In the largest single property commercial deal in the country, Embassy Office Parks REIT — India’s first publicly listed real estate investment trust — is acquiring Embassy TechVillage’s (ETV’s) assets in Bengaluru for $1.3 billion (Rs 9,782.4 crore). This deal will make Embassy REIT the largest in Asia in terms of office space.
The Blackstone-backed REIT will be acquiring 6.1 million square feet (msf) of completed area, 3.1 msf of under-construction area, of which 36 per cent is pre-leased to JPMorgan, and two proposed 518-keys Hilton hotels within the overall ETV campus as part of the deal.
“We are delighted to purchase an asset of the quality and scale of ETV at 4.6 per cent discount to the average of two independent valuations. This acquisition aligns perfectly with our overall strategy to maximise total returns for our unitholders,” said Mike Holland, chief executive officer, Embassy REIT.
ETV is an 84-acre large-scale business park in Bengaluru, with a diversified blue-chip and multinational occupier base, including JPMorgan, Cisco, Sony, and Flipkart. It derives 88 per cent of its rent from multinational occupiers and is 97.3 per cent occupied.
This deal increases Embassy REIT’s commercial office portfolio by 28 per cent to a total of 42.4 msf. “The landscape we are dealing within India is really exciting. It is the world’s largest absorption market. We have plenty to sink our teeth into in the coming years,” said Holland.
“Embassy Group will continue to develop top-notch office assets across the country, thereby providing the REIT with a potential pipeline of assets that will help it grow inorganically over the coming years,” said Jitendra Virwani, chairman and founder, Embassy Group.
Embassy REIT, which had recently acquired the property maintenance business of Embassy Manyata Business Park in Bengaluru and Embassy TechZone in Pune from an Embassy Group affiliate, has said it is scouting for large-scale office parks for acquisition. It is looking at an asset size of anywhere between 2 msf and 10 msf for acquisitions, eyeing large-scale office portfolios, which not only have top-rated buildings, but a whole ecosystem of gymnasia, food courts, and open spaces.
In other top commercial deals in the country this year, Bengaluru-based real estate player Prestige Estates signed a term sheet with private equity major Blackstone Group to sell stake in some of the company’s commercial, retail and hotel properties — a deal which is valued at Rs 11,000 crore.
Another Bengaluru-based player, RMZ Corp in October had announced the sale of 12.5 msf or 18 per cent of its total 67-msf assets to global investment firm Brookfield Asset Management for $2 billion.
After initial hiccups, the office property market has picked up. The third quarter of the calendar year saw absorption of 6.5 msf, which is 58 per cent higher than the previous quarter, said Colliers International. Large leasing deals, too, have picked up.