Embassy Office Parks REIT (real estate investment trust) has announced the acquisition of Embassy Business Hub for an aggregate capital value of Rs 334.8 crore ($41 million). The acquisition involves 1.4 million square feet (msf) of office property in Bengaluru.
Embassy REIT plans to primarily fund the acquisition through debt at 8.1 percent interest cost per annum, for which it has secured binding commitments from leading financial institutions.
“Embassy REIT’s acquisition of this high-quality, well-connected, wellness-oriented business park expands our dominant presence and office offerings in Bangalore, which undisputedly remains the most sought-after office market in India," Vikaash Khdloya, Chief Executive Officer (CEO) of Embassy REIT, added.
The 59-acre campus-style business park is situated in North Bengaluru and is close to both the airport and Embassy REIT’s 15.2-msf flagship property, Embassy Manyata.
Out of the 1.4 msf of total leasable area owned by Embassy Sponsor's affiliates, 0.4 msf is nearing completion and about 93 percent is pre-committed to Philips. The balance is still in the early stages of development.
In addition to securing approval by the Board of the REIT Manager's independent directors and a fair opinion from Axis Capital Limited, Embassy REIT claimed it adheres to strictly related-party safeguards.
"Additionally, the REIT Manager will not receive any fees linked to the acquisition. The acquisition is expected to be completed on or before April 30, 2023, subject to completion of customary conditions precedent," the company added.
Ernst and Young LLP provided financial and tax due diligence services and S&R Associates served as the legal advisor to Embassy REIT.
For the proposed acquisition, Axis Capital Limited gave a fairness opinion to the independent directors of the Manager to Embassy REIT, and stated that, subject to assumptions and scope limitations, the acquisition value is reasonable from a financial standpoint for the general unit holders of Embassy REIT.
India's first listed REIT, Embassy REIT, has established its presence in the office markets of Bengaluru, Mumbai, Pune, and NCR. Embassy REIT owns and manages eight office parks and four city centre office buildings, and works with over 200 companies.