Embassy Office Parks REIT has already met its full-year’s leasing target of 6.5 million square feet in just ninemonths as it transacted a record 3.5 msf in the December quarter.
The lease deals numbering 22, included 1.1 msf of new leases and pre-lease deals of 2.2 msf in Bengaluru, with global capability centres accounting for 78 per cent of the total leases. The pre-lease deals included a major Australian bank, an American retail chain and a US-based tech company.
In the third quarter of FY24, Embassy REIT’s net operating income and revenue rose 8 per cent each to ₹760 crore and ₹936.4 crore respectively, driven by revenue from new leases, higher re-leasing spreads and contracted rent escalations.
The REIT said that the higher rentals were partially offset by exits and costs associated with ramp up of the hotels portfolio. Half of its total portfolio had over 90 per cent occupancy, while the hotels saw a 55 per cent occupancy. Portfolio-wide occupacy was at 84 per cent.
The operating profit at ₹761.2 crore was 9 per cent higher and the EBITDA margin saw 100 bps rise to 81 per cent. The REIT distributed ₹5.2 per unit, and refinanced ₹2,600 crore at an average of 8.25 per cent coupon.
“Its been a remarkable quarter for Embassy REIT. As more and more multinationals set up their centres in India, their need for premium office spaces to house their talent will grow exponentially in the coming years,” said Chief Executive Officer Aravind Maiya.
He added that India continued to be a thriving business hub for GCCs.
The REIT has a development pipeline of 6.9 msf of which 90 per cent is in Bengaluru at yields of over 20 per cent. It said it was on track to achieve the full year net operating income target of ₹2,900-3,100 crore and distribution of ₹20.5-22 per unit.
On the large deals transacted in the quarter, the REIT said that these were landmark deals ‘reflecting the strength of our high-quality business parks which remain the preferred choice for the world’s best companies looking to expand their India footprint and seeking customized real estate solutions.’
With the recent exit of sponsor Blackstone, the total public unitholding of the REIT has increased to 92 per cent from 30 per cent at the time of its IPO in 2019.