Embassy Office Parks REIt: Strong Leasing Performance and Growth in Distribution
Embassy Office Parks REIT, India’s first listed REIT and the largest office REIT in Asia by area, has released its results for the first quarter ending June 30, 2024. The company’s Chief Executive Officer, Aravind Maiya, expressed his delight at the excellent quarter of strong leasing activities across the portfolio.
Leasing Activities and Portfolio
In Q1 FY2025, Embassy REIT leased a total of 1.9 million square feet (msf) through 22 deals, which represented a significant 70% year-on-year increase. Most of the leasing activity, approximately 70%, was driven by Global Capability Centres (GCCs).
Occupancy rates for key cities were also mentioned in the report, with Bengaluru reporting approximately 90%, Mumbai maintaining a robust 99%, and Chennai achieving 95%. Three properties, Embassy GolfLinks in Bengaluru, Embassy 247 and FIFC in Mumbai, boasted 100% occupancy. Embassy Galaxy in Noida achieved 99% occupancy.
Financial Highlights
The company demonstrated steady revenue growth, with a 4% year-on-year increase in Revenue from Operations and Net Operating Income (NOI) for the commercial office segment. These results are in line with the company’s guidance for FY25 NOI.
Furthermore, Embassy REIT distributed Rs 531 crores, equivalent to Rs 5.60 per unit, for the first quarter of FY2025. This represents a 4% year-on-year increase and a 7% quarterly increase.
Expansion and Growth Strategies
Embassy REIT continues its focus on expansion and strengthening its portfolio. The company recently completed the acquisition of Embassy Splendid TechZone, a premium business park spanning approximately 5 msf, located in Chennai.
Additionally, Embassy REIT announced the launch of a redevelopment project at Embassy Manyata in Bengaluru. The project aims to increase the leasable area by three times, creating a potential 20% yield on cost.
The company boasts a strong development pipeline, totaling 8.6 msf, with a capital investment of approximately Rs 4,600 crores. Once stabilized, these projects are expected to contribute approximately Rs 1,000 crores to NOI.
Successful SEZ Strategy
Embassy REIT remains on track with its strategic goals regarding Special Economic Zones (SEZs). Since April 2023, the company has denotified 3.4 msf of SEZ area, with 65% of this space already leased. Additionally, 0.8 msf has been demarcated as non-processing areas.
In Summary
Embassy Office Parks REIT has delivered strong leasing performance, with a notable 70% year-on-year increase in leasing activity. The company’s financials are also promising, with a 4% year-on-year growth in Revenue from Operations and NOI for the commercial office segment. Embassy REIT continues to expand its portfolio and is focused on delivering value to its stakeholders, with a strong pipeline of developments and successful SEZ strategies.
