Embassy Office Parks REIT Ltd. (NSE: EMBASSY) Q2 2025 Earnings Call dated Oct. 24, 2024
Corporate Participants:
Sakshi Garg — Head – Investor Relations
Aravind Maiya — Chief Executive Officer
Abhishek Agrawal — Chief Financial Officer
Amit Shetty — Chief Operating Officer
Analysts:
Puneet Gulati — Analyst
Murtuza Arsiwalla — Analyst
Parvez Akhtar Qazi — Analyst
Pritesh Sheth — Analyst
Mohit Agrawal — Analyst
Presentation:
Operator
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.
Sakshi Garg — Head – Investor Relations
Thank you. Welcome to the second quarter FY 2025 Earnings call for Embassy REIT. Embassy REIT released its financial results for the quarter and half year ended September 30, 2024, a short while back. As is our standard practice, we have placed our financial statements, earnings presentation discussing our performance, and a supplemental financial and operating databook 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 that one could deem 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 provide on this call are management estimates, based on certain assumptions and have not been subjected to any audit, review, or examination procedures. You 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 Aravind Maiya, our CEO; Amit Shetty, our COO; and Abhishek Agrawal, 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, Aravind.
Aravind Maiya — Chief Executive Officer
Thank you, Sakshi. Good evening, and thank you all for joining us today. Q2 was yet another remarkable quarter for us. Before we delve into the details, let me start with seven key highlights for the quarter and half year.
We leased a total of 2.1 million square feet for Q2, recording our highest ever H1 leasing performance of 4 million square feet. Signed 1.3 million square feet of new leases, 0.4 million square feet 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 square feet. Delivered 0.6 million square feet office tower in Bangalore, which is 100% pre-leased to ANZ. Raised the leasing guidance for the full year from 5.6 million square feet to 6.5 million square feet. 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 our annual guidance.
Moving to more details on our Q2 leasing performance. We leased a total of 2.1 million square feet across 22 deals and expanded our occupier base to 260 blue chip clients. This included 1.3 million square feet of new leases, 0.4 million square feet of renewals, and 0.4 million square feet of pre-commitments. The renewals included early renewal of leases, totaling 0.2 million square feet 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 square feet signed by a leading cybersecurity US company for the upcoming Block 8 in Embassy TechVillage and 0.2 million square feet 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 square feet, which needs to be exercised by June 2025, and with this, the whole 1.4 million square feet tower is pre-leased to them, including their expansion options, making this our largest built-to-suit project till 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 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 square feet of leases in Embassy Oxygen, bringing its occupancy up 70 — up to 70%, over 8% increase within a quarter.
We noted 0.6 million square feet of tenant exits in Q2, mostly from IT services occupiers, who now contribute to less than 10% of our rental portfolio. Also, of the total 1.5 million square feet 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-mark potential.
During Q2, we also received 0.3 million square feet 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 FY24 and a portion of which had materialized in Q1 with 0.4 million square feet 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 square feet by March ’25.
A little more insights into our city-wise 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 breakdown our total 5.2 million square feet vacant area, 2.2 million square feet is in Bangalore, for which we have a strong GCC pipeline and expect to reach stabilized occupancy levels of mid-90s in this city in the next year or so. Around 1 million square feet 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-80s in another year’s time. Finally, on Pune, wherein 1.9 million square feet 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 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 square feet area and we have already leased over 80% of the same. Another 1.4 million square feet is in the process of being converted either to non-SEZ or non-processing area.
On our development portfolio. Our current development pipeline now totals 8 million square feet, comprising nine projects across Bangalore and Chennai. Till FY26, five towers spanning 5.2 million square feet are scheduled for delivery and we have already pre-leased 71% of this area, including expansion options. Our ongoing 8 million square feet 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 square feet already leased out in the first nine months of the year. With this record leasing performance, calendar year ’24 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 our financial updates.
Abhishek Agrawal — Chief Financial Officer
Thank you, Aravind, 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 INR997 crores and INR805 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 a reduction in government tariffs, as well as a seasonal reduction in solar unit generation.
We declared distributions of INR553 crores or INR5.83 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 INR2,000 crores of coupon-bearing debt at an average rate of around 7.95% to repay the non-convertible debentures, which were due for maturity last week. The fundraise included issuance of INR900 crores of NCDs, which saw a 3x subscription, INR850 crores of term loans from leading banks, and INR250 crores of commercial paper.
As of September ’24, our net debt book stood at over INR18,000 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 ’24, our gross asset value increased by 12% year-on-year to INR59,104 crores and our net asset value by 4% to INR415.84 per unit. The increase was mainly driven by new deliveries, Chennai acquisition, and our ongoing development capex.
Lastly, an update on our FY25 guidance. Based on our YTD performance, I am pleased to reconfirm the financial guidance that we had provided at the start of FY25. We continue to expect our NOI to be in the range of INR3,215 crores to INR3,345 crores and our distributions to be in the range of INR22.40 to INR23.10 per unit. At midpoint, this guidance implies a 10% growth in NOI and a 7% growth in DPU on a Y-o-Y basis.
This guidance is based on certain key assumptions for the year, which includes revised total lease-up of 6.5 million square feet, including 4 million square feet of new leasing, 1 million square feet of renewals, and 1.5 million square feet 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% to 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 now move to Q&A, please.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] 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.
Puneet Gulati
Yeah. Thank you so much, and congratulations on an uptick in DPU once again. My first question is with respect to the divergence between NOI growth and DPU growth, especially for two assets, Manyata and Embassy TechVillage, where, Manyata, it is 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. If you can help us explain some of the discrepancies here?
Abhishek Agrawal
Puneet, the way I would answer this is, not look at the DPU asset-by-asset, because what happens is the loans that we have taken, not necessarily the loans 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.
Aravind Maiya
And Puneet, also that kind of explains the divergence between 12% and 5%, 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 and Q2. So that’s the reason why you see the divergence. But overall basis, if I was 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 FY25 end.
Puneet Gulati
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?
Abhishek Agrawal
Yeah. So, most of the property tax we have already paid between Q1 and Q2.
Puneet Gulati
Understood. And secondly, if you can also explain, what’s driving the dividend growth on the GolfLinks side and how should one think about it getting into next two quarters?
Abhishek Agrawal
So, Puneet, actually, as we 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 INR260 crore type — in the zip code of INR260 crores.
Puneet Gulati
Understood. And lastly, if you can talk about what is the additional 1.4 million square feet that you put in for conversion? Where exactly is that area and what are these assets?
Aravind Maiya
It’s across a few assets, Puneet. But this 1.4 million square feet, again I can split it as 0.7 million square feet. We’re looking at denotifying lands itself. One is in Pune and one is in Embassy TechVillage. And the balance 0.7 million square feet is floor-by-floor demarcation, again largely between Manyata, TechVillage, and Oxygen.
Puneet Gulati
Understood. That’s very helpful. Thank you so much, and all the best.
Aravind Maiya
Thank you.
Operator
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.
Murtuza Arsiwalla
Yeah. Hi, Aravind, just a question from my side. 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 rental is 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 final sort of data points, Pune and 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? Whenever those contracts do come up for leasing, how should one think, or you would like to believe that 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?
Aravind Maiya
Yeah. Let me answer this little macro, little micro, and I’ll also request Amit to add — 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 trends given by our valuers, which is Cushman over here, right?
So I mean, if you look at big picture Bangalore, they’ve given a market rent of INR97 for both Manyata and TechVillage. All I would want to say is, all are leasing in both these assets, range from INR100 to INR110 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 the rents which we are achieving are way higher than the number which is mentioned, which is INR48.
Potentially, only in Pune — and also, in Pune, I would say, TechZone and Qubix, largely we are a little above the market rate was [Phonetic] mentioned. Quadron is something where we’ve seen no leading traction, 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.
Amit Shetty
Thanks, Aravind. Just to add to Aravind, the overall leasing absorption has been very healthy in the country. I think YTD has been about 50 million square feet of leasing. The supply in the country is also contracting compared to — I think there has 17% drop compared to the last year.
So this again reinforces the fact that the rental values are just going to go north across market and across cities. I think 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 dynamics in the market.
Murtuza Arsiwalla
Sure. If I could just put in one more question, how do you think of some of these exits, which we are still seeing? If the market dynamics are so tight, how should one read into the broader sort of exits as opposed to getting into any specifically any city or micro market?
Aravind Maiya
Actually, we 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 square feet. Now that 1.5 million square feet has gone up to around 2.5 million square feet. Having said that, at the beginning of the year only, we had said that this 1.5 million square feet does not include a potential risk tenant in Quadron, which was almost 630,000 square feet, right?
So, if you see the increase from 1.5 million square feet to 2.5 million square feet, so 1 million square feet increase. Of the 1 million square feet, 0.64 million square feet is from this one tenant, which we had highlighted as a high risk. And if I were to remove this out, it is just one additional tenant in Bangalore TechVillage, who has given up another 200,000 square feet. Besides this, there are just another two or three small exits. So, you can see the exits slowly rationalizing. And taken together with the new lease-up, you are seeing occupancy going up.
Murtuza Arsiwalla
Sure. We appreciate the vacant — 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.
Operator
Thank you. The next question is from the line of Parvez Akhtar from Nuvama Group. Please go ahead.
Parvez Akhtar Qazi
Hi, good evening, and thanks for taking my question, and congratulations for the great set of numbers. So my first question is regarding Splendid TechZone. Over the next seven quarters, roughly about 1.6 million square feet 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.
Aravind Maiya
Parvez, probably you can just finish off all questions, so that then I can redirect the teams to answer specifics.
Parvez Akhtar Qazi
Sure.
Aravind Maiya
Unless you don’t have anything else.
Parvez Akhtar Qazi
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, when 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? Thanks.
Aravind Maiya
So, why don’t I request Amit to take the first question on Chennai?
Amit Shetty
Thanks, Aravind. Chennai, we have a very strong pipeline that we’ve built over the last quarter — quarter-plus. There are large demands, especially from the GCC sector again in Chennai, given the talent that is available in Chennai. So, we don’t see — we see this as a great opportunity, given that currently, we are already at 95% occupancy, and just to further consolidate and strengthen our position in that market.
Aravind Maiya
And in terms of IT services, honestly, two perspectives on this, Parvez. One is it’s already dropped below 10% and one tenant will leave in the next couple of quarters. With that, it will drop to — probably 1% more. And then I see it largely stabilizing from 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 rent they pay and some of the parks which we own, especially in Bangalore, might not necessarily be a solution that 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 broads — 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, strata-owned or Grade B supply. So as GCCs enter this particular market/micro market, we — our parks become at least the first port of call for them.
Parvez Akhtar Qazi
Sure. Thanks, and all the best. Appreciate it.
Aravind Maiya
Thank you.
Operator
Thank you. The next question is from the line of Pritesh Sheth from Axis Capital. Please go ahead.
Pritesh Sheth
Yeah, thanks for taking my question. The first one is on, I would say, leaving traction that you see in Pune and Noida. What’s the outlook there? Like, you guided for mid-90s occupancy in Bangalore by next year. How do you see trajectory for Pune and Noida going ahead, considering that we are finally now seeing some traction on leasing there? So that’s one.
Second, probably our NOI growth this year should be around 10%, as per your guidance. Considering the positive commentary on leasing that you have given, plus the new developments that are coming in in this year directionally, whether FY26 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, 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.
Aravind Maiya
Yeah, 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 that 70% to go above mid, say — call it, mid-80s in the next six months to 12 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 a couple of other assets, which is TechZone, as well as Qubix. TechZone 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 we — 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 refrain and hold on till we give better guidance, probably end of the year.
Pritesh Sheth
Sure, sure. That’s not a problem. Okay. That’s it from my side. Thank you.
Operator
Thank you. The next question is from the line of Mohit Agrawal from IIFL Securities. Please go ahead.
Mohit Agrawal
Yeah. Sorry, my line got dropped. So, thanks for giving me the opportunity again. So, my first question is on the occupancy level. Aravind, you mentioned that you are still looking at 88% occupancy levels by end of FY25. 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 lease — the 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 FY25?
Aravind Maiya
Mohit, you want to finish your questions?
Mohit Agrawal
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. So, some colour 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 talked about flex operators. They have taken a large space this quarter, now almost 7% of your portfolio. This used to be about 2% during COVID. Just wondering how do you think they do in terms of sustainability? Also, if there’s some sort of an overlap in terms of timings and all of that? So just your thoughts on basically flex being the large part — meaningful part of your portfolio now?
Aravind Maiya
Sure. I think, starting with the occupancy, one of the key missing links could be, Mohit, the fact that of the 1.9 million square feet, which is getting delivered in the next six months, 1.3 million square feet 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 square feet, what is left in Parcel 8 of ETV, which gets included.
So what that means is, call it, 1.9 million square feet gets added to supply and potentially something very close to 1.9 million square feet could get added to 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 — if you’re still not able to arrive at, Sakshi can take this offline and help you on this math. So…
Mohit Agrawal
Sure.
Aravind Maiya
That’s one. Second — why don’t I cover flex first, and then I’ll go into the question on restructuring.
Mohit Agrawal
Yeah.
Aravind Maiya
Big picture, it’s a well-thought through strategy, Mohit. And the reason why I say that is, if you see majority of this flex 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 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 will 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% to 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, a couple of things on this. 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 have 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 asset. All three are part of the single entity. So, what we thought was, at least structurally, let’s be ready. Eventually, we don’t know where this will head. We could, for all, continue to hold these assets. But 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, considering the stamp duty and other implications which are there in the restructuring, it makes sense to combine a couple of restructurings, then the cost of restructuring reduces. With this in mind, we thought why don’t we keep the hotel assets of Embassy Manyata also separate, then effectively, we’re keeping hotels in a different structure. So, it’s just enabling structure of keeping hotels separate, nothing beyond that.
Mohit Agrawal
So, what eventually you plan — Quadron, I understand. But eventually for the hospitality business, do we think that you want to, at some stage, monetize that portfolio?
Aravind Maiya
I 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 2x the price, why not? But that’s just hypothetical.
Mohit Agrawal
Okay. And one clarification, Aravind. 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?
Aravind Maiya
It won’t, Mohit. Manyata is a 13.5 million square feet park with another 3.5 million square feet getting delivered in the next three years. So, what we’ve done is, I think, put together around 600,000 feet.
Mohit Agrawal
Okay. Great. That’s all from my side, and wish you all a very happy Diwali in advance.
Aravind Maiya
Thank you. Wish you the same.
Operator
Thank you. The next follow-up question is from the line of Pritesh Sheth from Axis Capital. Please go ahead.
Pritesh Sheth
Yeah. Just one question I had. On the pre-commitments that we have increased in our leasing guidance, is that related to the upcoming development that we are delivering in Manyata or something we look in Chennai? Because that is also closer to delivery by probably next year, in six months, nine months. So, just your comment on that?
Aravind Maiya
It is for Chennai, Pritesh. It’s actually for Chennai.
Pritesh Sheth
Okay. So, of the 1 million square feet we are going to deliver there, so 0.5 million square feet is what we are expecting to be pre-leased in next six months? Yeah.
Aravind Maiya
Right.
Pritesh Sheth
Okay. Okay, thank you.
Operator
[Operator Closing Remarks]