robert Christopher Maiya, Chief Executive Officer; Mr. Abhishek Agarwal, Interim Chief Financial Officer; Mr. Ritwik Bhattacharjee, Chief Investment Officer; Ms. Vinitha Mellon, Company Secretary and Compliance Officer. The following key persons are also attending the meeting. Mr. Bhavesh Vichare and Mr. Sameer Kabra, attending [ AG ] both present here, representing SR Batliboi & Associates LLP, statutory auditors of Embassy REIT. Ms. Rupal Jhaveri, Practicing Company Secretary, present here as a scrutinizer for this annual meeting. We will now play a short corporate video highlighting Embassy REIT's journey since listing. Can we have the video, please? [Presentation]

Thank you. Chairman for today's meeting, Mr. Jitu Virwani.

Good morning unitholders. It gives me immense pleasure to welcome you all today to the fifth annual meeting of the unitholders of the Embassy REIT. All reasonable efforts have been made by the manager of the REIT to enable unitholders to participate and vote on the items being considered in the meeting. On behalf of the Board of Directors of the Embassy REIT, I thank you all for taking us out of time to join us today. Since we have the requisite for quorum, present to conduct the proceedings of the meeting, I call the meeting to order. Our Board of Directors are joining us from -- today from various locations. Before we start the main proceedings of the meeting, I would request my colleagues to introduce themselves, along with the details of the location from which they're attending the meeting. Dr. Punita Kumar Sena.

[indiscernible] director of the Board and [indiscernible] relationship committee. I'm attending the annual meeting from [indiscernible].

Aditya Virwani?

Good morning, unitholders. I'm Aditya Virwani, a Non-Executive Director on the Board. I'm attending the annual meeting from Bangalore.

Vivek Mehra?

Good morning unit holders. I'm Vivek Mehra [indiscernible] Director of Board and chairperson of the Audit Committee and Risk Management Committee. I'm attending the annual meeting from London.

Anuj Puri?

Hi, good morning all unit holders. I'm Anuj Puri, an Independent Director on the Board and Chairperson of the Investment Committee. I'm attending the annual meeting from Mumbai.

Robert Christopher Heady?

Good morning, unitholders. I'm Robert Christopher Heady, a Non-Executive Director on the Board, and I'm attending the annual meeting from Hong Kong.

Tuhin Parikh?

Good morning unit holders. I'm a Non-Executive Director on the Board, attending the meeting from my office in Mumbai.

Thank you. Dr. Ranjan Pai, the independent Director, has expressed his inability to attend the meeting due to unavoidable circumstances and prior commitments. The process of this meeting is to give you, our unitholders, an update on the key developments of the Embassy REIT and to seek your approvals on the matters that had stated in the annual meeting notice. This year marks Embassy REIT's fourth year anniversary since it's listing in April 2019. As demonstrated by results of 2023, the business is well positioned to benefit from the continued offshoring demand in India and we continue to invest and cater to this demand. As you may know, in April, we announced the appointment of Aravind Maiya as the CEO of the Embassy REIT. Aravind played a pivotal role in the growth of Embassy REIT since it's listing as a CFO and was instrumental in driving it's success. I'm delighted to welcome Aravind back. Under his leadership, we look forward for taking the Embassy REIT to greater heights. I will now hand it over to Aravind to present our business highlights for the year and our forward outlook and strategy, Aravind?

Thank you, Jitu. Good morning to all unitholders, and a warm welcome to the Fifth Annual [indiscernible] [ AG ] For the next 10 to 15 minutes, I will take you through a presentation, which covers how the year went by and how we see the year as we move ahead. Just to start with a slide which captures how the year went by in 1 single slide. We leased about 5.1 million square feet last year, beating the guidance which we had given at the beginning of the year. We accelerated our organic growth by launching close to 7.9 million square feet of development, which includes a one of it's kind 1.2 million square feet of redevelopment in Manyata, which increases the area by almost 3x. We did a small acquisition of a property by name Embassy Hub in the northern part of Bangalore, which I believe will be very accretive of the unitholders in the long term. Our balance sheet continues to be healthy at 28% leverage and almost 60% of the debt carrying a fixed rate of interest. We've been pioneers in our industry in relation to our overall ESG program, which is evidenced by the fact that we are one of the largest world's GBC platinum-certified portfolio in the world. Moving a little bit into what I believe is the heart of our business, which is leasing. As I mentioned, we did about 5.1 million square feet of leasing last year, which is the maximum we've done since the inception of this portfolio. But I would say there are 3 key messages over here. One, as you see over here, we did about 2 million square feet of new leasing and 1.8 million square feet of re-leasing, but all at a healthy 16% to 17% renewal spreads. What that means is even though the market has been a little soft, for best quality properties like ours, we are still able to lease it at the market rate. Number two, the 5.1 million square feet of lease up, we achieved over 100 deals. So on average, it's around 40,000 to 50,000 square feet per deal, which is a little lower than what it used to be pre-COVID. But more importantly, we added 44 new occupiers to our portfolio which is an increase of 25% on our customer base. And a lot of these are first-time entrants to India, and we believe that as these companies grow in India, they will grow in our portfolio. A lot of the India commercial office leasing over the last couple of years has been in relation to what's happening to the global captives and their growth story in India. Just to rattle out a few numbers, as per our recent NASSCOM report, the number of GCC is expected to increase from 1,600 to 1,900 by 2025, with a market size of $60 billion. As per [indiscernible] report, which went a little more into the future until 2030, the number of GCC is expected to increase to 2,500 from 1,600, with a market size of $110 billion and more importantly, with the employment of close to 45 lakhs from the current 19 lakhs. So that can speak about the amount of space they will need in the years to come. This is already getting reflected in our portfolio when you see because in FY '23, close to 70% of the new leasing was done to Global captives and today, 55% of our portfolio is occupied by global captives. We continue to grow organically as well as inorganically. As I mentioned, we have 7.9 million square feet of development in our portfolio. You see some of the pictures over here. The top 2 pictures are actual pictures and the bottom 2 are new launches and you're seeing the perspectives over here. All these we believe will be very accretive to unitholders over the next few years as they are delivered. In relation to inorganic growth, to talk a little bit more about Embassy Hub acquisition, which we did, we acquired a building which is 0.4 million square feet close to completion during the later part of this year, which is almost fully pre-leased to one tenant. We also acquired land on which we can develop 1 million square feet more. But what makes this acquisition even more exciting is the fact that this is located in the northern part of Bangalore, which I would say is the growth corridor for Bangalore. And second, we continue to retain what we call as the ROFO right with Embassy sponsor. Embassy sponsor continues to own rights over a larger parcel of land. And as and when they develop that, we have the right to acquire it, making this to be another total business ecosystem like some of our other parks in Bangalore. As I mentioned, all our growth comes with a commitment to our planet as well as communities. You see some of the certifications and awards, which we've received for our portfolio over the years. Just to round up last year in terms of some financial performance, our revenue increased by 15%, NOI and EBITDA increased by 11%. That's largely because of the 1.1 million square feet of build-to-suit JPMorgan building, which we delivered last year as well as the contracted escalations of close to 5%, which is there in built into our contracts year-on-year as well as the new leasing at market spreads. More importantly, we delivered distributions of around INR 2,058 crores last year. And when you take the 4 years since listing, we have distributed INR 7,800 crores almost close to USD 1 billion since listing. The fact that a vast majority of the 4 years since listing was spent post COVID, which I would say was a black swan event for our industry. Our distributions, we have continued to distribute and our distributions have remained consistent year-on-year. That speaks about the stability of this product. So now the question is from here where? As we look into the future, I would say there are 2 structural elements, which work favorably to us. Number one, India continues to be the office to the world. That is because of the availability of talent at scale as well as cost competitiveness. This is precisely the reason why we saw the growth in tech and IT industry over the last couple of decades and we are seeing global captives growing for the same reason. And secondly, Bangalore has been the epicenter of growth in commercial real estate sector in India. When you see some of the numbers over here, 40% of India's exports come from Bangalore, 1 in 3 tech employees are located in Bangalore. Almost 50% of the new capital set up last year was from Bangalore. And when you link this to the fact that over 70% of our portfolio is located in Bangalore, and more than 90% of the new development we are doing is in Bangalore, I can say that this is a very good recipe for success in the medium to long term. It's very important to highlight some of the embedded growth levers, which we have already in our portfolio. I would say there are 3 of them. Number one, we today have around close to 5 million square feet of vacant area. As and when we are able to lease this over the years, you will see an increase in cash flows leading to increase in distributions. The contracted escalations of 5% per annum or 15% every 3 years, we've been able to achieve that even in the worst of times. And as and when the leases come up ultimate maturity, we are able to take the rentals up to market, which again increases the net operating income and intern distributions. We have the opportunity to grow inorganically as well as we have done in the last couple of years through the large Embassy TechVillage acquisition, which increased the portfolio by close to 30%. We have the ROFO construct with a sponsor. It works very well for the REIT because as a developer, the sponsor is able to do the more risk-oriented ground-up development while offering these assets to the REIT as and when it reaches a reasonable amount of stabilization. We continue to look at opportunities to grow from third-party acquisitions, and we believe we'll be able to do those as and when the overall market stabilizes. I would say this is a very important slide for the simple reason, we are not just constructing stand-alone buildings. We are developing, as we call total business ecosystems. Our parks include not just office buildings, it's a combination of retail, hotel, convention centers, food courts, sport zone, [indiscernible]. This has been a real differentiator for us, which attracts top quality tenants to our portfolio. All the growth, which I spoke about is supported by a very well-capitalized balance sheet with 28% leverage and a headroom to grow in the form of close to INR 10,000 crores of additional debt. And lastly, we will continue to grow on a sustainable basis. We are backed by a well intense and well-recognized 19 pillars of our ESG strategy, which has been well recognized by our occupiers as well as our investors. Just to sum it up, I would say that it's been pretty turbulent times for us as an industry. But I'm very happy to say that we have emerged out of it much stronger. Our strategy to invest in total business ecosystems as well as the organic and inorganic growth levers, which I spoke about, will ensure that we are able to deliver accretive growth to our unitholders. I thank you once again for being a part of this organization. Thank you for placing the trust and faith in us as management, and I'm pretty sure that our 85,000-plus strong family will grow to many more lakhs and crores in the years to come. Thank you so much.

Thank you, Aravind. We will now conduct the Q&A session for the next 30 minutes or so. We'll first collect all the questions from our unitholders present here as well as virtually. And I'll then invite the management team to answer them together. Please note that Embassy REIT may limit the number of unitholders asking questions depending on the availability of time. We've already started receiving a few questions from our unitholders to the live chat. Any other unitholders joining us virtually who wish to ask the question, may do so by clicking on the Q&A tab on the video conference screens. I would now invite our unitholders present in the room to please come up to the podium and ask their queries.

Respected chairman sir and all the directors and all the fellow shareholders. I am Manjunath, an ex-member of [indiscernible] and i'm a shareholder with 11218169 is my folio number. So I'm glad to see very transparent and exhaust you, narrative that you have given -- taken a lot of time to complete 570 pages of the annual report. I congratulate the outset -- so making like truly real estate investment trust is what SEBI was calling with transparent mode. So now I will come to the negative factors. What -- I mean, [indiscernible] unit holders from the date of the issue of 350 or some price in IPO. Now even today, it is quoting less than the net asset value of around INR 394. It is stagnat even the last year and also this year. So the problem with the market is always market looks ahead what is the earnings per share. So in the case of per unit -- so it has been constantly at INR 300 issue price at INR 30,000 crores over capital assume to say I'm comfortably with crores. I'm not comfortable with the millions. So that is what your balance sheet was quoting. So basically, the earnings are not that great. So the main factor is, you are, I mean, fully built on the office cluster. So what I suggest, maybe it will work out or it may not work out. I mean, it's your idea and perception. Hospitals and water management. These are the untapped area because at one point of view, you say that you are at about 2 lakh employees working under your roof. So I mean, at any point of time, going from -- I mean, anybody getting into some problem with the health issues, going to nearest is [indiscernible] or something like that, so [indiscernible] about 30 minutes. I think 30 minutes will go from the campus to the gate, it will get exhausted. So this is 1 area and hospital also is a very lucrative business, in fact, in the -- in case see the quoted shares are recording at very high premiums like, Apollo and all the scale companies. So either way the joint venture are you say, no, I mean, you've got a lot of spaces, which are lying vacant. So these basically hospitals and mix with the hotels, maybe 5,000, 7,000 range. So there is enough potential so to make these or even managed convention centers. In fact, somebody from Andra who was coming and telling me was [indiscernible] concern. So there is no big -- I mean very big convention center between 1,000 to 1,500, with what you call parking area -- so within the city, not necessarily, it could be an outside also. So these are draw back with the Bangalore what is, I mean, helping the Bangalore growth. Silicon Valley, I mean, lacking the basic infrastructive. So these are the 3 areas, so a company should concentrate because at the end of the day, so these are like plug and play people, I don't say they are plug and play. So the people who are coming to invest who have the offices like 230 plus, you are telling. So they look at the human resource, how much cheaper it is there. Moment it becomes costly or moment it becomes irrelevant or unemployable or maybe technologies like you can say, machine learning or robot, AI, whatever they take place. They will just vanish and they'll close the shops. In fact, even today, Emphasis is only in the [indiscernible] they're like paying about INR 60, INR 70, INR 80 per square feet rent. So why it has become -- we, as a landlord, we are looking at whether they pay INR 100 something like that, or INR 150, something like that. But they at their level, what it cost to be like at the end of the day for a product, you need to sell in the market. So because of that consider the dependence in the office cluster, I mean to some extent, now it is at 35%. We brought down to maybe about 15%, 20%. So that is the main -- and because of the -- all this finance cost is huge, maybe around INR 890 crores or something like that. So these are the main areas of concern. And the main thing what I was saying, Annual General Meeting is Annual General Meeting only. It was coming in the annual meeting. I don't know when this translation has taken place. Maybe COVID has brought one word down, I think. Annual General Body Meeting. AGM, Annual General Meeting. It has been AM in all the wordings -- so please correct yourselves. And maybe this becomes a tradition on convention. Okay, I'll leave it. Okay. Thank you, sir.

Thank you, Sir.

Thank you so much. Good morning. I'm Krishnamurthy. Thank you, Chairman. I have only one thing to understand, while Mind Space and other REITs mostly work on capital, so we are leveraging 28%. The finance costs may come to 8%, 8.5% whereas the return will be 2%, 2.5%. So it is a capital diminishing proposition. So what I just want to understand how we are -- okay, over a period of time till the office values appreciate, then we would be able to get. So what is the thinking of the management on the leveraging? Because most of the rates have very less leverage -- so Embassy is higher leverage. So unit costs will come down, obviously. Maybe over a period of time, it will increase. I just want to understand, so what is the thinking of the management on the leveraging?

Good morning to all. I'm Subramanyam MC. My folio number is 30214811156530. Actually, I need not talk anything about the accounts or anything. By seeing the strength of this company, this transparent video of this one, actually, my mouth is shutting. I need not tell anything because the situation, the COVID situations, all other things are prevailing in the country that made any company to show greater performance. I am confident that this company will show better performance in the future years, I know that. But only thing is your current liabilities are more than the current assets. That's the only disappointing statement. Current liabilities should not be more than the current assets, which damages the current ratio. When borrowing from the banks, they will see the current ratio and EPS and ROE also. So those things you have to take much care. First of all, actually, I would like to thank the company and management for having conducted this meeting physically because no other company except this one. One company has conducted this physical meeting. This is the second company which is -- ABB is the first company which has conducted the meeting physically. This is the second company. I congratulate and thank the management for having conducted the meeting physically. The timing is, 9:30 is too early, sir, because people coming from faraway places, it is very difficult. Because myself, I'm coming from 40 kilometers [indiscernible]. I left my house by 7 a.m. sir, okay. Please change the timings, at least by 11 or 11:30 followed by lunch. Okay.

Thank you. Any further questions from the audience? Okay, sir. Okay, sir, then if you've already said, that's fine. But if you would like to ask your question again, please feel free.

Hi. Good morning to all of you. My name is Aditya. Aditya K. From what I understand is the net asset value, fair value per unit is around INR 396 or something, the latest one. I'm really baffled by the way the stock price is falling. In the same period, as Embassy has been falling, Sensex and some reality stocks have been shooting up. So that's very baffling?

Thank you. Any further questions? While our team collates the questions received virtually, we will play a short video showcasing our ESG program. [Presentation]

First question is on the stock price. We have received this question from Mr. Aditya K and Mr. Anand Shah. The question is, what is the reason for the consistent decline in the stock price for Embassy REIT? How do the payouts compare against other products like FD?

Thank you. I'll request Ritwik to take this question.

Sure. Thank you, Arvind. Good morning, all unitholders, and it's a pleasure to see people in this room. This is the reason why we've gone ahead and actually conducted this in person to take questions to converse with you, have a dialogue with you on the structure, on the sector and really talk about sort of both the product, the stock price, and everything else in the most transparent manner. So I think from our perspective, we are also -- to use the word who came up to the podium, we're as baffled as you are as to the performance of the stock relative to how strong this company actually is. But I think there are a couple of reasons for that. And I'm not going to sort of talk about sort of where the stock should be or clearly, we have certain views on it. But if you look at the fundamentals underlying this business, as both the Chairman as well as Aravind pointed out, this product has completely transformed the capital markets in India. If you think about sort of the growth levers, the way that we have made commercial real estate an asset that all of you, as unitholders own right now, you own real estate. You own real estate that is professionally managed that gives you -- has given you INR 8,000 crores of distribution since listing through a pandemic. It has been able to sort of give you the ownership of world-class office assets that companies like JPMorgan, like the Global sort of company, the tenants that we talk about that are in our portfolio, the 230 occupiers. You are now owners of that alongside us and our fundamental focus in this is to deliver growth to you. The distributions that we give you quarter after quarter points to how stable this business. It is the leverage that we spoke about, there was a question on leverage, talking about sort of why is leveraged so high. In our view, the leverage is actually very, very conservative. We cannot go more than 49%. We are very comfortable thinking about leverage sort of just in the 30%, just to fund the growth. All of this points to a very healthy business in an environment where, unfortunately, the stock price has not performed. We admit that. We recognize that. There are some macro factors that are contributing to this. There has clearly been a lot of global volatility. Office globally has performed very poorly compared to office in India, number one. The interest rate environment has been very difficult for most companies, yet we have contained and we have maintained a very prudent sort of balance sheet. And if you look at our results, year after year, we have consistently leased buildings. We have brought development online in a timely manner. We have bought growth, and we have distributed INR 8,000 crores. For a real estate company in this country, that is practically unheard of. That is what we will continue doing. And over time, I think our advice to all our unitholders who are worried about the stock price, is that have the patience to stay with us, we understand your frustration. We know that this is something that does not match the reality of where we think the stock should be and the intrinsic value. But all our growth levers, as Aravind pointed out, are something that we will continue to deliver every day. We will continue to work on developing and making sure that we can fund what we currently own, we will buy future growth, and we will continue distributing to unitholders. And over time, the stock -- we are confident the stock will re-rate two levels above what it currently is.

And if I can just add on. A lot of the stock price is also driven by what's happening globally and the sentiments are on commercial real estate globally. But India is a different environment. In the process, there has been evolution of our shareholder book as well, where there's a lot of domestic institutions coming and buying stock. That's number one. Number two, just to reiterate from this is a cash flow product. And for us, we are committed to increasing the distributions over a period of time for which what is important is we continue to lease well, increase the occupancy, grow the organic developments which you are doing and at the right point in time, grow inorganically as well as the capital market stabilizes. So as Ritwik said, it's our sincere request to all the unitholders to have patients in us. We are fully committed to delivering our cash flows.

Also to further add is that I think the leverage question is more that probably ours is the only REIT which has actually grown in terms of square footage also, the acquisition of Embassy TechVillage actually took the leverage a little higher. And if I'm not wrong with the numbers, Embassy Techvillege has been one of the best investments the REIT has done in this acquisition. So the REIT is not only about getting return, but also if you start looking at the REIT in a way that how much each REIT grows, growth being a very important factor in the long run, as you see there in the presentation that there's a lot of under construction, which will start paying over the time. And yes, of course, right now, office is a bad word globally, but India has always been different. And in my career, every time there's a crisis in the world, the office market in India actually moves up. And this is exactly where it's kind of heading. So I think we used to be patient. And I think we also, as a management have to do a lot to educate the retail investor. Because still, we see in the market a lot of stand-alone buildings being sold at a much lower return than what the REIT is giving and people still believe in owning a document, which says a particular square feet is in their name rather than buying a REIT unit, which is actually the most sensible thing to do. In fact, in terms of taxation also. So I think it's a new product, and it's taking it's time. And like Arvind mentioned, we were hit by COVID. I think in the long run and somebody who is also -- I mean, mentioned the value which has not been reflected in the price of the unit. So I think all this will come in good time. But for us, as the management is just to continue running the company with clean transparency, corporate governance and continue to be #1 in this area as we've been for the last so many years.

Our next question is from unitholder, Ms. Anju B. The question is, what are the key drivers for Indian office leasing demand?

Thank you, Shwetha. So let me take that. As I did mention, one of the key drivers for office leasing, what's been there last say, a couple of years and what we are seeing in the years to come is the growth in Global Captives. Just to repeat some of the numbers, last year, close to 100 new captives were set up in FY '23. And as per reports, close to 115 to 120 new captives are being set up in our country on a yearly basis. This, we believe, will continue to drive the office leasing demand in the short to medium term. Having said that, what is to be taken note of is, while these captives are growing, a lot of these are also jobs, which are getting migrated from different countries to India. So while that's happening, they're also conscious of the fact that they do not want to enter into large lease contracts immediately. So that's the reason why, as I did mention, you are seeing small lease take-ups of 40,000 to 50,000 square feet. But with a clear visibility of what we see coming in the next 6 to 9 months. Just to give some examples, one of our tenants in Manyata Techpark, Target, started with a small base, and over the years, has grown to close to 10,000 employees and close to 7 lakh square feet in the Park. Another example is the way JPMorgan has grown, again, a global capital, they took 1.1 million square feet, and they have committed to another 550,000 square feet more. We believe from a captive point of view, over the next 6, 9 months, we should see a bigger trend emerging. The second part of the story is around tech, IT, ITS. You would have seen that, that industry is facing a bit of pressure in terms of their margin and overall business growth. That somewhere gets reflected in our business as well because they have not been growing with us. Having said that, what I would say trends to watch out for is these businesses have grown their employee head count significantly over the last 2, 3 years, but they've not been able to get their people back to office. The return to office still ranges from, say, 25% to 35%. It has been, I would say, more of an employee market in the past, but we see those trends changing a bit to employer market. So I would just say that this is something to watch out for because these industries have also grown in terms of the headcount. We will need to be a little bit more patient with them to see how they evolve in terms of their space take up in the years to come.

Thank you, the next question is from unitholder Mr. Venkatesh R. The question is, "How does your REIT compare against the other listed Indian REITs?"

Thank you. So let me start and I think you can chip in. The way I would like to address this is instead of necessarily comparing, I would say each of the REITs have their own strengths and uniqueness, but let me speak about Embassy REIT. We are pretty proud to say that we have probably the 3 best Parks in India, which is Embassy Manyata, Embassy TechVillage and Embassy GolfLinks. All the 3 parks are located in the best market in India, which is Bangalore. We have some of the best occupiers, close to 50% of our tenants are Fortune 500 companies. We have a track record of distributing for the last 4 years, close to $1 billion, as we did mention. We have a very wide unitholder base, it comprises of foreign capital, domestic capital and more importantly, the retail unitholder base, which has grown significantly from around 4,000 4 years back to close to 85,000. And lastly, as I did mention, we are well placed in terms of our growth levers, the organic as well as inorganic, which I mentioned. Ritwik, anything to add on?

Yes. I'll just add one point. I think this entire REIT sector now has 4 REITs probably around 85 million square feet of office assets and you've obviously got the new retail REIT that listed last month. And it's a great accomplishment for India, for the Indian capital markets. But I think it still goes back to one thing. None of this would be possible without Embassy REIT having listed first. We listed first because we have the best assets in India's best office market. And that really paved the way through a pandemic to allow two other office REITs to list at a time an office was not struggling worldwide. And then obviously, the performance of all these structures together paved the way for the new retail REIT to REIT -- so I think -- to list -- so I think from our perspective, while it's not sort of a competitive environment, it's very important for all the structures to coexist, to allow unitholders like yourselves to have choices, to understand sort of how the structure works across different markets gives you the ability to invest based on your asset allocation, what your return profile is. And you can't just have one REIT in a market. And -- but I think what's important is that we, as a management team, focus on the quality. We have always prided ourselves on being sort of the largest REIT in the best possible markets. And we always look to differentiate ourselves from other competitors, from other products as well and driving value to yourselves as unitholders. But it's very important for us to make sure that we give you the option to invest in a quality product and give our tenants the options to also invest in quality products and quality markets.

The next question is from unitholder Mr. [ Malav Sherdalal ]. The question is, "When will REIT instruments be eligible for availing loans from banks or NBFCs?"

Thank you, can I please request Abhishek to take this question?

Yes. So this topic is actually very important for us also. We have been meeting the regulator and doing a lot of policy advocacy. Currently, we see that banks are not allowed to lend at the REIT level, but they continue to lend at the SPV levels, which are companies. So we continue to do the policy advocacy and see when this can be possible.

And if I can just add on. We are in constant touch with Reserve Bank and while they've allowed it for invest, they do have some concerns on why they don't want to allow it to REIT, but we've been constantly speaking and addressing to them. But what is still good for us is banks can lend to the SPV level. So it's not that we don't have the access to banks at all.

The next question is from Mr. [ Chandramouli Jagannadhan ], the question is, "What is the expected NDCF growth with occupancy going up? Any update about the Chennai ROFO acquisition?

Can I please request Ritwik to take this?

Yes. I think just on giving guidance on growth right now, I think we take that in totality. At this point in time, clearly, given where sort of the office market is globally, we refrain -- we've refrained from actually giving guidance simply because there have been a couple of global factors that have affected sort of the overall sort of sector as a whole. But I think what we try to do is that every time we come into earnings, which again is coming up, we are -- we take sort of the guidance aspect and giving you as best view of the business as possible. So at the time, we actually come into earnings. We will have sort of a further update on that entire sort of process of how -- what DPU looks like, what growth is. But rest assured, from our perspective, the DPU is something growing distribution is first and foremost in our minds. Over the last few years, unfortunately, that is something that while we have distributed, there are clearly macro factors that have impacted it. But going forward, we always sort of make sure that we are constantly trying to optimize the business, to run the business, to put distributions in unitholders' hands and grow those distributions.

On Chennai ROFO?

There was a Chennai --

On Chennai, again, I think we will have sort of -- we are always evaluating sort of the ROFO and the entire sort of acquisition process. The capital markets for the REIT and overall has not been conducive to funding an acquisition. The way that acquisitions work, as I also pointed out, is when you buy an asset, we must fund it from external sources, either using equity or debt. I think at the right time, given where market conditions have been globally, I think it has been very difficult to sit and raise capital at attractive terms so -- and managing our cost of capital so that we can actually distribute and provide growth is obviously our #1 priority. So at this point in time, that has not been something that we've been able to do with the Chennai asset. Over time, as we evaluate, we will have further updates for you.

Thank you, Ritwik.

The next question is from [ Manjunath ]. The question is, "Are we looking to expand our hospitals and hotel management business?"

So thank you for your question. In relation to -- let me take the hotels part first. We already own 4 hotels close to 1,000 rooms across Bangalore. And we continue to construct close to 520 rooms in our Embassy TechVillage. As we did mention, hotels are a very significant amenity to our Parks. This gives a lot of value to our occupiers and helps us in leasing to better occupiers. So we will stay invested in hotels, but more as an amenity in our existing Parks. In relation to hospitality, sir, or specifically hospitals, our point of view is that is a completely different set of business requiring different skill sets. We are more into, as we mentioned, commercial real estate and the other amenities. So as of today, we are not necessarily looking at growing into hospitals. And lastly, just a small point on this Annual General Meeting as Annual Meeting, Vinita, you can address, but I think it's wording, which is used more in the REIT regulations, calling Annual Meeting than Annual General Meeting.

Thank you, Aravind. The next question is from unitholder, [ Satyender Singh ]. The question is, "Market seems to be concerned about commitment of sponsors to the REIT. A clearer communication on this would greatly help."

Thank you, can I just request [ Jitu ] and Tuhin to take this question?

So firstly, I'd like to address that the Embassy Group and the Virwani Family are fully committed to the REIT. And there is no -- I mean, change in our stand. As far as the shareholding or what is the question is that -- commitment. So like I said, the commitment is there. I guess, like Ritwik mentioned and Aravind mentioned, the market has not been very conducive for Embassy to put some more assets right now with the stock price and the way the market is looking at it. So I think it's in the interest of the REIT that we've constrained from putting any more further embassy assets into the REIT at this moment, which will happen over the time. And as far as shareholding is concerned, yes, it's true that we did reduce our debt at Embassy level by selling some of the REIT units, but that's to make a stronger Embassy and a stronger sponsor for the future. And it was [indiscernible] with that. So going ahead, now we would be, in fact, looking to increase our equity in the stake as time and opportunity comes by. I hope that answers your question.