In a recent regulatory filing on October 26, Embassy Office Parks REIT disclosed its performance for Q2 FY2024. The REIT, a prominent player in the commercial real estate sector, demonstrated a noteworthy 4% year-over-year increase in net operating revenue, amounting to Rs 889 crore.
During the second quarter, the REIT achieved significant milestones by leasing 2 million square feet (msf) of office space across 25 deals. This leasing activity encompassed 1.2 msf of new leases and seven new agreements, each exceeding 1 lakh square feet, signifying a resurgence in larger deal closures.
The demand for office space was primarily led by Bengaluru and Mumbai, together contributing a substantial 90% of the total leasing activities in the quarter. Furthermore, the Embassy 247 property in Mumbai achieved full occupancy, while Global Captive Centres (GCCs) played a pivotal role, accounting for over 70% of the total leasing activity.
In this period, Embassy Office Parks REIT added a 1 msf new office tower in Bengaluru to its impressive portfolio. Their total development portfolio, which stands at 7.1 msf, witnessed substantial growth, with nearly 90% of it located in Bengaluru. Notably, the REIT anticipates a robust return on cost spending of approximately 20% from these investments.
The hospitality segment also demonstrated resilience during the quarter, with a commendable 52% occupancy rate and a 24% year-over-year growth in Average Daily Rate (ADR). The EBITDA for this segment stood at Rs 37 crore, underscoring its healthy performance.
Embassy Office Parks REIT’s CEO, Aravind Maiya, expressed optimism about the future, stating, “For the first half of FY2024, we have successfully leased 3.1 msf of office space, and the outlook for the full year appears promising. Our leasing pipeline for the upcoming year encompasses 2.5 msf. We are also delighted to strengthen our long-standing partnership with one of our largest clients at Embassy GolfLinks. This, combined with the strong leasing momentum, has led us to revise our leasing guidance for FY2024 to 6.5 msf, up from the previously announced 6 msf.”