Embassy REIT will spend Rs 3,800 crore over the course of four years to finish building 61 lakh square feet of office space

Embassy REIT will spend Rs 3,800 crore over the course of four years to finish building 61 lakh square feet of office space

With 36.5 million (365 lakh) square feet of finished office space spread across Bengaluru, Mumbai, Pune, and Delhi-NCR, Embassy REIT is the first publicly listed Real Estate Investment Trust (REIT) in India.

As part of its plan to increase its rental portfolio, Embassy Office Parks REIT, which is bullish on the need for premium workspace, plans to spend Rs 3,800 crore over the next four years to finish its current office complexes.

With 36.5 million (365 lakh) square feet of finished office space spread across Bengaluru, Mumbai, Pune, and Delhi-NCR, Embassy REIT is the first publicly listed Real Estate Investment Trust (REIT) in India.

Aravind Maiya, the CEO of Embassy REIT, said in a PTI interview that the company's operations have been expanding steadily.

He said that the business is building 6.1 million (61 lakh) square feet of premium office space in Bengaluru to meet the growing demand from both local and global capability centers (GCCs) in order to broaden its portfolio.

Aside from that, Maiya said that the firm has agreed to pay Rs 1,269 crore to the sponsor, Embassy Group, for the acquisition of Embassy Splendid TechZone (ESTZ), a Grade-A business park.

We are building Grade A office space totaling 6.1 million square feet at this time. Over the next four years, they will be finished ", he told PTI.

When asked how much it cost to create the 6.1 million square feet, he said, "We have already made some investment. To finish these office complexes, an estimated Rs 3,800 crore would be needed for development." The anticipated investment would be mostly financed by debt for the corporation.

He said that of the 6.1 million square feet, 2.5 million (25 lakh) will be finished in this fiscal year, 2.2 million (22 lakh) in 2025–26, 0.4 million (4 lakh) in 2026–27, and the last 1 million (10 lakh) in 2027–28.

When asked about the purchase of further assets in Chennai, Maiya said that the agreement should be finalized by the end of the next month.

The finished area of the business park ESTZ is 1.4 million (14 lakh) square feet, of which 95% is occupied by major international corporations including BNY Mellon and Wells Fargo.

It also includes 2 million (20 lakh) square feet of possible future development and 1.6 million (16 lakh) square feet of under-construction land.

Embassy REIT intends to raise a maximum of Rs 2,500 crore in order to finance this transaction, lower its debt, and expand its operations.

This fiscal year, the operating portfolio—which now consists of 36.5 million square feet via organic and inorganic routes—could grow to 40.5 million square feet.

About the previous fiscal year's success, Maiya said, "We had a really excellent year overall in FY24. Net operating income (NOI) and sales increased by over 8% annually." He added that the occupancy rate steadied at 85%.

Last year, the business reached a record-breaking high of 8.1 million square feet in gross leasing.

According to Maiya, the business has provided forecast for 2024–25, which comprises 5.4 million square feet of total leasing, in light of the favorable prognosis for the Indian office market.

He said that this fiscal year's payout to unitholders would increase by 7%, but he also noted that the forecast might alter if the transaction is completed before the end of the first quarter.

The Embassy Office Parks REIT has declared a dividend of Rs 494.8 crore to unit holders for the fourth quarter of the previous fiscal year, after a 13% rise in net operating income to Rs 765.6 crore.

In the previous year, its net operating income was Rs 680.2 crore.

During the most recent fiscal year, Embassy REIT reported an 8% yearly rise in net operating income to Rs 2,981.9 million.

The previous year's net operating income (NOI) was Rs 2,766.3 crore.

The management of Embassy REIT, Embassy Office Parks Management Services, announced a Q4 FY24 dividend of Rs 495 crore, or Rs 5.22 per unit, by the board of directors.

As a result, the total cumulative payout for 2023–24 is Rs 2,022 crore, or Rs 21.33 for each unit.

In addition to office space, Embassy REIT features two hotels that are currently under development, four functioning business hotels, and a 100 MW solar park that provides tenants with sustainable energy.