Embassy REIT to boost ₹2,500 cr, to purchase 5 msf tech park in Chennai

Embassy Workplace Parks REIT plans to boost ₹2,500 crore by way of fairness by means of an institutional placement. This cash will partly fund its acquisition of an workplace park in Chennai for ₹1,269 crore.

The REIT has agreed to purchase 5 million sq. ft of an workplace park, Embassy Splendid TechZone, in Chennai from its sponsor Embassy group. This acquisition will enhance the REIT’s complete portfolio by 11 per cent to 50.5 msf, making it one of many largest workplace REITs globally, a launch mentioned.

This additionally marks the REIT’s entry into the Chennai workplace market, which is seeing good traction.

The acquisition would straight impression its financials, resulting in a 2.9 per cent accretion to the FY24 internet working revenue and distribution per unit. Round 1.4 msf of the asset is accomplished and 95 per cent of that is occupied and leased to purchasers similar to Wells Fargo and BNY Mellon. The long-term earnings potential of the REIT could be boosted since 1.6 msf is beneath improvement, of which 26 per cent is pre-leased, and a couple of msf is future improvement.

The remaining funds could be used to cut back its portfolio leverage to 27 per cent from 30 per cent now. This would offer flexibility for future development, it mentioned.

Embassy REIT would purchase an financial curiosity in 61 per cent of the lease revenues and 100 per cent of the asset’s administration enterprise. The acquisition worth implies a NOI yield of 8.5 per cent for the finished portion and 10 per cent for the event portion, it mentioned. The transaction is being performed at a 6.7 per cent low cost to the common of two impartial valuations.

Earlier, the REIT acquired Embassy TechVillage and Embassy Enterprise Hub in Bengaluru from its sponsor.