Embassy Property Development, a leading real estate firm, intends to slash its debt of ₹8,800 crore by more than a third in the upcoming two quarters by divesting specific assets, including its office park in Chennai spanning 5 million square feet, a development known as N2 within Embassy Manyata Business Park covering 1.6 million square feet, and an additional 1 million square feet of office property.
Furthermore, the company plans to reduce debt by selling completed inventory backed by the necessary occupancy certificate (OC) from its residential projects.
Asset Value
“Last year, Embassy clocked more than ₹1,300 crore in revenue through the sale of inventory in its luxury and premium residential projects, which helped pare down its debt. The group is focused on all efforts to reduce its debt exposure. The immediate first step towards this is to reduce the overall debt by ₹2,700 crore before September 30, 2023,” said Rajesh Kaimal, CFO, Embassy Property Developments.
Furthermore, the company said it possesses substantial asset value, including a 73% ownership in Wework India, which it intends to monetise in the future.
Wework India is projected to surpass an Ebitda of ₹450 crore in the current fiscal year. “Embassy Group has already reduced its debt by ₹1,400 crore by selling commercial assets and part of its stake in Embassy REIT earlier this year,” said Kaimal. In March 2023, the company successfully completed the sale of Embassy Business Hub, a 1.4 million square foot (‘msf’) office property located in Bangalore.
‘Challenge the order’
The transaction was made to Embassy REIT, resulting in a total enterprise value of ₹334.8 crore. Additionally, the company raised ₹1,250 crore by selling approximately 4% of its stake in Embassy Office Parks REIT to Bain Capital.
According to the Embassy Group, NAM Estates’ consolidated debt exposure from banks or financial institutions was ₹5,200 core as of March 31, 2022.
“NAM’s consolidated debt is substantially backed by completed OC-received residential inventory. There are also assets of approximately ₹10,000 crore against the NAM consolidated debt, which the article fails to appreciate,” he said.
Embassy Group, Indiabulls Real Estate’s largest shareholder, plans to appeal to the National Company Law Appellate Tribunal over the recent order from the Chandigarh bench of the National Company Law Tribunal. The order halted the proposed merger of NAM Estates and Embassy One Commercial Property Developments with Indiabulls Real Estate (IBREL). “We have 45 days to apply to NCLAT against the NCLT order. We believe we have a strong legal basis to challenge the order,” said Kaimal.
Earlier this month, the NCLT’s Chandigarh bench, which has jurisdiction over Indiabulls Real Estate, raised specific concerns based on the objections cited by the income tax department to the merger, Indiabulls Real Estate said in a regulatory filing.
“The valuation based on which the swap ratio was determined for the merger was carried out by two independent, reputed, and recognised valuers and backed by a fairness opinion issued by a Sebi-registered Category I merchant banker.” The valuation reports were also scrutinised and found satisfactory by other regulators such as SEBI, BSE, and NSE,” said Kaimal.
