Embassy Office Parks REIT has said that it will invest Rs 1,500 crore over the next two years to add 2.6 million square feet of commercial space to its already existing portfolio of 26 million square feet of operational office space.
This additional 2.6 million square feet of space is in the early stages of construction and will be a part of its existing integrated business parks and campuses.
“The earliest delivery will come in June of 2022. Given our liquidity availability and balance sheet, we are going ahead with the development,” said Vikaash Khdloya, Deputy CEO at Embassy Office Parks REIT.
The Blackstone-backed REIT has another 5 million potential development in its existing parks. “Once we see traction in 2.6 million sq feet, we will kickstart the next phase of five mn sq feet,” said Khdloya.
The Bengaluru-based office developer reported a muted 1 per cent year-on-year rise in net operating income for the quarter ended June at Rs 456.9 crore.
Rental collections from office occupiers remained robust at 98.9 per cent for the quarter with rental increases of 14 per cent on 1.8 msf from 22 office leases across the portfolio. About 92 per cent of the company’s income comes from office spaces and the rest from a solar power plant and four hotel assets that it owns.
It had delivered 1.4 million sq feet of office space in January across two of its existing properties in Bengaluru and Noida on which tenants are likely to go live by the end of this year.
“We believe offices will remain at the heart of business. It might look different and more about collaboration and community but it needs to be higher quality. This will benefit large scale institutional owners like us,” said Mike Holland, chief executive officer, Embassy Office Parks.
Giving an outlook on leasing, the company said it sees muted leasing in a couple of quarters until companies finalise their mid-term strategies. Leases signed for the quarter stood at 526,000 square feet for the company, including 201,000 square feet of new leases at market rents.