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Embassy REIT inks 1.8 million sq ft lease deals in June quarter

BENGALURU : Embassy Office Parks REIT has leased 1.8 million sq ft across 25 transactions, including a 550,000 sq ft pre-commitment from JP Morgan at Embassy Tech Village (ETV) in Bengaluru, in the April-June quarter, as demand from office occupiers see a revival in the aftermath of the pandemic.

The company said it has witnessed record leasing and the best quarter since 2016.

The REIT or real estate investment trust has added 15 new occupiers in sectors such cloud, cybersecurity, renewables, and healthcare technology, increasing its customer base to 214 occupiers. It has also achieved 16% positive leasing spreads on 1.3 million sq ft and 15% rent escalation on 1.9 million sq ft.

Embassy REIT’s portfolio spans 43 million sq ft in four cities. Of this, 34% is constructed and 87% of space is occupied.

“We have been resilient in the last two years, but we are embarking on a growth phase now. We are witnessing expansion across tech occupiers and global captives in India, with Bangalore continuing to lead India’s office demand revival. We are seeing higher demand from large banks and the BFSI (banking, financial services and insurance). We are also focused on smaller but high- growth occupiers. In the last 12 months, we have added 33 such new occupiers, so while the lease sizes maybe smaller, these companies would continue to expand,” Vikaash Khdloya, CEO, Embassy REIT said in an interview.

During the June quarter, Embassy REIT’s net operating income grew by 9% from the year-ago period to 677.3 crore, with an operating margin of 82%.

“We are exploring inorganic acquisitions as well and are evaluating further buildings to commence construction. We already have a million sq ft of new lease pipeline for the September quarter,” Khdloya added.

The REIT is currently evaluating a right of first offer (ROFO) invitation for 5 million sq. ft of Embassy Splendid TechZone, Chennai from the Embassy Sponsor; of this, 1.4 million sq. ft. is completed, and 1.6 million sq. ft. is currently under development.

The Board of Embassy Office Parks Management Services Private, the manager of Embassy REIT, has declared a distribution of 5.33 per unit for the April-June period. The record date for the Q1 FY2023 distribution is 29 July 2022, and the distribution will be paid on or before 5 August.

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