Oberoi Realty - Annuity Portfolio On Track For Significant Scale Up: Motilal Oswal

Motilal Oswal Report

We recently visited Oberoi Realty Ltd.’s Goregaon and Borivali projects to understand the progress of its annuity portfolio and also the sales and leasing strategies for its residential and annuity assets. Below are the key takeaways:

• Oberoi Realty is expecting to receive occupancy certificate for Commerz III (Goregaon) by end of FY24. Further, Morgan Stanley – which has leased 1.1 million square feet (carpet area), accounting for ~50% of the total area – has commenced fit-outs and likely to start paying rentals beginning FY25.

• The leasing for the balance area will commence only six months prior to the completion and Oberoi Realty expects to fully lease out the area by FY25. At full occupancy, Commerz III has the potential to generate Rs 6.0-6.5 billion of annual rentals (including CAM) beginning FY26.

• The company’s Borivali mall is on track to commence operations during Oct-Nov 2023.

• The much awaited launch of Kolshet Road project in Thane (earlier expected in Q4 FY23) could spill over to Q1 FY24E but there is a strong possibility of a new tower launch at Elysian that could offset the delay.

• While the management has always reiterated its intent to acquire new projects, except for an eight-acre land acquired from Blue Star in Thane, no major new land deal has materialized yet.

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