Embassy Office Parks REIT Q1 FY27 Earnings Analysis

- Embassy REIT expects double-digit growth to continue in FY2027, with guidance as follows: - Net Operating Income (NOI) projected between ₹4,150 to ₹4,350 crores, implying ~13% YoY growth. - Distribution per Unit (DPU) guidance is ₹27.00 to ₹28.60, reflecting ~10% YoY growth. - Occupancy forecasted to improve to 92-93% by area. - Portfolio expansion through acquisitions of 10-12 million sq ft expected over next 4-5 years. - Leasing environment remains robust with approximately 20 million sq ft of RFPs in the market, primarily in Bangalore. - Strong pipeline of new deliveries and pre-leased assets, including 6.2 million sq ft of under-construction office space adding ₹610 crores stabilized NOI by FY2030. - Demand driven by Technology, Healthcare & BFSI sectors, and increasing mid-market GCC entrants. - Rental growth potential due to pre-leasing at 3-4% premium above market rents and expected increases in market rents by 4-5%.

- FY2027 Outlook: - Portfolio occupancy expected to reach 92-93% by area. - FY2027 NOI guidance: ₹4,150 to ₹4,350 crores (implying 13% YoY growth). - FY2027 DPU guidance: ₹27.00 to ₹28.60 per unit (implying 10% YoY growth). - Growth driven by increased occupancy, new building deliveries, and rental growth. - NOI to DPU gap expected to persist due to lease-up and higher interest costs from recent deliveries but should reduce once deliveries complete. - Continued double-digit growth anticipated, reflecting a strong macro backdrop and demand-supply mismatch favoring office asset owners. - Total returns to investors in the past year were 22%, with 15% price appreciation, signaling robust future growth potential.

- Nearing completion of hotel constructions at Embassy TechVillage; plans to launch Hilton Garden Inn in Jul-26 and Hilton in Mar-27. - Launched construction of a 116-key ‘Spark by Hilton’ hotel in Embassy TechZone, Pune; expected delivery by Dec-28. - Evaluating a pipeline of 12.6 million sq ft potential acquisitions from Embassy group and third parties; plans to acquire 10-12 msf over next 4-5 years. - Considering mix of debt and equity to fund acquisitions, maintaining leverage around 30-35% LTV. - Planning potential divestment of hotel assets to reduce leverage and fund office business acquisitions. - Capital recycling strategy in place, executed first-ever divestment of 376k sf in Embassy Manyata for ₹530 crores. Overall, focus on disciplined, accretive growth through strategic acquisitions, developments, and portfolio optimization.

- Embassy REIT raised ₹1,400 crores during Q4 FY2026 via a 10-year NCD at a fixed coupon of 7.49%, totaling ₹3,400 crores of 10-year NCDs raised in the financial year, doubling the duration of their fixed-rate debt book to 45 months. - The net debt stands at ₹21,000 crores with a 30% leverage ratio at 7.25% cost. - For future acquisitions, the REIT aims to maintain leverage around 30-35% and will fund deals through a mix of debt and equity to ensure accretive returns to unitholders. - Embassy REIT has a pipeline of 10-12 million sq ft acquisitions expected over the next 4-5 years; funding will be opportunistic, using debt, equity, or a mix based on deal specifics. - Equity raises are considered when there are firm deals, typically post-acquisition, and aimed at avoiding dilution. - There are plans to divest hotel assets to reduce leverage and fund new acquisitions in the office business.

- Embassy Office Parks REIT is currently evaluating a pipeline of approximately 12.6 million square feet (msf) of potential acquisition opportunities from both the Embassy group and third parties. - The acquisition pipeline is expected to be completed over the next 4-5 years. - The REIT plans to selectively pursue acquisitions when comfortable, ensuring deals are accretive to unitholders. - About 10-12 msf from the acquisition pipeline is anticipated to be added to the portfolio within this timeframe. - No exact current orderbook or pending orders for construction or leasing were explicitly mentioned beyond this acquisition pipeline. - Leasing activity remains robust with approximately 20 msf of Requests for Proposals (RFPs) in the market, around 75% concentrated in Bangalore.