Revival in office leasing demand bodes well for Embassy Office Parks REIT
- The company had raised its FY23 leasing guidance to 1 msf from 0.4msf in Q3FY22. In its latest interaction with analysts, the management said it was confident of achieving its revised guidance. It is also looking at various organic and inorganic expansion opportunities
NEW DELHI: Outlook for office leasing is expected to improve with more companies asking employees to return to office. This is the crucial takeaway from the recently held analyst meet of Embassy Office Parks REIT.
The company's management told analysts that it is hopeful of a robust recovery in office leasing from FY23 aided by a ramp-up in physical occupancy level. Strong hiring by global captive centers (GCC) and and IT Product companies would drive this demand, the management said. Investors should note that both the above mentioned segments contribute 70% to the total space leased out by Embassy REITs. Bengaluru is likely to benefit the most from the increased momentum in office leasing as it constitutes 60% of the total request for proposals currently floated.
The management said according to its discussions with occupiers, physical occupancy is likely to improve to 20-25% in April, and to 40-45% over the next couple of quarters. Currently, physical occupancy is at 10-15%, the management said.
Investors would reckon that the company had raised its FY23 leasing guidance to 1 million square feet (msf) from 0.4msf in Q3FY22. In its latest interaction with analysts, the management said it was confident of achieving its revised guidance. The company is also looking at various organic and inorganic expansion opportunities.
The management added its hotels vertical has been seeing a revival, driven by resumption in corporate travel. The management highlighted that for its newly opened Hilton Garden Inn, 50-60 corporate accounts have already been signedup and an additional 50 corporate accounts are in the pipeline.
Meanwhile, shares of the REIT manager have risen about 10% so far this calendar year. Analysts say futher upside in the stock will be driven by the pace of recovery in office leasing and its impact on occupancy levels.
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