Embassy REIT acquires Embassy Business Hub for Rs 3,348 million in Bengaluru

March 28, 2023
Embassy REIT acquires Embassy Business Hub for Rs 3,348 million in Bengaluru

NEW DELHI: Embassy Office Parks REIT (Embassy REIT) has agreed to acquire Embassy Business Hub, Bengaluru, for a total enterprise value of Rs 3,348 million ($41 million) with exclusive ownership rights to approximately of 1.4 million sq ft of leasable area on full completion, the company said in a BSE filing.

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 ICICI Bank and Bajaj Housing Finance, the company said in the regulatory filing.

Embassy Business Hub is an integrated business park in North Bengaluru and is expected to comprise a total leasable area of approximately 2.1 million sq ft upon completion, of which Philips India has committed to take on lease as a tenant approximately 0.62 million sq. ft. in a nearing completion building which is expected to comprise approximately 0.66 million sq. ft. of leasable area on completion.

Embassy REIT will acquire the entire paid up share capital of ECPL from the sellers, i.e., JV Holding (JVHPL, an affiliate of Embassy Property Developments) and another shareholder of the Embassy group.

Embassy REIT will acquire the rights, title and interest of sellers in Embassy Construction (ECPL), the developer of Embassy Business Hub, Bengaluru, consisting of ECPL’s entitlement to exclusive ownership rights over approximately 1.4 million sq. ft. of leasable area out of the 2.1 million sq. ft. mentioned above, including the right to provide common area maintenance services and common infrastructure services.

Expected net operating income (NOI) yield is 8.25%, proforma NOI accretion of 104 bps and proforma Net Asset Value (NAV) accretion of 2 bps.

The company also secured a Right of First Offer for future phases of Embassy Business Hub, totaling 46 acres.

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.

Leave a Comment