Embassy Office Parks REIT to acquire Embassy Business Hub, a 1.4 million square feet office property in Bangalore, for a total enterprise value of Rs 3,348 million ($41 million). Embassy REIT plans to primarily fund the acquisition through debt at 8.1% interest cost per annum, for which it has secured binding commitments from leading financial institutions.
Embassy Business Hub, a 59-acre campus-style business park, is situated in the high visibility growth corridor of North Bangalore, and is close to both the airport and Embassy REIT’s 15.2 mn sq ft flagship property Embassy Manyata. Embassy REIT is acquiring Embassy Sponsor’s affiliates’ share of 1.4 mn sq ft total leasable area, of which 0.4 mn sq ft is nearing completion and 93% pre-committed to Philips, global electronics major and member of the Fortune Global 500 and the balance 1 msf is in early stages of development.
Vikaash Khdloya, Chief Executive Officer of Embassy REIT, said, “Embassy REIT’s acquisition of this high-quality, well-connected, wellness-oriented business park expands our dominant presence and office offerings in Bangalore, which undisputedly remains the most sought-after office market in India. This tuck-in acquisition is priced attractively, embeds further growth in the REIT portfolio, and creates long-term value for our Unitholders.”
Embassy REIT followed stringent related party safeguards, including securing approval by independent directors of the Board of the REIT Manager and a fairness opinion from Axis Capital Limited to the Board of the REIT Manager. Additionally, REIT Manager will not receive any fees linked to the acquisition. The acquisition is expected to be completed on or before April 30, 2023, subject to completion of customary conditions precedent.
Ernst and Young LLP provided financial and tax due diligence services and S&R Associates served as the legal advisor to Embassy REIT. Axis Capital Limited provided a fairness opinion to the independent directors of the Manager to Embassy REIT for the proposed acquisition and opined that, subject to assumptions and limitations of the scope, the acquisition value is fair, from a financial point of view, to the public Unitholders of Embassy REIT.
