Embassy Office Park REIT, the country's first Real Estate Investment Trust (REIT) on May 19, announced distribution of Rs 531.67 crore for its unit holders for the quarter ended March.

"Declared distribution of Rs 5,316.77 million/Rs 6.89 per unit for the quarter ended March 31, 2020," the company said in a statement.

The distribution comprises of Rs 2.49 per unit in the form of interest, less taxes if any, Rs 4.17 per unit in the form of proceeds of Asset SPV loan amortisation and Rs 0.23 per unit in the form of dividend, it added.

"Together with distributions already made during the three previous quarters, the distributions for full year ended March 31, 2020 total to Rs 18,820.92 million/Rs 24.39 per unit," it added.

The REIT was launched last year by realty firm Embassy group and global investment firm Blackstone to raise nearly Rs 5,000 crore. The REIT is listed on the stock exchange.

The distribution for the fourth quarter represents 100 per cent payout ratio and full year cumulative distribution represents 99.8 per cent payout ratio.

"Embassy REIT is focused on delivering quarterly distribution to unit holders, with minimum 90 per cent of Net Distributable Cash Flows (NDCF) required to be distributed," it said in a presentation.

The record date for the 4Q FY2020 distribution is May 28, 2020 and the distribution will be paid on or before June 3, 2020.

The revenue from operations for the fourth quarter of FY20 grew year-on-year by 8 per cent to Rs 543.4 crore. For the full last fiscal, it rose 14 per cent to Rs 2,144.9 crore. Net operating income for the fourth quarter grew by 10 per cent to Rs 461.8 crore. For the full 2019-20 fiscal, it grew by 15 per cent to Rs 1,817 crore.

Since Embassy REIT listed in April 2019, the company has delivered a total return of 25 per cent. On operational front, the REIT achieved an overall occupancy of 92.8 per cent on 26.2 million sq ft operating office portfolio. The company leased 2.4 million square feet during the last fiscal

Embassy Office Park CEO Michael Holland said that “Since Embassy REIT listed in April 2019, we have delivered a total return of 25%. Our fourth quarter income and distribution payout once again illustrate the stability and resilience of Embassy REIT delivering cash flows that are backed by the covenants of our 160+ largely multinational occupier base.”

The focus of the company for the last two months  has been on business continuity for  tenants and "we are now moving towards opening up of different parks and getting things going. We have paused looking at acquisition but we will return to look at them in due course once we get out of the storm," Holland told reporters.

The company is  having ongoing discussions with various lenders and banks to continue to finance some on campus developments or extensions of existing parks.

"We will undertake selective raise of monies from lenders for these ongoing development projects. In the context of new developments, we will do capital raise in the form of construction financing from banks," added Khdloya.

Embassy REIT comprises 26 million square feet of completed and operational commercial properties across India. With approximately 7.1 million square feet of on-campus development in the pipeline, the total portfolio spans 33.3 million square feet across seven Grade A office parks and four city-center office buildings in Bengaluru, Mumbai, Pune and the National Capital Region (NCR).

Union housing and urban affairs minister Hardeep Puri on Saturday said that reverse migration of labourers and a breakdown of construction material supply chains have adversely affected real estate projects and that they will take quite some time to restart in full gear across the country.

“As we have already seen stalling of a lot of projects in Delhi- NCR [National Capital Region] due to various reasons, leading to a lot of litigations, etc, it is vital to take remedial measures now to ensure that Covid-19 does not lead to a complete breakdown of the real estate sector. Such a situation will result in many stalled projects resulting in a huge losses for all the stakeholders especially homebuyers,” he while speaking at a webinar on the 3rd anniversary of the Real Estate Regulatory Authority (RERA).

Union finance minister Nirmala Sitharaman on Wednesday offered some relief to real estate developers as she asked states and union territories to extend the registration and completion dates by six months of all projects registered under RERA.

Puri said the principal objectives of authority is to help restore the trust between the buyer and the seller by effective implementation of the law. “This would not only help ease the burden of inventory pile-up in the sector, but also provide the necessary financial cushion to the developers to complete pending projects,” he said.

During the initial period of the Covid-19 lockdown imposed in late March to check the pandemic spread, construction activities were barred. After reviewing the situation, the government allowed construction activities from April 20 onward, said Puri.

He referred to Sitharaman’s announcement on Friday for affordable rental housing for migrant labourers and the urban poor. He said the scheme under which government-funded houses in cities will be converted into Affordable Rental Housing Complexes will be pursued under the public-private partnership model.

“This single step will to a great extent alleviate the problem of providing temporary housing to migrant people who are stranded in several urban areas. The Credit Link Subsidy Scheme... under Pradhan Mantri Awas Yojana - Urban... for the middle-income group has been extended to 31st March 2021 which is likely to benefit 2.5 lakh, middle-class people. He added that these measures are aimed at giving a fillip to the housing sector as part of the Atmanirbhar Bharat Abhiyan, announced by the Prime Minister,” he added.

With an eye on the urban poor, migrants and mid-income families, finance minister Nirmala Sitharaman announced several incentives to provide low-cost rented accommodation and interest subsidy on home loans.

The government on Thursday extended till March 2021 the benefit of interest subsidy on home loans under the Credit Linked Subsidy Scheme (CLSS) for households that fall in the middle-income group with an annual income of between Rs 6 lakh and Rs 18 lakh. The scheme, introduced in 2017, ended on 31 March.

Sitharaman said the Union government will launch an affordable rental housing scheme under the Pradhan Mantri Awas Yojana (PMAY) to help migrants and urban poor find housing. The Centre will convert government-funded housing into affordable rental housing complexes under a public-private partnership (PPP), she said.

The incentives came a day after the FM granted a six-month extension of the registration and completion date for all projects registered under Real Estate Regulatory Authority (RERA), offering some relief for distressed developers. This will apply to all real estate projects expiring on or after 25 March, 2020, and individual applications are not needed.

Sitharaman said the CLSS scheme has benefited 330,000 middle-class families and is expected to benefit another 250,000 in FY21.

According to government estimates, the subsidy scheme will give a Rs 70,000 crore boost to the housing sector. Besides creating jobs, it will also stimulate demand for steel, cement, transport and other construction material.

CLSS, which comes under PMAY for middle-income group households, was unveiled in 2016.

Sitharaman said manufacturing units, industries and institutions will be given incentives to develop affordable housing complexes on their private land. Central government agencies and state government organizations will also be encouraged to develop housing complexes.

Providing relief to thousands of homebuyers in Chennai, the registration department in Tamil Nadu has clarified that while registering an apartment, only the undivided share of the property will attract stamp duty and registration charges and not the built-up area.

The move comes in the wake of some sub-registrar offices demanding to register the built-up area along with the UDS of land, causing great hardship, mental agony besides making the allottees to incur huge and unnecessary expenses for the registration of built up area which is not approved by law.

With 4 percent registration fees and 7 percent stamp duty, Tamil Nadu charges one of the highest registration fees and stamp duties among Indian states. It is important to register the construction agreement along with the sale deed of undivided share in the state.

The inspector general of registration on May 11 issued an order that clarified that “If a document is presented for registration of (first) sale of undivided share of land only, the registering officers are hereby instructed not to demand or insist for inclusion of building in the subject matter of sale document for the sole reason that completion certificate has been issued by the competent authority to the project.”

However, it is also instructed that there is no impediment to register separate construction agreement as envisaged in the circular dated Oct 28, 2013.

A letter written by chief secretary to the state government to the inspector general of registration on March 18 had said that in respect of development of a large building or apartment complex, the proposed allottee, who envisages to acquire the apartment enters into an agreement of sale of UDS of land with the holder (vendor) of the land and a separate construction agreement with the builder/developer contractor for construction of apartment. Both these agreements are registered as per relevant provisions of law.

“For the building where the completion certificate has been obtained, the sub registrars are insisting that the conveyance deed or the sale deed for UDS in land should also include the sale of built up area. The completion certificate has nothing to do with the title of the land. It is settled law that what is conveyed only should be taken into account for registration purpose by citing the judgments delivered in the division bench of Madras High Court,” the letter said and sought a clarification.

The construction agreement is being registered under the provisions of the law with a stamp and registration fee of 2 percent on the agreement value, it had.

Suresh Krishn, the president-elect of the Confederation of Real Estate Developers' Association of India (Credai), told Moneycontrol that it was only a clarification. Tamil Nadu follows a dual agreement system as both land and buildings are registered separately with the concessionaire agreement.

“It has now been clarified that even for the first sale of any apartment, the undivided share and the apartment can be registered separately,” he said, adding this has put to rest all confusion on the matter.

“The buyer now gets to pay registration charges and stamp duty basis the undivided share and not the super built-up area. If the UDS is 500 sq ft, the buyer would have to pay registration fees basis that area and not 700 sq ft which is the super built-up area. Through this clarification the government has reinstated its earlier order,” he said.

As many as 1,500 industries, which employ around 70,000 people, and 100 construction projects that will need at least 8,000 labourers have been allowed to resume work in Noida. But 1,800 applications have been turned down as they didn’t meet COVID-19 norms, Ritu Maheshwari, the chief executive officer of Noida Authority, tells Moneycontrol’s Vandana Ramnani in an interview.

Edited excerpts:

Q) How many industries have been given the go-ahead to resume work?

The process is ongoing and as per the government’s guidelines, we are regularly getting applications and processing them. These include both industries and construction projects. As many as 1,500 industries in the Noida Authority area have been granted permissions to resume work. These employ a workforce of over 70,000. There are around 1,100 industries by Noida Authority (employing 62,000 labourers) and 400 industries through the MSME department.

Q) Have some construction projects also been granted permission to restart work?

Yes, 100 construction projects, both government and private, employing close to 8,000 to 9,000 labourers have been given the go-ahead to resume work. These include 60 group housing and commercial projects and around 32 to 40 Noida Authority projects.

Q) When is work likely to resume?

Permissions are being issued to industries and construction firms. They are allowed to start operations immediately after receiving permissions.

Q) Have some applications been rejected by Noida Authority and why?

So far, 1,800 applications have been rejected. There are two reasons behind the decision. The first condition is that industries cannot be run in containment areas. That has been done at the level of incident commander which is the SDM (sub-divisional magistrate). The second criterion is that there are only few categories of industries that are allowed as per the government orders in the red zone districts in Noida. Those industries not in the permissible category have also been rejected.

In COVID times, we can’t check each and every industry and there is no such team to do so. As many as 6,000 applications have been received and everybody who is getting rejected is applying multiple times. It is an unending process and the industry department cannot check 1,500-odd industries.

The focus is on self-discipline currently. But once all permissions have been granted, we may look at the issue of compliance. Our first priority is to get the industries restarted. The industry department is currently dealing with only granting permissions and rejections. Once the process is streamlined, the second stage could involve randomly checking a few of the industries and ensuring that COVID-19 norms that include social distancing are being maintained.

A survey has showed that around 16 percent landlords waived rent for up to two months, while another 41 percent gave tenants extension on rental payments in view of a financial crunch during the coronavirus lockdown.

The survey, conducted by property classified 99acres.com which is owned by Info Edge India Ltd, polled 49,600 house owners and brokers who have listed properties for rent or sale. The survey's motive was to assess the impact of the coronavirus pandemic on the property market.

"Most of the landlords are extending a helping hand to the tenants - 44 percent have not increased the rent, 41 percent are giving more time to their tenants to pay and 16 percent have waived the rent for up to two months," the portal, which has over 10 lakh residential and commercial properties listed by owners and brokers, said in a statement.

Despite the sluggish market, 76 percent owners are still looking for renting out their property, whereas 24 percent have postponed the search for tenants.

Majority of the owners (54 percent), who want to rent out their property, expect the rental prices to go down, while only 11 percent are anticipating a rise, the survey said.

Around 80 percent owners, who want to sell their properties, will continue to look for prospective buyers, while 20 percent have postponed their selling plans. As much as 45 percent owners expect the prices to fall, while only 10 percent are anticipating a rise.

Regarding COVID-19's impact on property brokers, the survey found out that 57 percent brokers expect demand to go down post coronavirus, while 29 percent are uncertain about future changes.

According to the survey, there will be increased use of digital tools by developers and brokers to market their products.

The mass exodus of migrant labourers to their respective native places by special trains arranged by the Telangana government has cast a shadow on the real estate sector in the state, particularly for Rs 45,000 crore worth of projects that have been in the works in and around the state capital, Hyderabad.

Over five lakh migrant workers have been stranded in Telangana due to nationwide lockdown restrictions, which were initially enforced for 21 days from March 25 and then further extended for another 19 days till May 3 to contain the spread of coronavirus disease (Covid-19) disease.

Majority of the migrant workers to Telangana are construction labourers – both skilled and unskilled -- who are engaged in various real estate projects and construction activities.

These workers are returning to their native places, particularly to Bihar, Jharkhand, Uttar Pradesh (UP), Rajasthan, Madhya Pradesh (MP) and Chhattisgarh, in batches. While the first batch of 1,200 construction labourers left for their native places in Jharkhand from Hyderabad last Friday, the Telangana government has arranged to ferry the rest of them by arranging special trains.

On Tuesday, 12 special trains, carrying over 15,000 migrant labourers, left for their native places. On Wednesday morning, another three trains, carrying over 4,000 labourers, departed from Hyderabad.

“We had made arrangements for running 40 special trains daily for one week for these stranded migrant labourers. But some of the states, where these labourers belong to, requested us to go slow, as they need to make adequate arrangements for transporting them to their native villages. Besides, they need to be mandatorily quarantined for two weeks,” Telangana chief minister K Chandrasekhar Rao told media persons on Tuesday night.

Rao said of the five lakh-odd stranded migrant workers in Telangana, over three lakhs are involved in the real estate sector and other construction activities. “The construction activities have just started. I had suggested that they stay back in Telangana and we’d take care of them. But, they’re free to return to their native places, as they had wished,” he said.

The real estate industry in Hyderabad, which saw a boom over the last year, is feeling the heat due to the return of the migrant labourers to their respective native places. “Over 80% of the workforce in the real estate sector comprises migrant workers, particularly from Bihar, Jharkhand, UP, Rajasthan and MP. This en masse exodus of the workers will hamper the projects, especially those that are in the final stages of construction and more so, as the constriction activities have just resumed after weeks of lockdown restrictions,” said V Rajasekhar Reddy, general secretary of Confederation of Real Estate Developers’ Associations of India (CREDAI), Telangana chapter.

Reddy blamed the Centre for its hasty move in allowing migrant labourers to return to their native places amid lockdown restrictions that are still in place in some parts of the country. “It’s a risky business for everybody. We don’t know whether and when they would come back to resume work. Even if they come back after a month or two, there is every possibility that they could have contracted SARS-CoV-2 that causes Covid-19 in their native places,” he said.

Telangana Real Estate Developers Association (TREDA), estimated that projects, both residential and commercial, measuring around 300 million square feet, are being held up in and around Hyderabad.

Office space demand fell 3 percent during the first quarter of this calendar year but rents increased by up to 8 percent across five major cities -- Bengaluru, Hyderabad, Chennai, Mumbai and Kolkata, according to US-based property consultant Vestian.

The consultant expects decline in demand for office space in the short-to-medium term. The growth in rental values would also slow due to the coronavirus pandemic.

According to the data, the weighted average rental values of the five cities moved moderately, on a year-on-year basis, in the range of 0-8 percent.

The monthly average rent rose by 8 percent in both Bengaluru and Hyderabad at Rs 75.5 and Rs 62 per sq ft, respectively.

Chennai saw a 5 percent rise in rental value at Rs 60 per sq ft a month, while Mumbai witnessed a modest rise of 2 percent at Rs 125 per sq ft.

The average rental value of office space in Kolkata remained stable at Rs 48 per sq ft per month.

"The five major cities of Bengaluru, Mumbai, Chennai, Hyderabad and Kolkata saw absorption of approximately 9.18 million sq ft office space during Q1 2020, depicting a decline of just 3 percent over the absorption observed in the corresponding period in the previous year," Vestian said in a report.

Majority of the absorption was observed during the first two months of the first quarter of 2020, before the COVID-19 outbreak, the consultant said, adding that the lockdown led to the deferment of several large-scale leasing decisions.

Office space leasing dropped by 11 percent in Bengaluru to 3.53 million sq ft, while Kolkata saw a drop of 57 percent to 0.15 million sq ft and Hyderabad a dip of 25 percent to 1.64 million sq ft.

However, demand increased in Mumbai by 31 percent to 2.39 million sq ft. Leasing of office space increased in Chennai by 23 percent to 1.47 million sq ft.

The new office space completions for the first quarter of 2020 was recorded at 7.5 million sq ft in the five cities, a drop of 22 percent as compared to the year-ago period.

"Supply was impacted by the spread of the COVID-19 pandemic as construction had to be halted owing to lockdowns in the country and the migration of labour force to their hometowns," the report said.

Shrinivas Rao, chief executive officer (Asia-Pacific), Vestian, said, "The first quarter results were not as dismal on account of the traction witnessed during the first two months of the year. The ensuing lockdown to contain the COVID-19 outbreak has resulted in large-scale repercussions across the industry, the consequences of which will be witnessed in the subsequent 3-4 quarters."

Vestian provides consultancy services in commercial, residential, industrial, retail and hospitality sectors. Headquartered at Chicago, Vestian has offices across the US, India, China, Sri Lanka and the Middle East.

In March, 2016, Parliament voted into law the Real Estate (Regulation and Development) Act—RERA—a legislation that held out the promise of placing consumers at the centre of a new rules-based framework for India’s property market. It came into effect on May 1, 2017.

The Act was necessitated by the growing misery of tens of thousands of harried homebuyers.

Unsuspecting individual customers often complained about getting the short end of the stick, as many builders, some dodgy and some reputed, exploited regulatory gaps by not delivering promised apartments on time or reneging on size and quality, or sometimes, simply vanishing after collecting funds.

RERA’s primary purpose, apart from defining rules, was to build trust among buyers and builders in a market where opaque deals thriving in grey payment systems operating outside the legitimate financial system had become commonplace.

“It was on this day in 2017 that RERA came into effect to bring transparency and accountability in the functioning of real estate sector and safeguarding the interests of homebuyers,” housing and urban affairs minister Hardeep Puri tweeted on May 1 on the occasion of RERA Day.

As many as 51,850 real estate projects and 40,481 real estate agents have registered under RERA across the country. Almost 46,152 complaints have been disposed of by the real estate regulatory authorities across the country, he tweeted.

With COVID-19 leading to a lockdown, which has now been extended for another two weeks, and barely any construction activity on ground, the Centre announced earlier this week that it would soon be issuing an advisory to all state governments and regulators to invoke the force majeure provision due to the pandemic.

This is expected to bring relief to builders and buyers who would get an extension of timelines for project completion and be exempt from paying penalties. Buyers may not have to pay penalty for delayed payments to builders as the period may be treated as a zero period.

Why was RERA set up?

Customers would often find that the actual size of an apartment would be about 30 percent smaller than what was originally promised. The reason: “super built up area”, an arbitrary concept that builders used to charge customers for shared spaces such as common passage area, stairs and other areas.

Fund diversion had become a rampant practice in the realty sector. Many builders, large and small, would collect money from consumers for apartments, a part of which would then be channeled to buy land for another project. The net effect: never-ending project delays. This was going on without any checks and balances, and builders had developed the `consumers- be-damned’ attitude. For the banking sector too lending to realty projects became a risky proposition, as project delays resulted in mounting loan defaults.

RERA was brought in to address these. Three years later, experts reckon, the results, at best, are mixed.

RERA rules

Under RERA, builders are required to disclose details of “carpet area”, which is the actual apartment’s size, design, structure, layout, time of completion and other project specifications well in advance.

The rules make it mandatory for any project exceeding 500 square metres with eight or more apartments to register with a state’s real estate regulatory authority (RERA) before launching or even advertising a housing scheme.

Registration of real estate agents or brokers have also been made mandatory with clear responsibilities and functions. The punitive provisions include de-registration of the project. If the builder defaults on promises made at the time of the launch, the buyer can approach consumer fora in case of disputes with real estate developers. The penal measures were aimed at serving as a deterrent for builders to short change customers and ensure timely project delivery.

It is also now mandatory for builders to park 70 percent of funds collected from buyers in an escrow account, implying that these funds can only be withdrawn for the specific project for which these were collected.

Under the central law, each state was required to set up its own RERA that can draw upon central rules applicable in union territories.

Maharashtra was the first off the block with MahaRera in May 2017, with other states soon following suit with their own institutions.

RERA more than a registering body

RERA’s role is not limited to just as a registering agency for realty projects, but was designed to evolve into a body empowered to even complete stuck projects or even allow buyers’ groups to take over unfinished projects.

Three years later, experts say, RERA’s record on this front remains below par. The RERA Act’s Section 8 empowers the authority, buyers’ association or an appropriate government organisation to execute unfinished projects, but arranging funds and buyers’ cooperation remain a critical challenge.

“While it (UP RERA) certainly cannot complete projects by itself, it can find appropriate solutions by approaching competent authorities or even appoint a project management consultant to finish these,” said Kumar Mihir, lawyer, representing Amrapali homebuyers.

“One significant change in three years since RERA implementation is that credibility has been restored; fly-by-night agents and operators can no longer dupe customers with false promises and fraudulent measures. It has resulted in increase in fair transactions in the real estate sector, better accountability and transparency, and a fundamental upward shift in consumers’ sentiment. And that is beneficial for the real estate sector at large,” said Ram Raheja, director, S Raheja Realty.

Union Minister Nitin Gadkari on Wednesday exhorted real estate players to sell unsold housing units even at no-profit-no-loss to boost their liquidity condition and save interest cost on loans.

The outbreak of coronavirus disease has impacted the real estate sector, which was already reeling from the demand slowdown, the road, transport and highways minister said while addressing a webinar organised by realtors’ body NAREDCO.

Promising his full support, Gadkari, who also holds the MSME portfolio, advised builders to send their representatives to ministries of housing and finance as well as the Prime Minister’s Office (PMO) to suggest ways to deal with the present crisis.

To tide over the crisis caused by Covid-19 and create housing demand, the senior minister offered a slew of suggestions to builders, ranging from business expansion in rural areas to diversification in road construction to setting up of their own housing finance companies.

Citing an example from the automobile industry where many manufacturers are having their own finance companies, Gadkari said real estate companies could consider establishing their own housing finance companies to give loans to customers at lower rates and not be fully dependent on banks.

He said there is a need to strengthen non-banking finance companies (NBFCs) through equity infusion from the government and private players.

The NBFCs should tap funds from international markets where interest rates are lower.

The minister pitched for lower interest rates on home loans with a longer tenure so that the customers’ equated monthly installments (EMIs) remain less.

On builders sitting on huge unsold housing inventories, Gadkari advised builders, “Don’t be greedy. You will not get a premium price. Whatever price you are getting, sell your properties to boost liquidity and move forward.” He said there are many builders in Mumbai who are not clearing their unsold stocks and rather they are waiting for prices to increase to Rs 35,000-40,000 per sq ft.

“They are committing mistakes. Interest cost to banks, financial institutions and private lenders are increasing,” the minister said.

The developers should negotiate prices with prospective customers and even sell at “no-profit-no-loss” to avoid huge interest costs, Gadkari said.

Stating that there are huge opportunities in his ministries, he asked developers to diversify into logistic parks and road construction where precast technologies were being used.

Gadkari said his ministry is developing bus depots, petrol pumps, hotels, restaurants and rail over-bridges along the highways where real estate companies could participate.

“Now, with this outbreak of coronavirus, the work has come to a grinding halt,” he said and sought a stimulus package from the government to deal with this crisis.