Embassy REIT, India’s first publicly-listed Real Estate Investment Trust (REIT), is looking to raise Rs 7,400 crore through a mix of equity and debt from institutional investors and banks to part-fund its recent acquisition of Embassy Tech Village (ETV) in Bengaluru.
The company has agreed to purchase ETV assets -- 9.2 million sq. feet integrated office park -- located on Outer Ring Road in Bengaluru from affiliates of Embassy Sponsor, Blackstone Sponsor and other selling shareholders for Rs 9,782 crore ($1.3 billion).
"The purchase price is around Rs 9,700 crore. Of that, approximately Rs 2,300 crore would be the issuance of units to one of the selling shareholders through preferential allotment. We are looking to raise Rs 3,700 crore ($500 million) equity from institutional investors. Plus, we are also looking to refinance existing debt of Rs 3,700 crore through a coupon-bearing debt from banks and other institutions," Vikaash Khdloya, Deputy CEO & COO, Embassy REIT told DH.
He said that the company would be allotting units to selling shareholders instead of giving cash. The balance amount will be raised from investors.
The Embassy is looking to initiate the fundraising exercise in early December and conclude shortly thereafter.
"We are initiating fundraising exercise from an existing investor base of domestic institutions, mutual funds, long-term global institutions. We would reach out to a lot of these investors. There could be new investors as well who are interested in our portfolio which is of high quality. Importantly, in an environment of low yields, REIT provides good yields and growth in terms of escalation in rental yields periodically," Khdloya said.
Embassy REIT owns, operates or finances income-producing real estate and gives all investors access to the benefits of real estate investment with the advantage of investing in publicly traded units.
The Embassy Tech Village is a 9.2 million sq. feet integrated office park located on the outer ring road in Bengaluru. While 6 million sq. feet of office space is completed, another 3.2 million sq. feet is under construction. Of this, 1.1 million sq. feet is pre-leased to J P Morgan. It will be ready for possession in the next nine months, Khdloya said.
The acquisition process will be completed by the end of January and immediately after that, the company will begin construction of the remaining 2.1 million sq. feet over the next two and a half years.
"Currently, there are 40-odd blue-chip customers like Sony, Flipkart, Wells Fargo, and Cisco among others with an employee base of 45,000. The average rental yield is around Rs 550 crore per annum with 15% raise every three years," he added.