Embassy Group planning to infuse more funds into office park REIT

Embassy Group plans to add more assets to its office park real estate investment trust (REIT) in the coming quarters. 

The Bengaluru-headquartered real estate entity was the first company to list its REIT on Indian stock exchanges, after raising Rs 3,000 crore earlier this year through issue of non-convertible debentures maturing June 2022 with annual yield of 9.4 per cent. 

Blackstone Group is the other sponsor of this REIT.

“Our REIT is performing pretty well and we are putting in some more assets into it,” said Aditya Virwani, chief operating officer at Embassy. “We are more inclined towards the REIT model because of predictable cash flow, which makes investors comfortable with this asset class”.

Currently, the Embassy Office Parks REIT has 25 million sq ft of completed assets, with a pipeline of another eight mn sq ft in major cities, including Bengaluru and Mumbai.
 

After launching this REIT, Embassy says it sees such an opportunity in the warehousing space, too. "Warehousing is something which we will eventually pull into a REIT, once we have a sizable portfolio with similar predictable income flow from rent," the COO said.

Aditya Virwani, younger son of Embassy Promoter and Managing Director Jitu Virwani, has started taking bets on new asset classes after taking over the reins as COO this October. “In partnership with Phase-1 Experiences, we will be jointly developing India's first multi-purpose venue that can be used for concerts and expo purposes at the Bangalore International Airport," he said.

According to the company, as the live events and entertainment sector is likely to touch Rs 10,000 crore in revenue in 2020-21, such a facility will help diversifying its revenue source. "Though the investment amount will be just over Rs 100 crore in this new facility, it is another asset class Embassy is betting on," Virwani said. 

The new facility, to accommodate around 9,000 people at concerts and mega events, is likely to take around 18 months for completion. "If this project becomes successful, we will be looking at other airports which might be interested in setting up such facilities," he added. 

On taking the group company public, he said they were not in favour, as real estate companies were not getting a good valuation in the market.