Embassy REIT, India’s first publicly listed REIT, will purchase Embassy TechVillage assets (“ETV”) from affiliates of Embassy Sponsor, Blackstone Sponsor and other selling shareholders for a total consideration of Rs 9782.4 crore ($1.3 billion), subject to Unitholder and regulatory approvals.
The acquisition comprises 6.1 million square feet (“msf”) of completed area, 3.1 msf of under construction area, of which 36% is pre-leased to JP Morgan, and two proposed 518-keys Hilton hotels within the overall ETV campus. Embassy REIT is exercising its right under the ROFO agreement to acquire the asset.
ETV is a large-scale, award-winning and integrated office park situated on the Outer Ring Road in Bengaluru. Home to over 45,000 employees of 40+ corporate occupiers, ETV is an infrastructure-like asset that serves as a complete business ecosystem for its occupiers and their employees. Located in Bengaluru’s best-performing commercial office sub-market, ETV spans over 84 acres and derives 88% of its rents from multinational occupiers.
Mike Holland, Chief Executive Officer of Embassy REIT said, “The acquisition further deepens our presence in Bengaluru, which remains India’s strongest office market, and significantly enhances our scale and ability to deliver embedded growth. We are delighted to purchase an asset of the quality and scale of ETV at a 4.6% discount to the average of the two independent valuations.”
The REIT proposes to fund this Rs 98 billion ($1.3 billion) acquisition by issuing equity of Rs 60 billion ($812 million) through a combination of an institutional placement of Rs 37 billion ($500 million), and by way of a preferential issue of units to third-party selling shareholders of Rs 23 billion ($312 million). The REIT also plans to refinance existing ETV debt facilities of up to Rs 36 billion ($492 million) through a combination of equity and issuance of new coupon bearing debt.