Embassy REIT successfully acquires 50 lakh sq ft Tech Park in Chennai

Embassy Office Parks REIT, the largest office REIT in Asia by area and India's first listed REIT, has officially announced the successful acquisition of Embassy Splendid TechZone (ESTZ), a Grade-A business park located in Chennai. 

This significant acquisition, valued at Rs.1,185 crore, was primarily financed through a debt raise of Rs.1,200 crore and internal accruals. With this strategic move, Embassy REIT's total portfolio now stands at an impressive 50.5 million square foot (msf), solidifying its position as one of the leading office REITs globally. 

Furthermore, this acquisition marks Embassy REIT's entry into the thriving market of Chennai, opening doors to new growth opportunities.

The chief Executive Officer of Embassy REIT, Aravind Maiya said that, the successful completion of this value-enhancing acquisition enables the REIT to establish its presence in Chennai, a prominent office market in India.

He mentioned, “We are pleased to announce the completion of this accretive acquisition that facilitates the REIT’s entry into Chennai, one of India’s leading office markets. With this acquisition, we’re delighted to add another premium business park that perfectly complements and strengthens our high-quality office portfolio. While we evaluated funding this acquisition by issuing equity, we decided to finance it through debt and internal accruals, in the best interest of all our stakeholders. Given our diverse unit holder base and 92% public float, we will consider raising equity for defined purposes, when the markets are more conducive for us to do so.”

According to an official announcement, there will be a 2.0% increase in FY2025 mid-point NOI and a 0.2% increase in DPU guidance. Additionally, there will be a 0.2% increase in Mar’24 NAV on a preform basis. The Enterprise Value of Rs. 1,185 crore is at a 9.2% discount compared to the average of two independent valuation reports.

The stable cash flow from 95% occupancy on 1.4 million square feet of completed buildings in the business park located in Chennai has been emphasized by the company. These buildings are leased to renowned multinational occupiers including Wells Fargo and BNY Mellon, among other notable names.

It added, “Embedded growth from 1.6 million square feet of on-campus development and 2 million square feet future development potential." 

Embassy REIT, India's first publicly listed Real Estate Investment Trust, owned and managed 45.4 million square feet of commercial assets in Bengaluru, Mumbai, Pune, and the National Capital Region (NCR) prior to this acquisition. Their portfolio includes 36.5 million square feet of fully operational space, four operational business hotels, two hotels under construction, and a 100 MW solar park providing renewable energy to occupants.