Embassy REIT, publicly listed as REIT, has agreed to purchase Embassy TechVillage (ETV) assets from affiliates of Embassy Sponsor, Blackstone Sponsor and other selling shareholders for a total consideration of ₹9,782.4 crore ($1.3 billion), subject to unitholder and regulatory approvals.
Announcing this asset buy, Mike Holland, Chief Executive Officer of Embassy REIT, said the acquisition comprises around 6.1 million square feet (msf)of completed area; about 3.1 msf of under-construction area, of which 36 per cent 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.
He added, “The proposed accretive acquisition of Embassy TechVillage will mark the addition of another trophy asset to our existing office portfolio while reinforcing our stable cash flows. ETV is a unique large-scale business park with a diversified blue-chip and predominantly multi-national occupier base, including JP Morgan, Cisco, Sony and Flipkart.”
He said, “The acquisition further deepens our presence in Bengaluru 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 per cent discount to the average of the two independent valuations. This acquisition aligns perfectly with our overall strategy to maximise total returns for our Unitholders.”
The Embassy REIT proposes to fund this nearly ₹9,800 crore acquisition by issuing equity of around ₹6,000 crore through a combination of an institutional placement of around ₹3,700 crore, and by way of a preferential issue of units to third-party selling shareholders of around ₹2,300 crore.
The proposed placement of units is expected to increase the REIT’s public float, enhance its liquidity, and serve as a catalyst for the REIT’s potential inclusion into additional benchmark global equity indices. The REIT also plans to re-finance existing ETV debt facilities of up to about ₹3,600 crore ($492 million) through a combination of equity and issuance of new coupon bearing debt.
Jitendra Virwani, Chairman and founder of the Embassy Group, said: “We are pleased to deliver on our commitment to support the growth of the REIT platform through the ROFO pipeline. The Embassy TechVillage ROFO reaffirms the commitment we made at the time of the REIT’s listing to provide Embassy REIT with a pipeline of opportunities for completed and rent-yielding assets.”
He added, “Over the past six years, Embassy Group has developed ETV to be one of the finest office assets in the country, and we are pleased to offer this asset to the REIT for consideration and approval by the Independent Directors of the REIT Manager and the Unitholders.”