Embassy Office Parks REIT, India’s first publicly listed real estate investment trust (REIT), will acquire the property maintenance business of Embassy Manyata Business Park, Bengaluru and Embassy TechZone, Pune from an affiliate of Jitendra Virwani's Embassy Group , the company said in a statement.
Embassy Manyata and Embassy TechZone are part of Embassy REIT’s existing asset portfolio.
The acquisition will integrate 20.3 million square feet of property maintenance business to the existing 9.9 million sq ft properties already directly managed by Embassy REIT, the statement said.
The acquisition will cost Rs 474 crore to Embassy REIT. It will be funded through coupon-bearing debt at the REIT level, according to the statement.
Michael Holland, chief executive officer, Embassy REIT, said, “In addition to enhancing our operating income, this transaction fully integrates and aligns property management for all REIT assets and helps further strengthen operational relationships with our occupiers. It will allow us to enhance service delivery.”
Embassy REIT is acquiring the property maintenance businesses from Embassy Services Private Limited, an Embassy Group affiliate.
After closure of this acquisition, Embassy REIT will own the property management service delivery for all its fully owned properties.
The statement said that acquisition consideration is at a 8.5% discount to the average of two independent valuation reports and the proposed transaction is expected to be 2.3% NOI accretive (net operating income) and 0.5% DPU accretive (distribution per unit) in its first year.
Listed in April 2019, Embassy REIT owns and operates a 33.3 million sq ft portfolio of seven infrastructure-like office parks and four city-centre office buildings in Bengaluru, Mumbai, Pune, and the National Capital Region (NCR).
Its portfolio comprises 26.2 million sq ft completed operating area with an occupancy of 92.2% as of June 30, 2020.
The portfolio also comprises strategic amenities, including two operational business hotels, two under-construction hotels, and a 100 megawatt solar park supplying renewable energy to park occupiers.
Embassy Services Private Limited, the property management arm of Embassy Group, was founded in 1993 and today serves over 150 customers across 60+ million sq ft in the country. Its portfolio covers a spectrum of commercial, residential, industrial, co-working, retail, hospitality, and other properties.