Embassy REIT raises Rs 3,680 cr to part fund IT park acquisition

Embassy Office Parks REIT has raised Rs 3,680 crore ( $501 million) through sale of units to institutional investors and will use this amount to partly fund its acquisition of IT park 'Embassy TechVillage' in Bengaluru.

Qualified Institutional Placement

In a statement, Embassy REIT said “it has successfully completed a unit capital raise of Rs 36.8 billion ( $501 million) through an Institutional Placement of units.” The Securities Committee of the Board of Directors of Embassy Office Parks Management Services Pvt Ltd, Manager to Embassy REIT, approved the issuance and allotment of 111,335,400 new units through this institutional placement in a meeting held on December 22.

The Qualified Institutional Placement (QIP) issue was launched on December 15 and witnessed strong demand from both existing as well as new institutional investors, including global and domestic investors, pension funds, insurers, and alternative asset managers, the statement said.

Mike Holland, Chief Executive Officer of Embassy REIT said, "the strong demand for our offering amidst market uncertainties and the ongoing pandemic is a testament to the confidence in Embassy REIT's inorganic growth strategy of owning quality office assets such as Embassy TechVillage.”

This Institutional Placement of new units diversifies its unitholder register, enhances the liquidity of units, and is expected to facilitate the REIT's potential inclusion into additional global benchmark equity indices, he said.

The placement issue price of Rs 331 per unit represents a discount of 4.99 per cent to the applicable floor price of Rs 348.38 per unit.

Embassy REIT proposes to use the proceeds to fund its proposed acquisition of Embassy TechVillage and for general purposes.

Embassy REIT is acquiring the tech park from the Embassy Sponsor, members of the Blackstone group and other selling shareholders, for a total enterprise valuation of Rs 9,782.4 crore ( $1.3 billion).

The transaction is expected to close by the end of December 2020.

The acquisition of Embassy TechVillage comprises 6.1 million square feet (msf) of completed area, 3.1 msf of under-construction area, and two proposed 518-keys Hilton hotels.

The acquisition will increase Embassy REIT's commercial office portfolio by 28 per cent to 42.4 msf.

Embassy REIT is India's first publicly-listed REIT (Real Estate Investment Trust) sponsored by Blackstone and Embassy group. It got listed on stock exchanges last year.