Real Estate

Embassy REIT to buy group affiliate’s property maintenance biz in ₹474-crore deal

Our Bureau Bengaluru | Updated on October 22, 2020

Michael Holland, CEO, Embassy REIT

The deal covers two assets in Bengaluru and Pune to add 20.3 million sq ft to its existing portfolio of 9.9 m sq ft

Embassy Office Parks REIT, Bengaluru-based listed Real Estate Investment Trust company, has announced that the Board of Directors of Embassy Office Parks Management Services Private Limited, manager to Embassy REIT has approved the acquisition of the property maintenance business of two properties in Bengaluru and Pune totalling 20.3 million sq ft.

The two assets are the Embassy Manyata Business Park in Bengaluru and Embassy TechZone in Pune from an Embassy Group affiliate. Both are part of are part of Embassy REIT’s existing asset portfolio and the acquisition further add to the existing 9.9 million square feet with Embassy REIT.

Also read: Embassy REIT’s Q2 rentals climb 11%, rental collections at 98.5%

Affiliate’s business

Embassy REIT is acquiring the business from Embassy Services Private Limited at ₹474 crore to be funded through coupon-bearing debt at REIT level. The acquisition consideration is at 8.5 percent discount to the average of two independent valuation reports.

Michael Holland, Chief Executive Officer of Embassy REIT 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 finalise ‘Back to Workplace’ strategies.”

Also read: Embassy REIT places ₹750-crore NCDs

The proposed transaction is expected to be 2.3 percent Net Operating Income accretive and 0.5 percent Distribution Per Unit accretive in its first year on a proforma basis (considering FY 2019-20 actual NOI and DPU for the REIT as the basis).

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 is expected to be completed on or before third quarterFY 21.

Published on October 22, 2020

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