Good evening everyone. A very warm welcome to you all to the Embassy REIT second quarter FY 2026 earnings conference call. Currently all participant lines are in the 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 introduce your host for today's conference, Mrs. Sakshi Garg, Head of Investor Relations from Embassy REIT. Ma'am, you may begin.
Thank you. Welcome to the second quarter FY2026 earnings call for Embassy REIT. Embassy REIT released its financial results for the quarter and half year ended September 30, 2025. A short while back, as is our standard practice, we have placed our financial results, earnings presentation discussing our performance, and a supplemental financial and operating data book in the investors 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 at 1:14 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 at any time.
Specifically, any financial guidance and pro forma information that we will provide on this call are all management estimates based on certain assumptions that have not been subjected to any audit, review or examination procedures. We are cautioned 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 Amit Shetty, our CEO, 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, Amit.
Thank you, Sakshi. Good evening and thank you all for joining us today. I'm happy to report that quarter two was a stellar quarter for us on all fronts and the three key highlights that stand out are we grew our occupancy by an impressive 200 basis point quarter on quarter to 90% by area and 93% by value. Secondly, we declared our highest ever quarterly distribution of INR 617 crore or INR 6.51 per unit. We registered double-digit growth across all our key financial metrics and grew our revenue by 13% and our NOI by 15%. Let me begin by starting with the outlook for the Indian office market.
India, which is already the fourth largest global office market, is on the verge of crossing the 1 billion sq ft mark in terms of office stock. Robust demand from multinational corporates is driving this momentum. These companies range from large Fortune 500s to the mid tier firms setting up their India offices. We see this positivity across the cities as demand continues to surpass supply, resulting in all India vacancy falling to the 20% levels, which is the pre pandemic level. With this backdrop, let me dwell deeper into our Q2 leasing performance. We leased 1.5 million sq ft across 20 deals and expanded our occupier base to 274 marquee tenants. This included 1 million sq ft of new lease at 27% re-leasing spread, 0.4 million sq ft of renewal, and 64,000 sq ft of pre-commitment.
GCCs accounted for over 50% of our leasing and the remainder was mainly contributed by domestic technology consulting and flex operators. Our core portfolio of Bangalore continues to meet the demand and contributed to over 85% of our quarter two leasing. With this, our Bangalore portfolio occupancy is now at 95%, up 300 basis points quarter on quarter. On the back of strong leasing this quarter, we increased our portfolio occupancy by 200 basis points quarter on quarter to 90% by area and 93% by value on our development portfolio. We delivered a new 0.9 million sq ft building in Embassy Manyata in Bangalore, which is 100% pre-leased to a Fortune 500 retail. Another 1.4 million sq ft building in the park is scheduled for delivery in the later part of the financial year.
This block is 100% pre-leased including expansion options. Moving to Chennai, where we have been developing three new office blocks since the acquisition of Embassy's Splendid Tech Zone. Block 10, totaling 0.4 million sq ft, was completed this quarter and is 100% pre-leased. Its occupancy certificate is expected by the end of this month. Block 4 and Block 1, totaling 1.2 million sq ft, are slated for delivery across the next three quarters and are now 30% pre-leased including expansion options. We have a strong pipeline for the remainder of the space. On the back of this robust demand, which is driven mainly by the GCCs, we have launched 2 million sq ft of new development in this asset and look forward to building a strong pipeline for the same. With this, our total development pipeline now stands at 7.2 million sq ft.
All these projects are highly accretive to our NOI and DPU. Lastly, we welcome and commend SEBI's landmark move to reclassify Indian REITs as equity. This brings Indian REITs on parity with its global peers and will pave the way for broader investor participation, stronger liquidity, and potential index inclusion. The move has been taken up positively by the markets and has been a key contributor to the 20% total returns that we have delivered in the last nine months. Overall, this was a really strong quarter for us. We are able to actively evaluate multiple acquisition opportunities from third parties as well as from Embassy Group and will update the market as we progress. We are excited to continue delivering meaningful growth to our ever expanding base of over 110,000 investors. I will now hand over to Abhishek to present our financial updates.
Thank you Amit and good evening everyone. Let me take you through the key financial highlights for Q2. Our revenue from operations grew by 13% year on year to INR 1,124 crore and NOI increased by 15% year on year to INR 927 crore. This strong growth was driven by our continued leasing momentum, rental escalations, increase in hotel ADRs, and recent deliveries of new office buildings, partially offset by a decline in our solar NOI. We declared distributions of INR 617 crore or INR 6.51 per unit for the quarter. This impressive 12% year on year growth in distributions was driven by our NOI growth and working capital changes, partially offset by an increase in interest expenses during the quarter. We raised INR 2,000 crore of debt through a 10-year NCD at 7.33%, which was largely used to refinance higher cost debt.
By raising this first ever 10-year NCD in the Indian REIT space, we are proud to have pioneered newer debt capital pools for the industry. Our net debt stood at INR 2,079 crore as of September 25, implying a 31% leverage ratio at 7.35% average in-place cost. Through our refinances and other treasury initiatives, we have successfully reduced our in-place debt cost by 55 basis points in the last six months. We remain focused on further optimizing our interest cost and have recently raised INR 400 crore through a commercial paper at an effective rate of 6.44% per annum. As of September 25, our gross asset value increased by 8% year on year to INR 63,980 crore and our NAV by 7% to INR 445.91 per unit. This growth was primarily driven by strong leasing, rent growth, and new deliveries.
Backed.
By our premium portfolio assets and dual AAA credit ratings. Our balance sheet position is extremely strong and we are well primed to grow our business. Lastly, an update on our FY2026 guidance. Based on our H1 performance, we remain on track with our annual guidance. We continue to expect our NOI to be in the range of INR 3,589-3,811 crore and DPU to be in the range of INR 24.5-26 per unit. At midpoint, this guidance implies a 13% growth in NOI and a 10% growth in DPU on a year-on-year basis. This guidance is based on certain key assumptions for the year which includes March 26th portfolio occupancy of 90%-91% by area, total NOI growth of around 9% year-on-year and increasing total interest expense for the year by 10%-12% year-on-year.
We are committed to deliver growth for.
This year and to continue growing our DPU in the years to come. We can now move to Q and 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 the touchstone 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. We would also request participants to restrict their questions to two per participant. If you have a follow-up question, you please rejoin the queue. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Punit from HSBC. Please go ahead.
Yeah, thank you so much and congratulations on a very nice pick up on leasing DPU. Everything actually things on this call it seems. My first question is on Chennai block and when I see your leasing there you talked about 64,000 sq ft in Chennai but when I look at the individual slides there is a block 10 where you know you fully leased out and then there is block one which includes expansion options. Do the expansion options also count as pre-lease or is that very early stages?
Firstly, Punit, thank you. Chennai has been a very strong market for us and you know we've leased about, in the last one and a half years, we've leased about 0.8 million sq ft. Having said that, you know, block 10 is completely pre-leased to a large, you know, client. While you know some of the other.
Blocks, which is block 4 and block.
10, like I mentioned it's about 30% pre-lease. The expansion options we have not included, Punit.
Okay, so in the 35% pre-lease of points in the Block 1, the expansion is not included.
That's right, yes.
Actually every time we put a lease or a pre-lease data, expansion options are never included.
Those are over and above and we disclose it separately for our development pipeline.
In the supplementary data book.
Okay, understood. Secondly, when I look at your contractual escalation over the next few years, they all seem to be between 13-14% versus 15%. Has there been any change in how these escalation clauses are being worked out now versus earlier?
Not really, Punit. The market, there's a very standard market. Either the escalation is 5% per annum or it's 15% every three years. And mostly it's 15% every three years. Those escalation standard contractual escalations remain.
Next three years I see mostly 14% for you, which is what I was asking.
Yeah, because there is an average. See, because some of these contracts are between 5% per annum and some of them are 15% every three years. So when you average that out, you will hit a number of 14%.
That's a real thing. Lastly, on the Hilton side, occupancy has installed quite nicely this time.
Any meaningful change here or was it?
Driven by some big event in Bangalore during the quarter?
No, I mean it is business as usual for us. We believe that given that these hotels are within the business park and given the activity of leasing and corporate activity on the back of this, we saw this occupancy.
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. Please go ahead.
Good evening everyone and congratulations on a great quarter. My first question is you all agree, you know, it's a great cycle. You know, if I look at your numbers, the same store NOI now is double digit growth. So first half you did about 11% occupancy. Also you just mentioned that it's trending 90. You had an estimate of 1991. Just trying to understand how do you see this playing out for the investors. So let's say your FY2026 guidance, 13% NOI, 10% distribution growth. Do you now see that you could probably reach the upper end of the guidance for FY2026 and would this mean even if you may not want to quantify, but does that mean that 2027 and 2028 could be much sharper like for like NOI growth and also distribution considering that the interest rates have been coming down. Your thoughts here.
Mohit, you want to ask all the questions and then we can answer collectively.
Yeah.
Okay.
Yeah.
My second question is specifically on your Pune assets.
What's happening there? Obviously Bangalore has done very well. Pune, while I don't see any uptick in the occupancy meaningfully, the GRV has actually gone up in the last six months. How are you looking at the demand in rentals there and what are the green shoots that you're seeing there?
Okay, so let me take the first question, Punit. See, from an overall occupancy perspective, you know, we've reached 90% this quarter and you know we see increased leasing momentum in the market.
Right.
Having said that, you know, we are very, we are also delivering a lot of spaces. We are focused on those deliveries as also on the occupancies of those spaces. Having said that again, Punit, we are very confident that we will be surpassing our occupancy guidance that we've given the market. Having said that, we do not want to revise any guidance to the market at this point. When the time is appropriate, we'll come back if there is any revision to those guidance. The second part of the first question is how do we see some of the operating incomes growth? Like we said, there is a 7.2 million sq ft development pipeline and we have guided a 10% growth and we are very actively looking at delivering those.
7.2 million sq ft.
Like I said, also, you know, pre-leasing those assets and, you know, hopefully, you know, we will surpass our guidances.
Right.
Second question, was Pune on the Pune piece, like, you know, like, you know, the market's been a little bit sluggish, especially the Hinjewadi market, but we are seeing a little bit of traction in terms of leasing. First quarter, we saw a couple of leases. This quarter, again, we've reported one lease that we have concluded. The team has built a pipeline of about 150,000 sq ft. The fortunes can change very quickly once the Metro as well as the Navi Mumbai airport is operational, which is what happened with us in Noida as well. Probably in the next six months, one year, we are hopeful that the fortunes will change in the Pune market.
Just a follow up, firstly on the first question, 2027, 2028, do you expect the NOI growth to be sharper, like, you know, in the range of, let's say 13%-15%, like for like.
Or more than that?
This is Abhishek. I mean, we expect that the NOI will be higher for sure. I mean, do not want to quantify or give you an indication right now, but because of all the deliveries that we have and because of all the leasing that we have, the kind of leasing that we are seeing now, definitely it will be higher.
Abhishek, what will be the benefit of lower interest rates? Let's say currently what are you building, what interest rates are building, and then what is the expectation, let's say going forward, would that benefit also go into distribution?
Yeah, definitely. That benefit will start flowing into distributions from the next quarter itself because all the, if you see, the interest rate has reduced from 7.9% to 7.35% right now, most of the impact will start coming in from the next quarter. From here on, organically, we do not see much decrease in the interest rate. Let's say the Indian government also wants to mirror what Fed has done and there is a 25-50 basis point reduction in interest rate. In that case, there can be further reduction in interest and most of it will start going to NCD because now the interest rate capitalization is reducing because of all the deliveries.
Sure.
Just a last clarification on the Pune assets.
What has been the driver for the valuation going up? If you could explain that.
One of the couple of factors, one is like with the flux of time, the way DC part works, there is an impact of escalations, there's an impact of all the renewals that we're doing. Because of that, the valuation has increased a bit.
Okay, done.
Those are the questions. Thanks a lot.
Thank you.
Thank you. The next question is from the line of Jatin from Bank of America. Please go ahead.
Hi. Thank you. This is Kunal. A couple of questions from my side.
The new leasing has indeed been very.
Strong, but just curious that there also has been an increase in planned expiries for the year. We've also sort of seen this in the numbers of some of the other REITs as well. Just curious, otherwise we would have thought that if the leasing environment is so strong, even the planned exits should sort of come down. It has not been the case.
Is this regular course of business, you?
Think, or could it be something to do with the nature of demand? There was three, four years back and that's what's showing up in numbers now. That's question one and second on your development pipeline now starting to come to fruition broadly, how would you want to think about the DPU accretion of that, does it take some time before it becomes accretive or should it start becoming accretive from day one? Because most of these assets seem to be 100% pre-leased.
Firstly let me begin with the exits. It's business as usual. If you see the overall exits from a trajectory perspective, actually it's pretty tight this year. I just want to mention that some of these exits were actually relocation. For example, ANZ, which is having about 500,000 sq ft with us, grew to about 700,000 plus. They exited their old block and they took a newer block, and similarly about another 150,000 sq ft was the retail major. They have also grown with us in our portfolio itself. You know, cumulatively we don't see this as, you know, additional exits but, you know, it's just business as usual. Abhishek, over to you.
On the development pipeline acquisition fee, definitely we are taking care of now 7.2 million sq ft which will be delivered most part, let's say 5.2 in the next three years and another 2 million after that. It will be DPU accretive because if you see the yield on cost is almost around 15% there. Barring the interest cost which will come in, this will be. Let's say the interest cost is 7.5%, it will be DPU accretive. What I want to also mention is even though they are pre-leased, once the building is up these tenants will take some time for their Fit-out and hence we have a rent free period which is generally if it's a big tenant then six months, it depends if the smaller tenants it can.
Be lower, so it will take that.
Time because during those period the interest.
Will be a drag, but the rental.
Actually starts after that rent free period, so it takes some time.
Thank you.
Thank you.
Thank you. The next question is from the line of Yashas Gilganch i from BOB Capital Markets. Please go ahead.
Good evening team. Thank you for taking my question. I would like to know more about the invitation to offer from Embassy Developers for the commercial project in Whitefield. At what stage is the evaluation process and how long is it expected to?
Take.
What on cost will it be targeting? If the project were to be evaluated positively, when do you expect to start spending on the project? What is the CapEx outflow to be like? The second question is are you also evaluating acquiring third party assets? If so, how would you describe the market now and are there any opportunities?
Let me first begin with the Whitefield asset that we've got an invitation to assess. We are currently in the stage of evaluation. You know there are multiple divisions that we have to carry on. All that I can comment at this stage is that the evaluation is under progress. As soon as we are completed and in a better position we will update the market. Having said that, Whitefield is a very accretive market. Probably the best performing micro market in Bangalore today. We see that this asset is strategically positioned in the main part of Whitefield on ITP and road. Having said that, we are keenly evaluating the asset. Also on third party acquisitions we are, like we've mentioned in our press release as well, we are actively evaluating all third party asset opportunities that are available across the top six cities in the country.
As and when we are closer or we've made a decision, we will update the markets.
Thank you.
Sorry to interrupt. Shall we move ahead with the next question?
Yes please.
Thank you. The next question is from the line of Gaurav Khandelwal from JP Morgan. Please go ahead.
Hi Amit Shetty and Sakshi. Thanks for taking a question. Most of my questions actually are what were your expectations on the cost of fund at the beginning of year versus 7.35%. If there are no further rate cuts does the blended cost of funds still continue to trend down? That's number one. Number two, sorry I should have known this but can you just understand when you gave us a guidance of 13% NOI growth versus 10% DPU growth what was the 3% disconnect there? Those are all my questions. Thank you.
Yeah, Gaurav. On the disconnect between NOI growth and DPU growth, it was largely because of two things. One is the interest cost increase because of the new deliveries, as I was explaining before, two years. The second was the non-cash NOI which would come in because of the rent-free period. That was a disconnect going to the debt cost at the start of the year. We were at 7.9%. We were expecting a slight decrease on the refinancing, and let's say we had built in around 0.25%-0.5%. Today we are at 7.35%. There is a positive there.
Having said that, if let's say there.
is no rate cut from here on, it will slightly go down because of the refinance that we will do. The upcoming refinance is around INR 1.1 billion, so slight dip there. There is one INR 400 million Commercial Paper that we had done at 6.44% because of which the average would come down slightly, because it is a very small one. Otherwise, no major expectation that we have there.
Got it. It's then safe to assume that the interest costs are faring better than what you had budgeted at the beginning of the year.
Yes. Yes. Gaurav.
All right. Thanks. Thanks for that.
Thank you.
Thank you. The next question is from the line of Pritesh Sheth from Axis Capital. Please go ahead.
Yeah, thanks for the opportunity.
Just a couple of questions.
One is on the outlook for.
The.
Upcoming block in ESP which we are scheduled to deliver by December 25. It's still like 24-25% lease by the time we deliver and get OC.
What sort of?
Occupancy run rate that you expect?
Chennai is actually, like I said, one of the strong markets and we've seen velocity there. You know, our expectation is that, you know, we will be at least 50% less occupied on Block 4. Having said that, we are already 30% pre-lease. We have a very strong pipeline. I should say that, you know, we have a pipeline of about 800,000 sq ft in Chennai. You know, we are pretty confident about Block 4.
Got it.
Got it.
Just on the acquisition that have been continuing from where we left with the opportunities that we are looking at in terms of the ask rate of the existing owners, are they realistic and are we looking at transactions which we can hopefully close out of the pipeline that we have?
We are still.
Managing the expectations of the sellers.
We have always, there is certain guidance with which we have always acquired assets. One is obviously it has to be DPU accretive. The second one is the asset quality itself needs to meet our asset quality. It needs to be ESG compliant, needs to be campus style developments, and also the right city and the right micro market is the third criteria that we evaluate. As long as the asset is accretive, look, the roster that we bring of clients to the table is something which is very unique and very, very different from most of the operators looking at buying assets in the market. We are able to maneuver deals and whenever there is a right deal on the table, you know, we will come to the market and we will disclose that.
Got it. Just one on the non-cash NOI part. You know, when do we collect the security deposits from tenant? Right, once we deliver the assets or, you know, once the fit-outs are done. I am just trying to see why we do not have a cash rental. But at least working capital changes would reflect that inflow. You know, it should be evenly matched. Right. Just clarification on that.
Yeah. So there are two things. One, we get a part of it at the time of signing of the LOI and the balance part, let's say three to four months at the time of actual lease. Did signing at the time of actual handover. Why it does not match fully is it can fall in two different years.
Let's say the rental that we.
Accrue on a month-on-month basis would be equated. Two months or three months SD that comes in comes in a particular quarter and the balance comes in another particular quarter. It can be two different years also.
Yeah, I got it.
Got it.
Well understood.
Thank you.
That's it.
From my side and all the best.
Thank you.
Thank you. The next question is from the line of Parvez Qazi from Nuvama Group. Please go ahead.
Hi, good evening gentlemen.
Congratulations for the great sector numbers.
Three questions from my side.
If I got it correct, you said we have reached about 0.8 million sq ft.
Feet space in Chennai in the last one and a half years.
Now across Block 4 and Block 10, which are both scheduled to get delivered.
Over the next seven odd months, I think we have a similar space yet to be leased out of the total.
1.2 million sq ft.
What is our expectation by what time will we be able to reach?
This 0.8 million sq ft across these two blocks? That's the first question.
Second, for some of our under construction assets in Bangalore which are scheduled to.
Be delivered in CY27 like the block six in ETB or the Embassy BizPark phase two, we have not, I guess, started leasing.
What's our thought process there?
Considering that the market is so good, do we want to maybe wait till the end and get some better rents?
Do we want to pre-lease some portion before?
The third question is lastly.
Status of the SEZ conversion would be great. Thank you.
Let me first begin with Chennai. Like I said, you know, leasing timing is a very difficult question to answer simply because there are corporate board approvals and the velocity is largely dependent on the occupier. But having said that, I would like to say that we have about 800,000 sq ft of strong pipeline which is rather a matured pipeline. So we are very confident that this volume will get in a couple of quarters. Having said that, you know, Chennai market itself is also doing extremely well. So there's been robust RFPs in the market. So you know, that's another layer of comfort that we can draw from.
Sure.
On ETB, especially on Parcel 6, that's the only asset that we have in terms of space in ETB. This will be an asset that we will want to wait and watch. Until and unless it's a really good deal with a very, very good brand name, we would like to lease this asset towards the end of its life cycle of development.
Parvez, on the third question on assets conversion. Till now we have converted 8.1 million sq ft, which includes 4.1 million of denotification and another 4 million of demarcation. The process of demarcation is like BAU right now. It takes not more than three months for us. Any space in, let's say, geographies like Bangalore, which is SEZ and comes up for vacancy, we just start marketing it as non-SEZ space. Whenever somebody takes it up, we can convert it into non-SEZ in three months. For other geographies, we wait till there is an active discussion with the tenant and then we apply and get it converted. I mean, just to say, the cost also is lower than what we were expecting at the start. It's just in the back mirror, I would think.
Sure.
Thanks and all the way.
Thank you, Parvez.
Thank you. The next question is from the line of Bedi from Kotak Alternate Assets, please go ahead.
Hi. Good evening everyone. Congratulations on the results. Can you please provide an update on the divestment of Block 1A1BA2 at Embassy Manyata?
When do we expect the sale to?
Be complete and money to be received?
In terms of the Embassy Manyata divestment, we've actually concluded the transaction. We're waiting for some final approvals that we have to secure. Once that is secured, I think the transaction will get concluded. It should happen in the immediate future. We will update the markets as and when we secure the appropriate approvals.
Okay. And one last question. Can you please quantify how much SEZ stock is currently held by the REIT?
We have about 19 million sq ft of SEZ stock currently.
How much will be occupied?
81% is occupied.
Okay, sure.
That's okay.
Thank you.
Thank you. The next question is from the line of Jatin from Bank of America. Please go ahead.
This one.
Follow up on the non-cash NOI part. If you were to assume next year that the pace of occupancy increase is similar to this year, then is it fair to assume that non-cash NOI will not actually be an additional drag on DPU growth? Conversely, if the occupancy does not go up at the same pace, it might actually become a source of tailwind.
Jatin, the answer would be no because even if we are leasing more, there will be non-cash NOI which will come in because there will be three to six months of rent free which we will be providing to the tenants. If there is no leasing, the pace of leasing reduces, then the total revenue and NOI itself reduces.
In the former.
Would you not see catch up from this year's non-cash part? I mean, I was hoping that you would balance out in that scenario.
Very good question. Because what happens is, see, the buildup happens over a six months to three months period, right? Because there's an entry, but the unwinding happens over the locking period, which is typically five years. So the balance four and a half to 4.75 years. The rate of unwinding is very slow. While there will be some unwinding for sure of all the buildup that has happened till this year end, the rate of unwinding is lower.
Understood?
Okay, thank you.
The next question is from the line of Satyinder Singh Bedi from Eon Investments. Please go ahead.
Yeah, thanks for the opportunity and I think great, great show in this quarter. Two questions, one for Amit. Amit.
The results are great.
What are the top three concerns that you have as of today and is there any first hint of softening in inquiries? We understand the leasing has been great but there's a time gap between inquiries and leasing. Any first hint of a softening in demand given the robustness that we've seen and the macro around AI and so on so forth. That's for Amit and Abhishek. I want to understand what is the amount of maintenance capex run rate that we have annually and how is that accounted for? Second, out of the 40% floating debt that we have, what percentage is repo linked and what is MCLR or some other benchmark?
Thank you.
Okay, let me begin with my first question.
Satyinder.
I think you know, from a business perspective we are at a very, very healthy and I think we're at a happy place. Having said that, you know, two concerns that we have is that one is the solar NOI. There is a dip, which we would like to, you know, see that that reverses itself and then it's, you know, back on track. The second piece is the hotel occupancy. You know, it's at 64%. It's a conscious decision that we took basically to increase our ADR. We've grown our ADR by 16% now. The focus will now move on to occupancy as well at the same ADRs. That's the second concern or, you know, target that we have. With respect to AI tariffs, really we've not seen any impact on the ground.
There's a lot of noise, there's a.
Lot of.
Noise in the market. In terms of overall leasing, like I said, about 60 million sq ft of lease got absorbed in the first nine months. We are pretty confident that we will surpass last year of 74.4 million sq ft and probably even hit 80 million sq ft of gross leasing. Like I said earlier, there is about 12.5 million sq ft of RFPs in the market, of which about 60% is for Bangalore. Right. That is where we have pretty much our largest portfolio as well. Again, we are seeing a lot of GCCs, especially the new entrants from mid-tier GCCs entering the country for the first time. You know, analytics say that, you know, probably the GCC count will go from 1,900 GCCs to about 2,200-2,400 GCCs.
Right.
I think we are in a really, really happy place today.
Thank you.
Very clear.
Yeah.
On the second question, which is on the maintenance CapEx, you can see the maintenance CapEx is basically at a run rate of INR 70-80 crores per year on the whole of the portfolio. Now what happens to this is if there is a repair which is major overall in types, then it gets capitalized. If there is a, let's say, replacement in nature and it has a corresponding VCAP also. And if it is repairs, repair in nature, it goes to the financials and it's the P&L. What also happens is that for all of these repair and maintenance and CAM expenses, we get a margin from the tenant.
Okay, yeah, yeah. What percentage typically would be getting capitalized? I understand it's otherwise a small value typically. About INR 50 crore would be getting capitalized. Could that be a rough for our current run rate?
I mean, it actually depends every quarter on quarter. I mean, I cannot, I do not know the exact number, but let's say 50, 50% would capitalize. I mean I will have to come back to you on the exact number.
Is per quarter. Okay. Yeah.
Yeah.
Thank you.
On the floating debt thing, if you see 40% is floating, you can say 50-50 between T-Bill and MCLR.
Okay. Okay, fine, fine.
Okay.
Okay. So assuming no change, assuming that the December expected report does not come around, what is the exit rate from 7.35? Is it a fair assumption we will move to 7.2 or so organically or 7.25 organically? Obviously, there is some record movement. We get the benefit through the tp.
I mean there will be some reduction because of as I mentioned earlier one CP that we did and there will be some change because of the refinancing of INR 1,100 crores as of now.
Too early to say.
I mean whether we land at 7.25 or what number, that is too early to say. Yeah, it will reduce by some basis points.
Not major. Thanks Abhishek. Great show. I think the way you can reach messenger, I think it's set a new benchmark. Congratulations Amit. Congratulations Abhishek and Sakshi. Thank you.
Thank you.
Thank you. The next question is from the line of Sumit Kumar from JM Financial Institutional Securities. Please go ahead.
Hi, good evening everyone. Thanks for the opportunity. My first question is on the working capital change of about INR 75 crore. What explains that number? My second question is on distributions from workings seems to be up and down quite a bit.
How should we look at that number?
Sumit, on the first question of working capital. See, the major component of that is SD, as we were discussing, because of all the leasing that we are doing and pre-leasing also. Whenever we are signing this NOI, we get the SD. This quarter is.
The big number of our INR 80 crores.
The second one is what happened is as we mentioned in the last call during the last quarter we had paid all the property tax for the year. We are getting an unwinding benefit for one quarter out of that. The third one is a positive on some collections which we had not collected.
During the last quarter.
We collected that and there is a negative because of the spread straight line in the non-cash NOI that we said. Hence, there is INR 7.72 crores of working capital this quarter. Sorry, I missed the second question. Yeah, sorry. The distribution of JLP actually depends on the cash that is available with them. There is a loan repayment where there is an EMI, so they keep paying that. Whatever is the extra balance cash that is available with them based on their collection, the SD that they receive, they distribute the dividend where we receive the 50%. Hence, there is a variance quarter on quarter.
Let's say as last time we had mentioned, for the, we look at it for the full year basis, it will be similar to what we had last time of around, let's say, INR 250 crore.
Okay, thank you. That's all from myself.
Thank you.
Thank you. Ladies and gentlemen, as there are no further questions, on behalf of Embassy REIT, that concludes this conference. Thank you for joining us. You may now disconnect your lines.