Embassy Office Parks REIT has finalized the purchase of a 50 lakh square feet business park in Chennai for Rs 1,185 crore, aligning with its objective to broaden its office assets portfolio and enhance business growth. The acquisition was financed through a debt totaling Rs 1,200 crore.
In a regulatory disclosure, Embassy REIT announced the successful finalization of the acquisition of Embassy Splendid TechZone (ESTZ), a Grade-A business park situated in Chennai. The park comprises 1.4 million square feet of completed buildings, with an additional 1.6 million square feet under construction and a future development potential of 2 million square feet. "The Rs 1,185 crore acquisition was funded primarily through a debt raise of around Rs 1,200 crore and internal accruals", it added. The acquisition increases the total portfolio of Embassy REIT, based in Bengaluru, to 50.5 million square feet.
Aravind Maiya, Chief Executive Officer of Embassy REIT, said the completion of this accretive acquisition facilitates the REIT's entry into Chennai, one of India's leading office markets.
"With this acquisition, we are 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," he added.
With its varied unitholder base and a public float of 92 percent, Maiya indicated that the company might explore raising equity for specific objectives when market conditions are more favorable. The company emphasized that the Chennai business park enjoys steady cash flow due to its 95 percent occupancy across 1.4 million square feet of completed buildings, which are leased to prominent multinational tenants including Wells Fargo and BNY Mellon, among others. "Embedded growth from 1.6 million square feet of on-campus development and 2 million square feet future development potential", it said.
Before acquiring this asset, Embassy REIT, India's inaugural publicly listed Real Estate Investment Trust, managed 45.4 million square feet of commercial properties across Bengaluru, Mumbai, Pune, and the National Capital Region (NCR). Within its portfolio, Embassy REIT oversees 36.5 million square feet of fully operational space. Additionally, it operates four business hotels, is constructing two more, and operates a 100 MW solar park, providing renewable energy to its tenants.