Embassy REIT raises Rs 3,680 crore via QIP; will use proceeds to fund IT park acquisition

Embassy Office Parks REIT on Tuesday announced that it has raised Rs 3,680 crore, or $501 million, through an institutional placement of units. The proceeds will be utilised to fund its recent proposed acquisition of an IT park in Bangalore.

“Securities committee of the board of directors of Embassy Office Parks Management Services, manager of Embassy REIT, at its meeting held on December 22, 2020, approved the issue and allotment of 111,335,400 units of Embassy REIT to 129 successful eligible institutional investors, at the issue price of Rs 331 per unit, which includes a discount of Rs 17.38 per unit (i.e., 4.99%) on the floor price of Rs 348.38 per unit,” the company said in a regulatory filing.

The issue opened on December 15 and closed on December 21. Under allotment of units in the issue, an aggregate of 883,000,743 units are issued and outstanding immediately after the Issue, it added.

Trading of these units is expected to commence on or around December 24, 2020, on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE), Embassy REIT said in a statement. Morgan Stanley India, Kotak Mahindra Capital, BofA Securities India, JP Morgan India, Axis Capital, HSBC Securities and Capital Markets (India) and IIFL Securities served as Joint book-running lead managers for the offering.

“Subject to applicable regulations, Embassy REIT proposes to use proceeds from this placement to fund its proposed acquisition of Embassy Tech Village (ETV) that it announced earlier on November 17, 2020, and for general purposes,” the company said.

“We appreciate the overwhelming support we received from our existing investors as well as many new domestic and global institutional investors in our first-ever institutional placement. 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 our unitholder register, enhances the liquidity of our units, and is expected to facilitate the REIT’s potential inclusion into additional global benchmark equity indices,” said Mike Holland, CEO of Embassy REIT.

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

Embassy REIT is acquiring ETV from the Embassy Sponsor, members of Blackstone group and other selling shareholders, for a total enterprise valuation of Rs 9,782 crore, or around $1.3 billion.

The acquisition of ETV assets includes around 6.1 million sq ft (MSF) of the completed area and 3.1 MSF of area under-construction, of which 36% is pre-leased to JP Morgan and two proposed 518-keys Hilton hotels within the overall campus. Embassy REIT is exercising its right under the ROFO (right of first offer) agreement to acquire the asset.

ETV spans over 84 acres and derives 88% of its rents from multinational occupiers. It is 97.3% occupied and has a 9.7 year weighted average lease expiry (WALE) with a 33.7% mark-to-market (MTM) potential.

Listed in April 2019, Embassy REIT is India’s first publicly listed real estate investment trust and is sponsored by Blackstone and Embassy group.