Embassy REIT to acquire certain property maintenance business from Embassy group for Rs 474 cr

By: |
October 22, 2020 4:28 PM

Embassy REIT is acquiring the property maintenance businesses from Embassy Services and expects to fund the consideration by issuing coupon bearing debt at the REIT level.

This acquisition further integrates 20.3 million sq ft of property maintenance business to the existing 9.9 million sq ft properties already directly managed by Embassy REIT.

Embassy Office Parks REIT will acquire property maintenance business of two large office parks in Bengaluru and Pune for Rs 474 crore from realty firm Embassy group.

Last year, Embassy Office Parks REIT, sponsored by Blackstone and Embassy group, launched the country’s first real estate investment trust (REIT) and got listed on the stock exchages after raising Rs 4,750 crore through public issue.

Embassy REIT said the board of directors of Embassy Office Parks Management Services Pvt Ltd, which is manager to Embassy REIT, has approved the acquisition of the property maintenance business of Embassy Manyata Business Park in Bengaluru and Embassy TechZone in Pune from an Embassy Group firm.

“Acquisition cost of Rs 4,740 million (Rs 474 crore) to be funded through coupon bearing debt at REIT level. Acquisition consideration is at 8.5 per cent discount to average of two independent valuation reports,” the statement said.

Embassy Manyata and Embassy TechZone are part of Embassy REIT’s existing asset portfolio. But, the property maintenance was outsourced to realty firm Embassy group’s arm Embassy Services Pvt Ltd.

This acquisition further integrates 20.3 million sq ft of property maintenance business to the existing 9.9 million sq ft properties already directly managed by Embassy REIT, the statement said.

Embassy REIT Chief Executive Officer Michael Holland said, “In addition to enhancing our operating income, this transaction fully integrates and aligns property management for all REIT assets and helps further strengthen operational relationships with our occupiers.”

“It will allow us to enhance service delivery, which is particularly important to our occupiers as they finalize ‘Back to Workplace’ strategies,” he added.

Embassy REIT is acquiring the property maintenance businesses from Embassy Services and expects to fund the consideration by issuing coupon bearing debt at the REIT level.

On closing, Embassy REIT will own the property management service delivery for all its fully owned properties. The transaction is subject to completion of customary conditions precedent and is expected to be completed on or before the third quarter of FY2020-21.

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