Embassy REIT announces ₹3,348 million acquisition of Embassy Business Hub in Bangalore

Embassy Office Parks REIT (NSE: EMBASSY / BSE: 542602) ('Embassy REIT'), India's first listed REIT and the largest office REIT in Asia by area, announced today that it has agreed to acquire Embassy Business Hub, a 1.4 million square feet ('msf') office property in Bangalore, for a total enterprise value of ₹3,348 million ($41 million). Embassy REIT plans to primarily fund the acquisition through debt at 8.1% interest cost per annum, for which it has secured binding commitments from leading financial institutions.

Embassy Business Hub, a 59-acre campus-style business park, is situated in the high visibility growth corridor of North Bangalore, and is close to both the airport and Embassy REIT's 15.2 msf flagship property Embassy Manyata. Embassy REIT is acquiring Embassy Sponsor's affiliates' share of 1.4 msf total leasable area, of which 0.4 msf is nearing completion and 93% pre-committed to Philips, a global electronics major and member of the Fortune Global 500 and the balance 1 msf is in early stages of development.

Vikaash Khdloya, Chief Executive Officer of Embassy REIT, said, "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. This tuck-in acquisition is priced attractively, embeds further growth in the REIT portfolio, and creates long-term value for our Unitholders."

Transaction Highlights

- Total enterprise valuation of ₹3,348 million ($41 million) at a 4.5% discount to the average of two independent valuations

- Fully financed acquisition with binding commitments from leading financial institutions at 8.1% interest cost per annum

- Attractive acquisition with expected Net Operating Income ('NOI') yield of 8.25%, proforma NOI accretion of 104 bps andproforma Net Asset Value ('NAV') accretion of 2 bps, all on a stabilized basis

- Secured a Right of First Offer ('ROFO') for future phases of Embassy Business Hub, totaling 46 acres, further extending REIT's growth options

Embassy REIT followed stringent related party safeguards, including securing approval by independent directors of the Board of the REIT Manager and a fairness opinion from Axis Capital Limited to the Board of the REIT Manager. Additionally, 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.

Ernst and Young LLP provided financial and tax due diligence services and S&R Associates served as the legal advisor to Embassy REIT. Axis Capital Limited provided a fairness opinion to the independent directors of the Manager to Embassy REIT for the proposed acquisition and opined that, subject to assumptions and limitations of the scope, the acquisition value is fair, from a financial point of view, to the public Unitholders of Embassy REIT.

Shares of Embassy Office Parks REIT was last trading in BSE at Rs. 314.44 as compared to the previous close of Rs. 322.60. The total number of shares traded during the day was 64917 in over 1443 trades.

The stock hit an intraday high of Rs. 327.00 and intraday low of 314.00. The net turnover during the day was Rs. 20660224.00.

Source : Equity Bulls

Keywords

EmbassyOfficeParksREIT EmbassyBusinessHubg Acquisition OfficeProperty Bangalore