Embassy Office Parks REIT net operating revenue grows 4% YoY to Rs 889 crore in Q2

Embassy Office Parks REIT, in its recent regulatory filing on October 26, reported significant developments and achievements in the second quarter of fiscal year 2024 (Q2 FY2024). During this period, the REIT successfully leased a substantial 2 million square feet (msf) of office space across 25 deals, marking a noteworthy increase in operational revenue. The total operational revenue amounted to Rs 889 crore, indicating a growth of 4 percent compared to the previous period.
A closer look at the leasing activities reveals the diverse nature of the deals. Out of the 2 msf of leased space, 1.2 msf came from entirely new leases, highlighting the company's ability to attract new tenants. Furthermore, Embassy Office Parks REIT inked seven fresh deals, each covering over 1 lakh square feet. This signifies a resurgence in large deal closures, underlining the REIT's strong position in the market.
Two major Indian cities, Bengaluru and Mumbai, played pivotal roles in driving the demand for office spaces during this quarter. These cities collectively contributed to a staggering 90 percent of the total leasing activity. Such demand underscores the appeal of these bustling business hubs for companies seeking prime office locations. Moreover, a notable achievement was the occupancy levels across 50 percent of the REIT's properties, particularly Embassy 247 in Mumbai, where every unit is fully occupied. Global Captive Centres (GCCs) played a vital role in the leasing landscape, accounting for over 70 percent of the total leasing activity.
In terms of infrastructure and development, the second quarter witnessed the completion and delivery of a new 1 msf office tower in Bengaluru. This addition aligns with Embassy REIT's strategic focus on expanding and enhancing its real estate portfolio, particularly in Bengaluru. Impressively, approximately 90 percent of the total development portfolio falls within this city. The outlook is promising, with expectations of achieving a return on cost spending of around 20 percent, reflecting the company's commitment to optimizing returns for its stakeholders.
The hospitality segment of Embassy Office Parks REIT remained robust during Q2 FY2024. The quarter reported a 52 percent occupancy rate, coupled with a remarkable 24 percent Year-over-Year (YoY) growth in Average Daily Rate (ADR). This demonstrates the REIT's ability to effectively manage and maintain a strong presence in the hospitality sector. The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) for this segment stood at Rs 37 crores, underlining the financial stability and performance of the hospitality business.
In a broader perspective, the first half of FY2024 has seen the successful leasing of 3.1 msf of office space, indicating a strong momentum in Embassy REIT's leasing activities. Looking ahead, the full-year outlook remains promising, with a substantial leasing pipeline of 2.5 msf. This optimistic forecast has led to a revision of the leasing guidance for FY2024, which now stands at 6.5 msf, up from the initial estimate of 6 msf.

Next (BNY Mellon secures 162,000 Sq Ft office space in Kalyani Nagar, Pune)

Embassy Office Parks REIT net operating revenue grows 4% YoY to Rs 889 crore in Q2

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