Embassy REIT gets unitholders' approval to raise up to Rs 8,000 crore

Embassy Office Parks REIT's unitholders have approved plans to raise up to Rs 8,000 crore through sale of units to institutional investors, mainly to fund its big-ticket acquisition of 'Embassy TechVillage' in Bengaluru.

Embassy REIT is India's first publicly-listed REIT (Real Estate Investment Trust) sponsored by Blackstone and Embassy group. It got listed on stock exchanges last year.

Last month, Embassy Office Parks REIT had announced that it has agreed to acquire a large business park ''Embassy TechVillage'' in Bengaluru from realty firm Embassy group, Blackstone and some other investors for Rs 9,782.4 crore.

In a regulatory filing, Embassy REIT said its unitholders have approved all the four resolutions with the requisite majority.

They have approved the acquisition of Embassy TechVillage for an enterprise value of Rs 9,782.4 crore and also granted authority to borrow up to 35 per cent of the gross asset value of the Embassy REIT.

Unitholders have approved "raising of funds through an institutional placement(s) of units of Embassy REIT not exceeding Rs 80,000 million to institutional investors in one or more placements." They gave green signal to a preferential issue of up to 65,579,400 units of Embassy REIT at a price of Rs 356.70 per unit.

Last month, Embassy REIT said it has "agreed to purchase Embassy TechVillage assets from affiliates of Embassy Sponsor, Blackstone Sponsor and other selling shareholders for a total consideration of Rs 97,824 million (USD 1.3 billion)".

The REIT had proposed to fund the acquisition by issuing equity of around Rs 6,000 crore through a combination of an institutional placement of about Rs 3,700 crore and a preferential issue of units to third-party selling shareholders of around Rs 2,300 crore.

The REIT also plans to refinance existing Embassy TechVillage debt facilities of up to Rs 3,600 crore through a combination of equity and issuance of new coupon-bearing debt.

The acquisition comprises 6.1 million square feet (msf) of completed area, 3.1 msf of under-construction area, and two proposed 518-keys Hilton hotels.

The acquisition will increase Embassy REIT's commercial office portfolio by 28 per cent to 42.4 msf.

"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," Mike Holland, Chief Executive Officer of Embassy REIT, had said.

Embassy TechVillage is a large scale business park located on the leading Outer Ring Road sub-market of Bengaluru, with a diversified blue-chip and predominantly multinational-occupier base, including JP Morgan, Cisco, Sony and Flipkart.

"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.

"We are delighted to purchase an asset of the quality and scale of Embassy TechVillage at a 4.6 per cent discount to the average of the two independent valuations," Holland had said.