Exclusive: Embassy REIT bullish on India-US deal, lines up Rs 4,000-cr capex plan

Embassy Office Parks REIT CEO Amit Shetty

Even as the India–US and India–EU trade deals are expected to accelerate Global Capability Centre (GCC) expansion in the country, Embassy Office Parks REIT (Real Estate Investment Trust) is doubling down on organic growth, chief executive Amit Shetty said.

Shetty said Embassy Office Parks has a 7.6 million square feet development pipeline, backed by a capital expenditure of around Rs 4,000 crore.

Shetty, in an exclusive interview with Moneycontrol on February 9 said that improving global trade relations are likely to reinforce long-term demand for Grade-A office space, particularly from GCCs.

“India currently has about 1,900 GCCs, which will grow to around 2,400–2,500 by 2030, employing nearly 2.5 million people,” he said, adding that mid-tier US firms and companies from Europe, Australia and Asia-Pacific are increasingly setting up operations in India.

“With India producing about 2.5 million STEM (Science, Technology, Engineering and Mathematics) graduates annually and having the world’s largest pool of data scientists and the second-largest AI talent base, trade pacts with the US and EU will be positive for real estate and the economy,” Shetty said.

Rs 4,000-crore organic development pipeline

“We are developing 7.6 million square feet (msf) organically, within our portfolio, at a capex spend of about Rs 4,000 crore. This will yield a stabilised NOI (net operating income) of about Rs 740 crore, at a yield on cost of about 16 percent,” Shetty told Moneycontrol.

The additions will take Embassy REIT’s total operational area from 51 msf to nearly 59 msf.

Most of the projects are expected to be delivered within the next 3-3.5 years, with one development extending slightly beyond that timeline. Of the new construction, 58 percent will be in Bengaluru and 42 percent in Chennai.

Embassy REIT reported a strong third quarter, with NOI rising 19 percent year-on-year (YoY) and revenue increasing 17 percent.

Embassy Zenith acquisition, hotel in Pune

Shetty said that Embassy REIT has plans to acquire Embassy Zenith, a prime central business district office asset leased to a global trillion-dollar technology company.

Embassy Zenith is the property of Embassy Group in Bengaluru and is leased to Apple. Embassy Group holds 7.69 percent stake in Embassy REIT.

The REIT has initiated due diligence and will enter commercial discussions with Embassy Group after that, he said.

In addition, the Embassy Office Park REIT is planning a 116-key star rated hotel at its Embassy Tech Zone campus in Hinjewadi, Pune.

“Hotels have always been an important ancillary to building large ecosystems. The property will be operated by a star-rated hotel chain and is expected to be operational by October 2028,” he said.

Shettly said that Embassy REIT has also signed a share purchase agreement to acquire Embassy Pinehurst, a 300,000 square feet office building located within Embassy Golf Links, one of Bengaluru’s strongest office micro-markets.

The asset is being acquired for Rs 852 crore and is expected to deliver a stabilised NOI of Rs 67 crore.

“We have signed the SPA (sale and purchase agreement), and once conditions  are completed, we expect to close the transaction by the end of this month,” Shetty said.

Redevelopment project

In addition to the greenfield development, Embassy REIT has launched a redevelopment project at its flagship Embassy Manyata Business Park in Bengaluru.

“We’ve just launched redevelopment of about 0.8 msf in Embassy Manyata. A 200,000 square feet block is being knocked off and replaced with 800,000 square feet, delivering a 23 percent yield on cost,” Shetty said.

June 2029 is the deadline to complete the redevelopment project.

On expansion plans across other micro-markets, Shetty said that Embassy REIT is actively evaluating opportunities across India’s top markets.

“We are aggressively looking at opportunities across the top seven cities. The criteria are clear — deals must be distribution-accretive, meet our base asset quality, and be located in the best-performing micro-markets,” he said.