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    Embassy Off.REIT

    EMBASSY
    Realty·5 Nov 2025
    Management Summary

    Embassy REIT reported a stellar Q2 FY26, marked by significant occupancy growth to 90% by area and 93% by value, and record quarterly distributions of ₹617 crores. The company achieved double-digit growth in both revenue (13% YoY) and NOI (15% YoY), driven by robust leasing of 1.5 msf. Strategic debt refinancing reduced the in-place cost of debt by 55 bps, and the development pipeline stands at 7.2 msf, with new deliveries 100% pre-leased. Management is actively evaluating new acquisition opportunities and remains confident in surpassing its occupancy guidance.

    Highlights

    5

    • Occupancy grew by an impressive 200 bps QoQ to 90% by area and 93% by value, driven by strong leasing momentum.

    • Declared highest-ever quarterly distributions of ₹617 crores or ₹6.51 per unit, representing a 12% YoY growth.

    • Revenue from Operations grew by 13% YoY to ₹1,124 crores, and NOI increased by 15% YoY to ₹927 crores.

    • Successfully leased 1.5 msf across 20 deals, including 1 msf of new leases at 27% re-leasing spreads and 64k sf of pre-commitments.

    • Reduced in-place debt cost by 55 bps in the last 6 months, with net debt at ₹20,079 crores and average in-place cost of 7.35%.

    Concerns

    3

    • Solar NOI experienced a dip, which management aims to reverse.

    • Hotel occupancy at 64% is a concern, though management notes it was a conscious decision to increase ADRs first.

    • Pune market remains sluggish, though management sees some traction and hopes for improvement with infrastructure developments.

    What Changed1

    vs Q3 FY26

    Risks discussed4 → 3 (-1)

    Key financials

    Single quarter

    06 metrics
    1. 01Revenue from Operations₹1,124 Cr+13%YoY
    2. 02NOI₹927 Cr+15%YoY
    3. 03Distributions₹617 Cr+12%YoY
    4. 04DPU₹6.51
    5. 05Gross Asset Value₹63,980 Cr+8%YoY

    Order Book

    high confidence

    Total Value

    1.5 msf

    as of 2025-09-30

    quantified

    Inflow this qtr

    1.5 msf

    Composition

    GCCs(client type)
    50.0%
    Bangalore(geography)
    85.0%

    Pipeline

    other

    Total development pipeline

    "Robust demand from multinational corporates is driving momentum, with all-India vacancy falling to 20% levels. The company is confident in surpassing its occupancy guidance."

    Source:
    Prepared remarks

    Capital allocation

    3
    high confidence
    CategoryHeadline
    Capex

    Capex disclosed

    Debt

    Net ₹20,079 crores

    Cost 7.3%

    Dividend

    ₹6.51/share (interim)

    Guidance & targets

    6
    CategoryTargetPriority
    NOI
    NOI
    ₹3,589 to ₹3,811 crores
    		High
    DPU
    DPU
    ₹24.50 to ₹26.00 per unit
    		High
    Occupancy
    Portfolio Occupancy by Area
    90%-91%
    		High
    Hotel NOI Growth
    Hotel NOI Growth
    ~9% YoY
    		High
    Interest Expense
    Total Interest Expense Increase
    10%-12% YoY
    		High
    Gross Leasing
    Gross Leasing
    80 msf
    		Medium

    Occupancy rate

    next quarter
    Current90% by area, 93% by value
    TargetSurpassing 90-91% guidance

    Why it matters

    Management expressed confidence in surpassing current occupancy guidance, which would indicate stronger-than-expected demand.

    Mohit, we are very confident that we will be surpassing our occupancy guidance that we have given the market, but we do not want to revise any guidance to the market at this point in time.

    How to verify

    key_financials.metrics[label='Occupancy']

    Risks & concerns

    3
    RiskSeverity

    Solar NOI dip

    Management noted a dip in solar NOI and expressed a desire to reverse this trend and get it back on track. — Management acknowledged

    medium

    Hotel occupancy at 64%

    Hotel occupancy is at 64%, which is a concern, though management states it was a conscious decision to prioritize increasing ADRs first (up 16% YoY). — Management acknowledged

    medium

    Sluggish Pune market

    The Pune market, especially Hinjewadi, has been sluggish, but management sees some traction and hopes for improvement with upcoming infrastructure. — Management acknowledged

    low

    Q&A highlights

    7

    “Block 10 totaling 0.4 msf was completed this quarter and is 100% pre-leased. Its occupancy certificate is expected by the end of this month. Block 4 and 1 totaling 1.2 msf are slated for delivery across the next three quarters and are now 30% pre-leased, including expansion options, and we have a strong pipeline for the remainder. ... expansion options are never included. Those are over and above.”

    Clarifies the status of new Chennai developments and how expansion options are reported, indicating additional potential beyond stated pre-lease figures.

    asked by Puneet

    2 min read5 chapters

    Detailed Narrative

    01

    Strong Q2 Performance Driven by Leasing Momentum

    Embassy REIT delivered a stellar Q2 FY26, achieving a 200 bps QoQ increase in occupancy to 90% by area and 93% by value. This was supported by robust leasing activity, with 1.5 msf leased across 20 deals, including 1 msf of new leases at a significant 27% re-leasing spread. The company also reported its highest-ever quarterly distributions of ₹617 crores, or ₹6.51 per unit, marking a 12% YoY growth. Revenue from Operations grew 13% YoY to ₹1,124 crores, and NOI increased 15% YoY to ₹927 crores.

    02

    Strategic Development Pipeline and Pre-leasing Success

    The REIT's total development pipeline now stands at 7.2 msf, with significant progress made in Q2. A new 0.9 msf building in Embassy Manyata, Bangalore, was delivered and is 100% pre-leased to a Fortune 500 retail major. In Chennai, Block 10 (0.4 msf) was completed and is also 100% pre-leased. Blocks 4 and 1 (1.2 msf) in Chennai are 30% pre-leased and slated for delivery over the next three quarters, with a strong pipeline for the remainder. These projects are expected to be highly accretive to NOI and DPU.

    03

    Optimized Debt Profile and Favorable Interest Rate Trends

    Embassy REIT successfully optimized its debt profile by raising ₹2,000 crores through a 10-year NCD at 7.33%, primarily used to refinance higher-cost debt. This contributed to a 55 bps reduction in the in-place debt cost over the last six months, bringing the average to 7.35%. Net debt stood at ₹20,079 crores as of September 2025, with a leverage ratio of 31%. Management expects the benefits of lower interest rates to flow into distributions from the next quarter, further enhancing DPU.

    04

    FY26 Guidance Reaffirmed with Positive Outlook

    The company reaffirmed its FY26 guidance, expecting NOI in the range of ₹3,589 to ₹3,811 crores and DPU between ₹24.50 and ₹26.00 per unit. This guidance implies a 13% growth in NOI and 10% growth in DPU YoY at the mid-point. Key assumptions include a Mar'26 portfolio occupancy of 90%-91% by area and a 9% YoY hotel NOI growth. Management expressed confidence in surpassing its occupancy guidance and potentially achieving higher NOI growth in future years due to strong leasing and deliveries.

    05

    Active Pursuit of Acquisitions and SEZ Conversions

    Embassy REIT is actively evaluating multiple acquisition opportunities from both third parties and the Embassy group, including a specific asset in the high-performing Whitefield micro-market in Bangalore. The company also provided an update on SEZ conversions, having converted 8.1 msf to non-SEZ status, with 19 msf of SEZ stock currently held, 81% of which is occupied. The process for demarcation is now business-as-usual, taking about 3 months.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.