Embassy Office Parks REIT on Saturday said it will buy Embassy Splendid TechZone (‘ESTZ’), a Grade-A business park, from its sponsor Embassy group for an enterprise value of Rs 1,269 crore.
The proposed acquisition marks Embassy REIT’s entry into Chennai, one of India’s top performing office markets. It intends to raise unit capital of Rs 2,500 crore, primarily to fund the acquisition and reduce the current 30% leverage of the portfolio, providing flexibility for future growth, the REIT said .
ESTZ comprises 1.4 million sq ft of completed area, which is 95% occupied and leased to large global companies such as Wells Fargo and BNY Mellon, among others.
It also comprises 1.6 million sq ft of under-construction area, of which 0.4 million sq ft is pre-leased, and 2 million sq ft of future development potential.
The board of the manager to Embassy REIT has also approved the ESTZ acquisition and an institutional placement via an enabling resolution of up to Rs 3,000 crore, subject to unitholder approval.
Jitendra Virwani, chairman & managing director, Embassy Group, said, “At Embassy Group, our priority is to develop world-class office assets and support the expansion of the REIT’s portfolio through a pipeline of opportunities that will help it to grow inorganically over the coming years. After the successful acquisition of Embassy TechVillage and Embassy Business Hub in Bengaluru by the REIT, we’re pleased to provide another premier office park in a prominent market like Chennai and contribute to the continued growth of Embassy REIT.”
Aravind Maiya, chief executive officer, Embassy REIT, said, “The proposed accretive acquisition of Embassy Splendid TechZone will mark the addition of another quality asset to our existing office portfolio, which continues to benefit greatly from the demand that Global Capability Centres (GCCs) are demonstrating for Indian office space. ESTZ is a top-notch business park in a leading Chennai micro market that will take our portfolio to over 50 msf. This acquisition further diversifies our India presence, enhances our scale and ability to deliver embedded growth to all our stakeholders.
