Embassy REIT on Tuesday announced that it has agreed to purchase the assets of Embassy TechVillage from affiliates of Embassy Sponsor, Blackstone Sponsor and other selling shareholders for a total consideration of Rs 9,782.4 crore ($1.3 billion).
The acquisition is subject to approvals by unit-holders and other regulatory approval.
In a statement, Embassy REIT said that the acquisition comprises 6.1 million square feet of completed area, 3.1 million square feet of under-construction area, of which 36 per cent is pre-leased to JP Morgan, and two proposed 518-keys Hilton hotels within the overall ETV campus. Embassy REIT is exercising its right under the ROFO agreement to acquire the asset.
Mike Holland, Chief Executive Officer of Embassy REIT said, “The proposed accretive acquisition of Embassy TechVillage will mark the addition of another trophy asset to our existing office portfolio, while reinforcing our stable cash flows. The acquisition further deepens our presence in Bengaluru, which remains India’s strongest office market, and significantly enhances our scale and ability to deliver embedded growth.”
Jitendra Virwani, Chairman & Founder of the Embassy Group said: “We are pleased to deliver on our commitment to support the growth of the REIT platform through the ROFO pipeline. The Embassy TechVillage ROFO reaffirms the commitment wemade at the time of the REIT’s listing to provide Embassy REIT with a pipeline of opportunities for completed and rent-yielding assets.
The REIT proposes to fund the Rs 9,782-crore acquisition by issuing equity of Rs 6,000 crore through a combination of an institutional placement of Rs 3,700 crore and by way of a preferential issue of units to third-party selling shareholders of Rs 2,300 crore.
The proposed placement of units is expected to increase the REIT’s public float, enhance its liquidity, and serve as a catalyst for the REIT’s potential inclusion into additional benchmark global equity indices.
The REIT also plans to refinance existing ETV debt facilities of up to Rs 3,600 crore through a combination of equity and issuance of new coupon bearing debt.