Embassy Office Parks REIT is looking to raise $500 million through a Qualified Institutional Placement (QIP), said two persons with direct knowledge of the development.
This will be the first fundraising exercise being undertaken by the Blackstone Group and Embassy Group-backed REIT since its listing in April 2019.
The funds raised through this institutional placement will be utilised to support the proposed $1.3 billion acquisition of the Embassy TechVillage, an integrated office park in Bengaluru.
“The fundraising will be done through international and domestic institutions starting tonight itself. The indicative price for the issue will be in the range of Rs 331 to Rs 335 per REIT unit,” said one of the persons mentioned above.
On Tuesday, units of Embassy Office Parks REIT closed at Rs 356, up 0.2% over previous close. The issues opens tonight and allotment for the same will be completed within this week itself.
Embassy Office Parks REIT has already entered into an agreement to acquire Embassy TechVillage assets from affiliates of its sponsors–Embassy Group, Blackstone Group and other selling shareholders–for $1.3 billion or Rs 9,782 crore.
Last week, 99.94% of unrelated unit holders had given approval for raising funds for the acquisition of this large-scale integrated office park situated on the Outer Ring Road in Bengaluru.
The 9.2-million-sq ft office park houses over 45,000 employees of over 40 corporate occupiers.
It spans over 84 acres and derives 88% of its rents from multinational occupiers.
The park is 97.3% occupied, and has a 9.7 year Weighted Average Lease Expiry (WALE) with a 33.7% mark-to-market potential.
The REIT proposes to fund this acquisition by issuing equity worth $812 million through a combination of this institutional placement of $500 million, and by way of a preferential issue of units to third-party selling shareholders of $312 million.
The proposed placement of units is expected to increase the REIT’s public float and liquidity.
The REIT also plans to refinance existing Embassy TechVillage’s debt of up to $492 million through a combination of equity and issuance of new coupon-bearing debt.
Embassy Office Parks REIT declined to comment for the story.
The integrated office park has additional development potential of 3.1 million sq ft, of which 36% space has already been pre-leased to JP Morgan.
The overall campus also has two proposed Hilton hotels with a total 518 keys. Embassy REIT is exercising its right to acquire the asset under the Right Of First Offer (ROFO) agreement.
Morgan Stanley India Company, Kotak Mahindra Capital Company, BofA Securities India, J.P. Morgan India, Axis Capital, HSBC Securities and Capital Markets (India) and IIFL Securities are bankers to the QIP issue.
Global institutional investors’ interest in Indian commercial real estate remains robust even during the ongoing pandemic.
In an indication of the appetite for commercial rental yield, India’s second Real Estate Investment Trust (REIT), K Raheja Corp and Blackstone Group-backed Mindspace Business Parks REIT received record subscription in July for the Rs 4,500-crore issue.
In the last few weeks too, right in the middle of the ongoing pandemic, Blackstone Group and Brookfield Asset Management have entered into separate deals worth over $1.5 billion and $2 billion for office assets portfolios of Prestige Group and RMZ Corp.
Source: Economic Times