Embassy Office Parks REIT has agreed to purchase Embassy Splendid TechZone, a Grade-A business park, from Embassy Sponsor, for an Enterprise Value of Rs 1,269 crore.
The proposed acquisition marks Embassy REIT’s entry into Chennai, one of India’s top performing office markets, comprises 1.4 msf of completed area, which is 95% occupied and leased to large global companies such as Wells Fargo and BNY Mellon, among others. It also comprises 1.6 msf of under-construction area, of which 0.4 msf is pre-leased, and 2.0 msf of future development potential.
“At Embassy Group, our priority is to develop world-class office assets and support the expansion of the REIT’s portfolio through a pipeline of opportunities that will help it to grow inorganically over the coming years. After the successful acquisition of Embassy TechVillage and Embassy Business Hub in Bengaluru by the REIT, we are pleased to provide another premier office park in a prominent market like Chennai and contribute to the continued growth of Embassy REIT,” said Jitendra Virwani, Chairman & Managing Director, Embassy Group.
The acquisition is subject to certain conditions precedent, regulatory and other approvals.
Embassy REIT intends to raise unit capital of Rs 2,500 crore, to finance the acquisition and reduce the current 30% leverage of the portfolio, providing flexibility for future growth.
“The Board of the Manager to Embassy REIT has approved the acquisition and an institutional placement via an enabling resolution of up to Rs 3,000 crores, subject to unitholder approval,” the company said in a statement.
“The proposed accretive acquisition of Embassy Splendid TechZone will mark the addition of another quality asset to our existing office portfolio, which continues to benefit greatly from the demand that Global Capability Centres (GCCs) are demonstrating for Indian office space. ESTZ is a top-notch business park in a leading Chennai micro market that will take our portfolio to over 50 msf. This acquisition further diversifies our India presence, enhances our scale and ability to deliver embedded growth to all our stakeholders,” said Aravind Maiya, Chief Executive Officer, Embassy REIT.
Listed in April 2019, Embassy REIT owns and operates a 45.4 msf portfolio of nine infrastructure-like office parks and four city‑centre office buildings in India’s top office markets of Bengaluru, Mumbai, Pune, and the National Capital Region (‘NCR’). Embassy REIT’s portfolio comprises 35.8 msf completed operating area.
