Embassy REIT Unveils Rs 3,800 Cr Investment Plan for Office Expansion

Embassy Office Parks REIT is gearing up for a substantial investment of Rs 3,800 crore over the next four years to finalize the construction of 61 lakh square feet of office space. As the demand for high-quality workspaces remains robust, the REIT, marking its position as India's first publicly listed Real Estate Investment Trust, aims to bolster its rental portfolio. Currently boasting 36.5 million square feet of completed office spaces across Bengaluru, Mumbai, Pune, and Delhi-NCR, the company is on a growth trajectory.

Aravind Maiya, CEO of Embassy REIT, expressed confidence in the company's escalating success. To cater to the escalating demand, particularly from global capability centers (GCCs) and domestic players, the company is actively constructing 6.1 million square feet of premium office space in Bengaluru. Additionally, an agreement has been inked to acquire Embassy Splendid TechZone (ESTZ), a Grade-A business park, from the sponsor Embassy Group, valuing at Rs 1,269 crore.

Detailing the financials, Maiya mentioned that the estimated pending construction cost for the 6.1 million square feet space stands at approximately Rs 3,800 crore. The investment will primarily be financed through debt. The construction timeline reveals a phased approach, with 2.5 million square feet set for completion this fiscal year, followed by 2.2 million, 0.4 million, and 1 million square feet in subsequent years.

Regarding the acquisition in Chennai, Maiya anticipates its completion by the end of the upcoming month. ESTZ, the business park in question, comprises both completed and under-construction areas, along with potential for future development. The REIT plans to raise up to Rs 2,500 crore to facilitate this acquisition, further bolstering its operational portfolio.

Reflecting on the performance of the previous fiscal year, Maiya shared positive insights. FY24 witnessed an impressive 8% year-on-year growth in revenue and net operating income (NOI), with the occupancy level stabilizing at 85%. Gross leasing hit an all-time high of 8.1 million square feet. Looking ahead, Maiya provided guidance for FY25, targeting a total leasing of 5.4 million square feet.

Recent financial reports depict a notable 13% increase in net operating income to Rs 765.6 crore, with Rs 494.8 crore distributed to unit holders in the fourth quarter of the last fiscal year. The REIT's net operating income for the entire fiscal year stood at Rs 2,981.9 crore, reflecting an 8% annual increase.

The Board of Directors declared a distribution of Rs 495 crore or Rs 5.22 per unit for Q4 FY24, bringing the cumulative distribution for the entire 2023-24 period to Rs 2,022 crore or Rs 21.33 per unit.

Beyond office spaces, Embassy REIT's portfolio includes operational business hotels, under-construction hotels, and a 100 MW solar park catering to renewable energy needs.

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