Embassy Reit to invest Rs 2,300 cr to develop 5.7 mn sq ft office space

Says it sees an opportunity in the drop in overall supply in Bengaluru due to liquidity crunch

Planning to kick-start its next phase of growth in India, Blackstone-backed Embassy Office Parks Reit announced an investment of Rs 2,300 crore for construction of 5.7 million sq ft of office space over the next three years. “As there’s supply side reduction in the overall market because of liquidity crunch, we see this as an opportunity in markets such as Bengaluru,” said Embassy REIT Deputy CEO and Chief Operating Officer Vikaash Khdloya.

The Reit on Friday reported a 15 per cent decline in consolidated net profit to Rs 214.8 crore for the third quarter ended December, as compared to Rs 253.5 crore in the year-ago period. Total income, however, rose to Rs 595.94 crore from Rs 568.12 crore, according to a regulatory filing.

While net operating income increased by a muted 3 per cent at Rs 478 crore for the quarter, operating margin for Asia’s largest Reit by area stood at 85 per cent  for the quarter. 

 

Lease deals signed for the quarter stood at 311,000 square feet, with 1 million sq ft lease deals signed year-to-date. The company said it is already seeing green shoots in leasing space and it will gain full momentum in the next 2-3 quarters. 

Michael Holland, CEO

“As India’s outlook steadily improves with a continued downward trend in active Covid-19 cases and the encouraging progress on vaccine roll-out, we remain optimistic that Indian office leasing demand will continue to increase as occupiers accelerate their return-to-work programmes,” said Michael Holland, Chief Executive Officer of Embassy REIT.

While the company achieved rental increases of 15 per cent on 1.5 msft during the quarter, rent collections for the period from office occupiers remained strong at 99.5 per cent. “About 97 per cent of occupiers and the daily average of 20,000 employees operated from our properties in Q3, up 27 per cent since Q2,” said Hollande.

The Reit completed the acquisition of the Rs 9,780 crore Embassy Tech Village (ETV) in December and successfully raised Rs 3,680 crore through an Institutional Placement to fund the acquisition. It launched 1.9 msft of new on-campus office development at ETV. It is further looking at large scale dominant office spaces in top six cities including Bengaluru, Pune and Chennai for inorganic expansion.