Embassy REIT units up 3% on strong Q2 performance

Over the past year, Embassy REIT units have fallen 11.6 percent.

Embassy Office Parks REIT units gained 3 percent in trade on October 27 after the company announced revenue from operations at Rs 889 crore, higher by 4 percent year-on-year.

Embassy Office Parks REIT leased 2 million square feet (msf) of office space across 25 deals, according to a regulatory filing on October 26. The leasing includes 1.2 msf of new leases and the company signed seven new deals over 1 lakh square feet, reflecting a return of large deal closures.

As of 1 p.m., Embassy REIT units were trading at Rs 304.04, higher by 1.91 percent on the NSE from the previous session’s closing price.

"For the first half of FY2024, we have leased 3.1 million square feet and the outlook for the full year looks promising, with a leasing pipeline of 2.5 million square feet. We’re also very pleased to further strengthen our long-standing partnership with one of our largest clients at Embassy GolfLinks," Aravind Maiya, Chief Executive Officer of Embassy REIT said.

Follow our market blog for all the live action

He added that this coupled with the strong leasing momentum in the business, has resulted in a revised leasing guidance of 6.5 million square feet for FY2024 from the earlier announced 6 million square feet.

Brokerages bullish

Jefferies maintained its ‘buy’ call on the REIT, saying, “We assume a bottoming out of occupancy levels in FY24 and a gradual rise in occupancies from FY25. Market rentals are likely to stay flat over FY 23-25.”

“The REIT manager has upped its FY24 leasing guidance to 6.5 million square feet (earlier 6 million square feet) and expects recovery in leasing decisions by GCCs and possible floor-wise SEZ denotification on the cards in H2FY24,” said ICICI Securities, who also retained its ‘buy’ rating with a target price of Rs 390 per unit. The domestic brokerage said that the key risks are a slower recovery in office leasing and higher portfolio vacancy levels.