Good evening, everyone. A very warm welcome to all of you for Embassy REIT's second quarter FY 2025 earnings conference call. Currently, all participants are in a listen-only mode. Our speakers will address your questions during the question and answer session at the end. As a reminder, this conference call is being recorded. I would now like to hand the conference over to Ms. Sakshi Garg, Head of Investor Relations for Embassy REIT. Thank you, and over to you, ma'am.
Thank you. Welcome to the second quarter FY twenty twenty-five earnings call for Embassy REIT. Embassy REIT released its financial results for the quarter and half year ended September thirty, twenty twenty-four, a short while back. As is our standard practice, we have placed our financial statements, earnings presentation discussing our performance, and a supplementary financial and operating data book in the investor section of our website at www.embassyofficeparks.com. As always, we would like to inform you that management may make certain comments on this call that one could be in forward-looking statements. Please be advised that the REIT's actual results may differ from these statements. Embassy REIT does not guarantee these statements or results and is not obliged to update them in advance.
Specifically, any financial guidance, and forward-looking information that we provide on this call are management estimates based on certain assumptions that have not been subjected to any audit, review, or examination procedures. We caution you not to place undue reliance on such information, and there can be no assurance that we will be able to achieve the same. Joining me today are Arvind Maiya, our CEO, Amit Shetty, our COO, and Abhishek Agarwal, our CFO. We'll start off with brief remarks on our business and financial performance, and then open the floor to questions. Over to you, Arvind.
Thank you, Sakshi. Good evening, and thank you all for joining us today. Q2 was yet another remarkable quarter for us. Before we get into the details, let me start with certain key highlights for the quarter and half year. We leased a total of 2.1 million sq ft for Q2, recording our highest ever H1 leasing performance of 4 million sq ft. Signed 1.3 million sq ft of new leases, 0.4 million sq ft of renewals at an impressive 71% spread. Grew occupancy to 87% by area and 90% by value, up 4% year-over-year on a higher base of 38.3 million sq ft. Delivered 0.6 million sq ft office tower in Bangalore, which is 100% pre-leased to ANZ.
Raised the leasing guidance for the full year from 5.6 million sq ft to 6.5 million sq ft. Increased our hotel occupancy to 67%, up 14% year-over-year, with the three Hiltons at around 70% occupancy, and lastly, grew our NOI by 12% year-over-year and our DPU by 5%, keeping us on track with the annual guidance. Moving to more details on our Q2 leasing performance. We leased a total of 2.1 million sq ft across 22 deals and expanded our occupier base to 260 blue chip clients. This included 1.3 million sq ft of new leases, 0.4 million sq ft of renewals, and 0.4 million sq ft of pre-commitments.
The renewals included early renewal of leases totaling 0.2 million sq ft in Embassy Manyata, where over 80% renewal spreads were locked in around a year ahead of actual lease expiry. The pre-commitments included 0.2 million sq ft signed by a leading cybersecurity US company for the upcoming Block 8 in Embassy TechVillage, and 0.2 million sq ft of expansion option exercised by an Australian bank in the D1, D2 redevelopment project in Embassy Manyata. The latter also signed an additional expansion option of 0.3 million sq ft, which needs to be exercised by June 2025, and with this, the whole 1.4 million sq ft tower is pre-leased to them, including their expansion options, making this our largest built-to-suit project to date.
This quarter, around 50% of our leasing demand was driven by global captive centers, or GCCs, primarily from BFSI and technology sectors, and over 30% of the space was leased to multiple flex operators. Bangalore continued to lead the demand and contributed to over 75% of our quarterly leasing. As indicated by us last quarter, our Noida demand has started to pick up. We signed over 300,000 sq ft of leases in Embassy Oxygen, bringing its occupancy up 70%, up to 70%, over 8% increase within a quarter. We noted 0.6 million sq ft of tenant exits in Q2, mostly from IT service occupiers, who now contribute to less than 10% of our rental portfolio.
Also, of the total 1.5 million sq ft exits noted in the first half, we have already backfilled over 40% area at 61% higher rents, and remaining vacant area offers a 19% mark-to-market potential. During Q2, we also received 0.3 million sq ft of additional exit notice from one of our IT services tenants in Pune. This was part of the potential risk that we had highlighted back in Q4 of FY 2024, and a portion of which had materialized in Q1, with 0.4 million sq ft of exit notice from the same tenant. Despite these additional exits, we anticipate our year-end portfolio occupancy to close at 88% by area or 92% by value on a total enhanced completed portfolio of 40.3 million sq ft by March 2025. A little more insights into our city-wide occupancy.
Our Mumbai portfolio is now at 99% occupancy, Chennai at 95%, and Bangalore at 91%. Noida and Pune are at 78% and 70% respectively. Seven of our 14 properties are now recording stabilized occupancy levels of over 95%.... If we break down our total 5.2 million sq ft vacant area, 2.2 million sq ft is in Bangalore, for which we have a strong GCC pipeline and expect to reach stabilized occupancy levels of mid-nineties in this city in the next year or so. Around 1 million sq ft vacancy is in Noida, which is at our Embassy Oxygen asset. This asset has seen a good pickup in demand, and we are confident of increasing its occupancy to the mid-eighties in another year's time. Finally, on Pune, wherein 1.9 million sq ft of our current vacancy resides.
A majority of this vacant space is in Embassy Quadron. The current leasing traction at Hinjewadi, and especially around Embassy Quadron, continues to be slow, and we expect that it will take us some time for leasing demand to return in this micro market. Having said that, we want to highlight that the pro forma vacant area at Embassy Quadron by the end of the year represents only 1.4% of our total portfolio by value. Also, just in the last 12 months, we have successfully demarcated and denotified around 5.3 million sq ft area, and we have already leased over 80% of the same. Another 1.4 million sq ft is in the process of being converted either to non-SEZ or non-processing areas.
On our development portfolio, our current development portfolio pipeline now totals eight million sq ft, comprising nine projects across Bangalore and Chennai. Till FY 2026, five towers spanning 5.2 million sq ft are scheduled for delivery, and we have already pre-leased 71% of this area, including expansion options. Our ongoing eight million sq ft development is at highly attractive yield on cost of around 19% and is a key growth lever for the REIT's NOI and DPU in the coming years. As we look ahead, a bit on the macro front. Pan-India leasing activity maintained a very strong momentum, with 50 million sq ft already leased out in the first nine months of the year. With this record leasing performance, calendar year 2024 absorption is on track to reach all-time record highs.
This outperformance continues to be driven by faster closure of large deals, as well as continued strong demand from GCCs and flex operators. Large-scale office parks with world-class amenities, excellent connectivity, and vibrant ecosystems are becoming the preferred choice for these GCCs for attracting top-tier talent. Such total business ecosystem assets of ours, like Embassy Manyata, TechVillage, and GolfLinks, stand out in this current environment. We are committed to creating, maintaining, and acquiring similar infra-type office parks to maintain our portfolio and tenant quality. Finally, I am delighted to announce a few leadership changes. Amit Shetty, our current Head of Leasing, has been elevated to the REIT's Chief Operating Officer, and Rishad Pandole, our Co-head of Commercial Leasing, has been promoted to Head of All India Leasing. I want to congratulate both Amit and Rishad and wish them continued success in their enhanced roles.
I will now hand it over to Abhishek to present the financial updates.
Thank you, Arvind, and good evening, everyone. Let me take you through the financial highlights for Q2. Our revenue from operations and net operating income both grew by 12% year-on-year to INR 997 crores and INR 805 crores respectively. The increase was mainly driven by new lease up at high re-leasing spreads, contracted rent escalations, new buildings delivered and acquired during the period, and a continued ramp-up in our hotel business. This was partially offset by the impact of exits in our office portfolio and a decline in our solar revenue due to reduction in government tariffs, as well as a seasonal reduction in solar unit generation. We declared distributions of INR 553 crores or INR 5.83 per unit for the quarter, representing a 5% uptick year-on-year.
This was driven by an increase in our NOI, which was partially offset by an increase in our interest costs. We have raised INR 2,000 crores of coupon-bearing debt at an average rate of around 7.95% to repay the NCDs, which were due for maturity last week. The funding included issuance of INR 900 crores of NCDs, which saw 3x subscription, INR 850 crores of term loans from leading banks, and INR 250 crores of commercial paper. As of September 2024, our net debt book stood at over INR 18,000 crores, implying a 31% leverage ratio at 7.82% in-place cost. Post the above refinance, the in-place cost has increased marginally to 7.99%, with 51% of the debt book now at floating rates.
All our recent debt raises and refinancings have been aimed at optimally managing our interest costs and locking in rates for shorter durations, positioning us well to take advantage of future rate cuts. Next on our independent valuation. As of September 2024, our gross asset value increased by 12% year-on-year to INR 59,104 crores, and our net asset value by 4% to INR 415.84 per unit. The increase was mainly driven by new deliveries, Chennai acquisition, and our ongoing development CapEx. Lastly, an update on our FY 2025 guidance. Based on our YTD performance, I am pleased to reconfirm the financial guidance that we had provided at the start of FY 2025. We continue to expect our NOI to be in the range of INR 3,215 to INR 3,345 crores-...
And our distributions to be in the range of INR 22.4-INR 23.1 per unit. At midpoint, this guidance implies a 10% growth in NOI and a 7% growth in DPU on a YOY basis. This guidance is based on certain key assumptions for the year, which includes a revised total leaseup of 6.5 million sq ft, including 4 million sq ft of new leasing, 1 million sq ft of renewals, and 1.5 million sq ft of pre-commitments. Year-end portfolio occupancy of 88% by area and 92% by value, and an increase in the total interest expense for the year by 18%-20% year on year. We have consistently delivered our annual guidance every single year, and we remain focused on delivering this year's growth numbers to our 1 lakh plus investors.
With this, let's move to Q&A, please.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Puneet Gulati from HSBC. Please go ahead.
Yeah, thank you so much, and congratulations on upping our DPU once again. My first question is with respect to the divergence between NOI growth and DPU growth, especially for two assets, Manyata and TechVillage, where Manyata, at least on NDCF side, seems to have contracted 17% despite an increase on the NOI side, while Embassy TechVillage, on the other hand, has expanded NDCF on a lower growth on NOI. So if you can help us explain some of the discrepancies there.
Puneet, the way I would, answer this is not to look at the DPU, asset by asset, because what happens is, the loans that we have taken, not necessarily the loan we have taken in one particular entity is utilized for the same particular entity, so it is all mixed up between the SPVs and the REIT. Having said that, for this quarter, Manyata's DPU is lower because we have paid the property tax for the full year of Manyata in this particular quarter.
Okay.
Puneet, also, that kind of explains the divergence between 12 and 5-
Yeah.
-which is this quarter, there's been additional outflows of property tax. Unlike last year, where we had split it between Q1, Q3, we took the benefit of certain rebates and paid it between Q1, Q2. So, that's the reason why you see the divergence. But overall basis, if I could just straight take the question and answer it, in terms of guidance, we believe in terms of NOI, we'll be, probably be at the lower end of the NOI range, but in terms of DPU, we believe we'll be at the higher end of the range come FY 2025 end.
Understood. And will it be fair to say that large part of property tax paying is done in Q2, and Q3, Q4 should see less of the impact?
Yeah. So, most of the property tax, we have already paid between Q1 and Q2.
Okay, understood. And secondly, if you can also explain, you know, what's driving the dividend growth on the GolfLinks side? And then how should one think about it getting into next two quarters?
So Puneet, actually, as we have said in the last quarter call also, for GLSP, what you should do is not look at quarter on quarter, because the distribution there depends on the cash availability that they have. The way we can look at is, as I said, that the run rate of Q1 is a run rate we should see for the full year, so it would land somewhere around 260 crore types, in the zip code of 260 crores.
Understood. And lastly, if you can talk about what is the additional 1.4 million sq ft that you've put in for conversion? Where exactly is that area, and what are these assets?
It's across a few assets, Puneet, but this 1.4, again, I can split it as 0.7 million, we're looking at denotifying lands itself. One is in Pune and one is in Embassy TechVillage. And the balance 0.7 million sq ft is floor-by-floor demarcation, again, largely between Manyata, TechVillage and Oxygen.
Understood. That's very helpful. Thank you so much, and all the best.
Thank you.
Thank you. The next question is from the line of Mohit Agrawal from IIFL Securities. Please go ahead. Due to no response from the current participant, we will move on to the next participant. The next question is from the line of Murtuza from Kotak Securities. Please go ahead.
Yeah. Hi, Arvind. Just a question from my side. You know, if I look at the mark-to-market spread over the last few quarters, it has been shrinking, and that's because your in-place rentals are obviously being realized at a higher rate, but the market rentals haven't moved, right? So that's one larger observation. And more specifically, if I were to look at it from a geography perspective, most of your mark-to-market is concentrated in Bangalore. And when I look at the financial set of data points, Pune, Noida, are actually running a negative mark-to-market. So two parts to it, given that in general, real estate prices have generally been on the up, and like you pointed out, most of your geographies are seeing fairly healthy occupancies, barring, let's say, Pune and Noida.
Shouldn't we see an uptick in market rentals at some point in time as well? That's one part. And the second is, how should one think of negative mark-to-market, you know? You know, whenever those contracts do come up for leasing, how should one think? Or you would like to believe that, you know, even those cities will play a catch-up on market rentals, and so the mark-to-market is just a number, which may not actually be realized.
Yeah. Let me answer this little micro, and I'll also request Amit Shetty to add a little on the market flavor. Big picture, Murtuza, the market rent, what you see in the overall MTM computations which are given, are purely based on the market rent given by our valuers, which is Cushman over here, right? I mean, if you look at big picture Bangalore, they've given a market rent of 97 for both Manyata and TechVillage. All I would want to say is, all the leasing in both these assets range from 100-110, and some of them a little higher than that also, over the last six months, number one, right? So while the valuers give a market rent, they try to give it for that specific micro market and not necessarily for our asset.
So some of these MTMs which are mentioned here, I would say, are understated, right? And I would say it's a similar story for our Mumbai assets, where our leasing is happening much above market rates. And I would say that's a similar story even for our Noida assets, where, you know, the rents which we are achieving are way higher than the number which is mentioned, which is 48. Potentially, only in Pune, and also in Pune, I would say Tech Zone and Qubix, largely, we are a little above the market rates was mentioned. Quadron is something where we've seen no leasing tracking, and hence, can't comment much. But in terms of overall market trends, probably I can request Amit also to chip in what he's seeing overall in the market.
Thanks, Arvind.
Just to add to Arvind, you know, the overall leasing absorption has been very healthy in the country. I think YTD has been about 54 million sq ft of leasing. The supply in the country is also contracting compared to, I think there's a 17% drop, compared to the last year. So this again reinforces the fact that the rental values are just gonna go north, across market and across cities. I think, you know, the top three cities, again, like last year, continues to be Bangalore, followed by Hyderabad and then Delhi NCR, and Chennai is a close fourth, in terms of, overall absorptions.
So I think from a Bangalore perspective, if you see just the absorption on the GCC side, about 65% of the GCC volume in the country is in Bangalore itself, and that's where our biggest portfolio sits. So I think that kind of sums up the you know the dynamics in the market.
Sure. If I could just put in one more question. How do you think of some of these exits which we're still seeing? If the market dynamics are so tight, you know, how should one read into the broader set of exits, as opposed to getting into specific to any city or micro market?
Actually, you know, probably I can speak with a little more conviction on this, Murtuza, because beginning of the year, we had expected a total exit of around 1.5 million. Now, that 1.5 has gone up to around 2.5. Having said that, at the beginning of the year only, we had said that this 1.5 does not include a potential risk tenant in Quadron, which was almost 630,000 sq ft, right? So if you see the increase from 1.5 to 2.5, the 1 million increase, of the 1 million, 0.64 is coming just from this tenant, which we had highlighted as high risk.
If I were to remove this out, it is just one additional tenant in Bangalore TechVillage, which has given up another two hundred thousand sq ft. Besides this, there are just another two or three small exits. You can see the exits slowly rationalizing, and taken together with the new lease up, you're seeing the occupancy going up.
Sure. Now, we appreciate the overall vacant area coming down and occupancy is going up, so that's broadly good, but nitpicking on some of the numbers. Thank you so much, guys.
Thank you. The next question is from the line of Parvez Akhtar from Nomura Group. Please go ahead.
Hi, good evening, and thanks for taking my question, and congratulations on the great set of numbers. So my first question is regarding Splendid TechZone. Over the next seven quarters, roughly about 1.6 million sq ft space will become available there. So how do we see the leasing pipeline in that city? Because this is a sizable amount for Chennai. So just wanted to get your thoughts there.
Parivez, probably you can just finish off all questions, so then I can redirect the teams to answer specifically-
Sure.
Unless you don't have anything else.
Sure. The second question is, I mean, you did mention that IT services now contribute to less than 10% of your portfolio. But at a sectoral level, where do you see pain ending in that space? And also now that we have seen occupancies improving in Noida, to which sectors do the incremental leasing happening to? Thanks.
Sure. Why don't I request Amit to take the first question on Chennai? Thanks, Arvind. Chennai, you know, we have a very strong pipeline that we've built over the last, quarter, quarter plus. You know, there are large demands, especially from the GCC sector, again, in Chennai, given the talent that is available in, in Chennai. So we don't see, we see this as a great opportunity, given that, you know, currently we're at 95% occupancy, and just to further consolidate and strengthen our position in that market. And, in terms of IT services, honestly, two perspectives on this. One is, it's already dropped below 10%, and, one tenant will leave in the next, couple of quarters. With that, it'll drop to probably 1% more. And then I see it largely stabilizing there for our portfolio.
But overall, I mean, just seeing from the results and seeing from some of the conversations, two issues which have been there in the past: One was work from home, which I think is a done deal. They've all called people back to office. And there are actually a few RFPs in the market where IT services need more space. Having said that, one thing to call out for clearly is that IT services will continue to be, a little more conscious on the rents they pay, and some of the parks which we own, especially in Bangalore, might not necessarily be a solution which they would want to take, considering the rents which have moved up to over there. And Noida, overall demand traction, what we are seeing, honestly, is coming from a lot of GCC players only, across, I would say, tech, BFSI.
Yeah, these are the two broad... And healthcare. These are the three broad sectors where there are GCC players coming, taking up more space. And also, the demand in Noida is a factor of lack of availability of Grade A total business ecosystem-type park, which is what Oxygen is. The buildings over there are more, we would say, startup-owned or Grade B supply. So as GCCs enter this particular market/micromarket, we, our parks become at least the first port of call for them.
Sure. Thanks, and all the best with this.
Thank you.
Thank you. The next question is from the line of Pritesh Sheth from Axis Capital. Please go ahead.
Yeah, thanks for taking my question. The first one is on, you know, your, I would say, you know, leasing traction that you see in Pune and Noida. You know, what's the outlook there? Like, you guided for mid-nineties occupancy, in Bangalore by next year. You know, how do you see, Galaxy for Pune and Noida going ahead, considering that, you know, now we are finally seeing some traction on, leasing there. So that's one. Second, probably, you know, our NOI growth this year should be around 10%, as per your guidance.
Considering, you know, the positive commentary on leasing that you have given, plus the new developments that are coming in this year, directionally, whether FY 2026 should see a better growth run rate versus 10% this year? And third, on interest cost, which is expected to increase by 18-20% this year, next year, you know, it should be in line with where the NOI growth should be, or there's some bit of impact still left on that interest cost? Those are my questions. Thank you.
Sure, Pritesh. I think on the first one, on leasing traction, Noida, I did mention a bit, but giving a little more color, Galaxy is already at 99%, so we have nothing to lease. Oxygen, we are currently at 70%, and I did say that we expect the 70% to go above mid-, say call it mid-80s% in the next six to twelve months. That's where we see overall Noida heading, so positive. In terms of Pune, honestly, with the exits coming up in Quadron, directionally, Pune occupancy will drop in the next six months. Honestly, in the next six months, we might see some very marginal leasing in the couple of other assets, which is Tech Zone as well as Qubix. Tech Zone is already at 81%, which is fine, and Qubix is close to 70%.
There might be a little bit of marginal leasing here, but nothing beyond that. So overall, four cities will be very strong, of the five. It's only Pune which will lag a bit, and I did call out that overall from a value perspective, this is a small component. On your other two questions, Pritesh, honestly, both overall direction and interest cost, while I might be itching to answer this, I will just refrain and hold on, you know, till we give better guidance, probably end of the year.
Sure, sure. That's not a problem. Okay, that's it from my side. Thank you.
Thank you. The next question is from the line of Mohit Agrawal from IIFL Securities. Please go ahead.
Yeah, sorry, my line got dropped, so thanks for giving me the opportunity again. So, my first question is on the occupancy level. Arvind, you mentioned that you are still looking at 88% net occupancy levels by end of FY 2025. I just want to understand the math a little better, considering that while we have increased the leasing guidance, there's also been an increase in the exits, right? So, and the leasing guidance increase also has a large portion of pre-commitments, like forward leasing. So if you could just help me understand the math that how do you still see an 88% kind of occupancy level on area by the end of FY 2025?
Mohit, do you want to finish off your question?
Yeah, okay. Yeah, okay. My second question is, if you could elaborate a bit on the notes in the financials about the restructuring of the SPVs, which holds the Quadron assets and also the hospitality assets. So what's the thought there? There have been media articles around both these businesses, you know, so some color on what you plan to do. That's the second question. If I may just squeeze in a third. What is your view on, you know, you've talked about flex operators. They've taken a large space this quarter. You know, now almost 7% of your portfolio, this used to be about 2% during COVID. Just wondering, you know, how do you think they do in terms of sustainability?
Also, if there's some sort of an overlap in terms of tenants and, all of that. So, just your thoughts on basically flex being a large part, meaningful part of your portfolio now.
Sure. I think starting with the occupancy, one of the key missing links could be, Mohit, the fact that of the 1.9 million sq ft, which is getting delivered in the next six months, 1.3 million is already pre-leased, right? So we don't give that as additional lease up for the next six months. It's only what lease up we consider in the balance, 500,000, what is left in Parcel 8 of ETV, which gets included. What that means is, call it 1.9 million gets added to supply, and potentially something very close to 1.9 could get added to on the numerator as well. I think that could be the missing link when you do the walk from 87% to 88%, after factoring in the exits. But we can...
You know, if you're still not able to arrive at, Sakshi can take this offline and help you on this math. So,
Sure.
That's one. Second, why don't I cover flex first, and then I'll go into the question on restructuring.
Yeah.
Big picture, it's a well-thought-through strategy, Mohit. And the reason why I say that is, if you see majority of this, like, lease up has happened in our Manyata asset, number one. Number two, the reason why we did this is a lot of these are also, in a way, kind of back-to-back. Literally, it's different GCCs looking for solutions, and some of these GCCs are very clear that they want a end-to-end managed office, and they would like to go with some of these flex operators to take up space. So because of that, and also the last part is, some of these tenants have clearly called out to these operators that we would want to be in and around Manyata. So what that means is that's a very big positive for us.
There's been a huge demand from literally all flex operators asking for space in Manyata, so having said all of this, I think strategically we'll be selective on how much we give space to flex operators overall. Today we are around 7% of our portfolio. Across India, flex is around 10% of overall available office, but when you look at it on a quarter-on-quarter or even on a year-on-year basis, flex leasing is ranging from 15%-17%, so they're growing much faster than others, but all I would say is, big picture, we will be flex taken together as a overall portfolio. We would like to be below the industry average. I think that's the big picture strategy we have on flex, and the last one on restructuring. Couple of things on this.
You know, firstly, we are long-term owners of assets, and our strategy has not changed on that, number one. Number two, having said that, I think there is stress in our Embassy Quadron asset, and we can't shy away from that fact. As responsible asset managers, all we are doing is evaluating what is best for this asset when we look at it more long term. And we are still in a very evaluation phase. We've not made up any mind. But the structure today, the way it is, is in this entity called Quadron Business Park, there are three assets. There is the Quadron Business Park of Pune, the Embassy One asset, as well as Four Seasons assets. All three are part of the single entity. So what we thought was, at least structurally, let's be ready. You know, eventually, we don't know where this will head.
We could, for all you know, continue to hold these assets. But structurally, structurally, if there's an opportunity where we get good value for some of these assets and we would like to divest and recycle capital, we don't want to take another nine months to start a process then. That's the reason why we thought of this restructuring, and along with this, you know, considering the stamp duty and other implications which are there in the restructuring, it makes sense to combine a couple of restructuring, then the costs of restructuring reduce. With this in mind, we thought, "Why don't we keep the hotel assets of Embassy Manyata also separate?" Then effectively, we're keeping the hotels in a different structure. So it's just an enabling structure of keeping hotels separate, nothing beyond that.
So what eventually you plan to... So Quadron, I understand, but eventually for the hospitality business, do we think that you want to, at some stage, monetize that portfolio?
Don't have a firm view on that, Mohit. I think big picture, again, these hotels are great amenities. Standalone, these hotels now are doing great. I mean, they are giving, they are almost reaching stabilized occupancy other than Four Seasons. So honestly, there's no reason for us to sell these assets. But as we always say, if somebody is ready to offer two extra price, why not? But that's just hypothetical.
Okay. And one clarification, Arvind, on the flex part, you said that a lot of demand is coming from Manyata. So despite you increasing your share of flex, the overall share of GCC as a percentage of your Manyata tenants won't change meaningfully, right?
It won't, Mohit. Manyata is a 13.5 million sq ft park with another 3.5 million sq ft getting delivered in the next three years. So what we've done is, you know, I think put together around 600,000, so.
Okay, great. That's all from my side, and wish you all a very happy Diwali in advance.
Thank you. Wish you the same.
Thank you. The next follow-up question is from the line of Pritesh Sheth from Axis Capital. Please go ahead.
Yeah, just one question I had. On the pre-commitments that, you know, we have increased, in our leasing guidance, is that related to the upcoming development that we are delivering in Manyata or, or something, you know, we looked in Chennai? Because that is also closer to delivery by probably next year, in six, seven months. So just a comment on that.
Chennai, Pritesh. That leaves Chennai.
Okay. So, a million sq ft we are going to deliver there, so 0.5 million sq ft is what we are expecting to be pre-leased in next six months.
Yeah.
Okay, thank you.
Thank you. As there are no further questions, on behalf of Embassy REIT, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.