- \n
- 9.2 msf integrated office park located on Outer Ring Road Bengaluru, India\u2019s best-performing office sub-market<\/i><\/li>\n
- Addition of 35+ blue-chip occupiers to REIT\u2019s existing marquee occupier base<\/i><\/li>\n
- Adds long-term earnings power through 33.7% mark-to-market potential and 3.1 msf development, of which 36% pre-leased <\/i><\/li>\n
- NOI, DPU and NAV accretive transaction fortifies Embassy REIT\u2019s position as one of Asia\u2019s largest office REITs by area<\/i><\/li>\n<\/ul>\n
BENGALURU, India–(BUSINESS WIRE<\/a>)–
\nEmbassy REIT, India\u2019s first publicly listed REIT, announced today that it has agreed to purchase Embassy TechVillage assets (\u201cETV<\/b>\u201d) from affiliates of Embassy Sponsor, Blackstone Sponsor and other selling shareholders for a total consideration of Rs97,824 million ($1.3 billion), subject to Unitholder and regulatory approvals.\n<\/p>\n\nThe acquisition comprises c.6.1 million square feet (\u201cmsf\u201d) of completed area, c.3.1 msf of under-construction area, of which 36% is pre-leased to JP Morgan, and two proposed 518-keys Hilton hotels within the overall ETV campus. Embassy REIT is exercising its right under the ROFO agreement to acquire the asset.\n<\/p>\n
\nMike Holland, Chief Executive Officer of Embassy REIT said, \u201cThe proposed accretive acquisition of Embassy TechVillage will mark the addition of another trophy asset to our existing office portfolio, while reinforcing our stable cash flows. ETV is a unique large scale business park, in the leading Outer Ring Road sub-market of Bengaluru, with a diversified blue-chip and predominantly multinational occupier base, including JP Morgan, Cisco, Sony and Flipkart. The acquisition further deepens our presence in Bengaluru, which remains India\u2019s strongest office market, and significantly enhances our scale and ability to deliver embedded growth. We are delighted to purchase an asset of the quality and scale of ETV at a 4.6% discount to the average of the two independent valuations. This acquisition aligns perfectly with our overall strategy to maximize total returns for our Unitholders.\u201d<\/i><\/p>\n
\nJitendra Virwani, Chairman & Founder of the Embassy Group said, \u201cWe are pleased to deliver on our commitment to support the growth of the REIT platform through the ROFO pipeline. The Embassy TechVillage ROFO reaffirms the commitment we made at the time of the REIT\u2019s listing to provide Embassy REIT with a pipeline of opportunities for completed and rent-yielding assets. Over the past six years, Embassy Group has developed ETV to be one of the finest office assets in the country, and we are pleased to offer this asset to the REIT for consideration and approval by the Independent Directors of the REIT Manager and the Unitholders. Embassy Group will continue to develop top quality 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.\u201d<\/i><\/p>\n
\nThe REIT proposes to fund this c. Rs 98 billion ($1.3 billion) acquisition by issuing equity of c. Rs 60 billion ($812 million) through a combination of an institutional placement of c. Rs 37 billion ($500 million), and by way of a preferential issue of units to third-party selling shareholders of c. Rs 23 billion ($312 million). The proposed placement of units is expected to increase the REIT\u2019s public float, enhance its liquidity, and serve as a catalyst for the REIT\u2019s potential inclusion into additional benchmark global equity indices. The REIT also plans to refinance existing ETV debt facilities of up to c. Rs 36 billion ($492 million) through a combination of equity and issuance of new coupon bearing debt.\n<\/p>\n
Transaction Highlights<\/b><\/p>\n
- \n
- \nAggregate enterprise valuation of Rs 97,824 million is at a 4.6% discount to average of two independent valuation reports\n<\/li>\n
- \nEnhances Embassy REIT\u2019s commercial office portfolio scale by 28% to 42.4 msf, facilitates entry into Bengaluru\u2019s best-performing sub-market and further diversifies Embassy REIT\u2019s occupier base\n<\/li>\n
- \nStable cash flows with strong embedded growth through 33.7% MTM upside on 97.3% leased area and 3.1 msf of on-campus development, of which 36% is pre-leased to JP Morgan\n<\/li>\n
- \nAttractive acquisition with proforma accretion of 28% to Net Operating Income (\u2018NOI<\/b>\u2019), 4.2% to Distribution Per Unit (\u2018DPU<\/b>\u2019) and 3.0% to Net Asset Value (\u2018NAV<\/b>\u2019) per unit basis 6 months period ended September 2020\n<\/li>\n
- \nStrong framework in place regulating related party transactions including approval by independent directors of the Board, majority of unrelated unitholders\u2019 approval required for ETV acquisition, and no acquisition linked fees to the REIT Manager\n<\/li>\n
- \nFairness opinion issued by HSBC Securities and Capital Markets (India) Private Limited to the independent directors of the manager to Embassy REIT opining that, subject to the assumptions and limitations of the scope, the proposed value of the acquisition is fair, from a financial point of view, to the public Unitholders of Embassy REIT\n<\/li>\n<\/ul>\n
\nThe acquisition is subject to certain condition precedents and requires Unitholder, regulatory and other approvals.\n<\/p>\n
\nMorgan Stanley and Kotak Investment Banking are serving as joint financial advisors to Embassy REIT, while S&R Associates and Clifford Chance are acting as legal advisors to Embassy REIT. Ernst and Young LLP conducted financial and tax diligence and HSBC Securities and Capital Markets (India) provided a fairness opinion to the independent directors of the manager to Embassy REIT for the proposed acquisition.\n<\/p>\n
About Embassy TechVillage<\/b><\/p>\n
\nEmbassy TechVillage is a large-scale, award-winning and best-in-class integrated office park situated on the Outer Ring Road (\u201cORR\u201d) in Bengaluru. Home to over 45,000 employees of 40+ corporate occupiers, ETV is an infrastructure-like asset that serves as a complete business ecosystem for its occupiers and their employees.\n<\/p>\n
\nLocated in Bengaluru\u2019s best-performing commercial office sub-market, ETV spans over 84 acres and derives 88% of its rents from multinational occupiers, is 97.3% occupied, and has a 9.7 year Weighted Average Lease Expiry (\u201cWALE\u201d) with a 33.7% mark-to-market (\u201cMTM\u201d) potential.\n<\/p>\n
About Embassy REIT<\/b><\/p>\n
\nEmbassy Office Parks is India\u2019s first publicly listed Real Estate Investment Trust (REIT). Listed in April 2019, Embassy REIT owns and operates a 33.3 million square feet (msf) portfolio of seven infrastructure-like office parks and four city\u2011centre office buildings in India\u2019s best-performing office markets of Bengaluru, Mumbai, Pune, and the National Capital Region (NCR). Embassy REIT\u2019s portfolio comprises 26.2 msf completed operating area, has an occupancy of 91.7% as of September 30, 2020, and is home to many of the world\u2019s leading companies as occupiers. The portfolio also comprises strategic amenities, including two operational business hotels, two under\u2011construction hotels, and a 100MW solar park supplying renewable energy to park occupiers.\n<\/p>\n
Investor Call Details<\/b><\/p>\n
\nThe management team of Embassy Office Parks Management Services Private Limited, the REIT Manager, will host a global conference call at 18.30 Indian Standard Time (+ 5.30 GMT) today, i.e., Tuesday, November 17, 2020 to discuss the Acquisition of Embassy TechVillage.\n<\/p>\n
\nStakeholders can access the call by dialling +91 22 6280 1320 or +91 22 7115 8815 or +91 70456 71221 domestically, or by accessing the following international toll and toll-free numbers\n<\/p>\n
\n
\n \n Dial-in detail:<\/b><\/p>\n<\/td>\n<\/tr>\n
\n \n \n\u00a0\n<\/p>\n<\/td>\n
\n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n
\n \n Universal Dial In<\/b><\/p>\n<\/td>\n
\n \n+91 22 6280 1320\n<\/p>\n<\/td>\n<\/tr>\n
\n \n \n\u00a0\n<\/p>\n<\/td>\n
\n \n+91 22 7115 8815\n<\/p>\n<\/td>\n<\/tr>\n
\n \n Local Dial In<\/b><\/p>\n<\/td>\n
\n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n
\n \n \nAvailable all over India\n<\/p>\n<\/td>\n
\n \n+91 70456 71221\n<\/p>\n<\/td>\n<\/tr>\n
\n \n \n\u00a0\n<\/p>\n<\/td>\n
\n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n
\n \n International Toll Free<\/b><\/p>\n<\/td>\n
\n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n
\n \n \nHong Kong\n<\/p>\n<\/td>\n
\n \n800 964 448\n<\/p>\n<\/td>\n<\/tr>\n
\n \n \nSingapore\n<\/p>\n<\/td>\n
\n \n800 101 2045\n<\/p>\n<\/td>\n<\/tr>\n
\n \n \nUK\n<\/p>\n<\/td>\n
\n \n0 808 101 1573\n<\/p>\n<\/td>\n<\/tr>\n
\n \n \nUSA\n<\/p>\n<\/td>\n
\n \n1 866 746 2133\n<\/p>\n<\/td>\n<\/tr>\n
\n \n \n\u00a0\n<\/p>\n<\/td>\n
\n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n
\n \n International Toll <\/b><\/p>\n<\/td>\n
\n \n\u00a0\n<\/p>\n<\/td>\n<\/tr>\n
\n \n \nHongkong\n<\/p>\n<\/td>\n
\n \n+852 3018 6877\n<\/p>\n<\/td>\n<\/tr>\n
\n \n \nSingapore\n<\/p>\n<\/td>\n
\n \n+65 3157 5746\n<\/p>\n<\/td>\n<\/tr>\n
\n \n \nUK\n<\/p>\n<\/td>\n
\n \n+44 203 478 5524\n<\/p>\n<\/td>\n<\/tr>\n
\n \n \nUSA\n<\/p>\n<\/td>\n
\n \n+1 323 386 8721\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\n
\n
\n \n Appendix<\/b><\/p>\n<\/td>\n<\/tr>\n
\n \n Key Transaction Parameters<\/b><\/p>\n<\/td>\n<\/tr>\n
\n \n \u00a0<\/td>\n<\/tr>\n \n \n Particulars<\/b><\/p>\n<\/td>\n
\n Details<\/b><\/p>\n<\/td>\n<\/tr>\n
\n \n Asset Overview<\/b><\/p>\n<\/td>\n
\n \nEmbassy TechVillage, located at Outer Ring Road, Bengaluru\n<\/p>\n<\/td>\n<\/tr>\n
\n \n Proposed Acquisition Area<\/b><\/p>\n<\/td>\n
\n \n84.05 acres\n<\/p>\n<\/td>\n<\/tr>\n
\n \n Leasable Area<\/b><\/p>\n<\/td>\n
\n \n9.2 msf\n<\/p>\n<\/td>\n<\/tr>\n
\n \n Completed Area<\/b><\/p>\n<\/td>\n
\n \n6.1 msf\n<\/p>\n<\/td>\n<\/tr>\n
\n \n Under Construction Area<\/b><\/p>\n<\/td>\n
\n \n3.1 msf (36% pre-leased)\n<\/p>\n<\/td>\n<\/tr>\n
\n \n Proposed Hotel <\/b><\/p>\n<\/td>\n
\n \n518 keys (dual-branded Hilton hotels)\n<\/p>\n<\/td>\n<\/tr>\n
\n \n Occupancy<\/b><\/p>\n<\/td>\n
\n \n97.3% on 6.1 msf completed area\n<\/p>\n<\/td>\n<\/tr>\n
\n \n Number of Occupiers<\/b><\/p>\n<\/td>\n
\n \n40+ (88% of Gross Rentals from multinational occupiers)\n<\/p>\n<\/td>\n<\/tr>\n
\n \n WALE<\/b><\/p>\n<\/td>\n
\n \n9.7 years\n<\/p>\n<\/td>\n<\/tr>\n
\n \n Avg. in-place rentals<\/b><\/p>\n<\/td>\n
\n \nRs 68 psf\n<\/p>\n<\/td>\n<\/tr>\n
\n \n Market Rentals<\/b><\/p>\n<\/td>\n
\n \nRs 91 psf\n<\/p>\n<\/td>\n<\/tr>\n
\n \n MTM Potential<\/b><\/p>\n<\/td>\n
\n \n33.7% mark-to-market rental opportunity\n<\/p>\n<\/td>\n<\/tr>\n
\n \n Independent Valuer 1<\/b><\/p>\n<\/td>\n
\n \nRs 102,292 million ($1.38 billion)\n<\/p>\n<\/td>\n<\/tr>\n
\n \n Independent Valuer 2<\/b><\/p>\n<\/td>\n
\n \nRs 102,817 million ($1.39 billion)\n<\/p>\n<\/td>\n<\/tr>\n
\n \n Average Valuation<\/b><\/p>\n<\/td>\n
\n \nRs 102,555 million ($1.39 billion)\n<\/p>\n<\/td>\n<\/tr>\n
\n \n Agreed Enterprise Value <\/b><\/p>\n<\/td>\n
\n \nRs 97,824 million ($1.32 billion)\n<\/p>\n
(4.6% discount to the average of the two independent valuations)<\/i><\/p>\n<\/td>\n<\/tr>\n
\n \n Pro Forma Impact & Financing<\/b><\/p>\n<\/td>\n<\/tr>\n
\n \n Pro-forma Impact<\/b><\/p>\n<\/td>\n
\n Impact on Embassy REIT\u2019s scale:<\/b><\/p>\n
- \n
- \nLeasable Area: 28% increase (from 33.3 msf to 42.4 msf)\n<\/li>\n
- \nDevelopment Area: 43% increase (from 7.1 msf to 10.2 msf), with 1.1 msf already pre-leased\n<\/li>\n
- \nGross Asset Value: 30% increase\n<\/li>\n
- \nPublic Float: Increase from 38% to 43%1<\/sup><\/li>\n<\/ul>\n
Impact on Embassy REIT\u2019s 6-months FY2020-21 Proforma financials:<\/b><\/p>\n
- \n
- \nNOI: 28% increase\n<\/li>\n
- \nTrailing NOI Yield: 7.5% on completed portion\n<\/li>\n
- \nDPU: 4.2% accretive\n<\/li>\n
- \nNAV per unit: 3.0% accretive\n<\/li>\n<\/ul>\n
Impact on Embassy REIT\u2019s Proforma leverage:<\/b><\/p>\n
- \n
- \nGross Debt to GAV: 22%\n<\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
\n \n Financing <\/b><\/p>\n<\/td>\n
\n Equity issue of c. Rs<\/b>60 billion ($812 million)<\/b><\/p>\n
- \n
- \nProposed Institutional Placement of c. Rs 37 billion ($500 million)\n<\/li>\n
- \nProposed Preferential Issue of up to 65,579,400 units, approximating to Rs 23 billion ($312 million)\n<\/li>\n<\/ul>\n
Debt issue of up to Rs 36 billion ($492 million)<\/b><\/p>\n
- \n
- \nCombination of bonds \/ loans at the REIT level and \/ or SPVs\n<\/li>\n
- \nTo be utilized to repay existing ETV debt and for general corporate purposes\n<\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
\n \n Extraordinary Meeting Particulars<\/b><\/p>\n<\/td>\n<\/tr>\n
\n \n Date and Time<\/b><\/p>\n<\/td>\n
\n December 10, 2020<\/b><\/p>\n<\/td>\n<\/tr>\n
\n \n Venue<\/b><\/p>\n<\/td>\n
\n Virtual Meeting<\/b><\/p>\n<\/td>\n<\/tr>\n
\n \n Summary of Proposed Resolutions<\/b><\/p>\n<\/td>\n<\/tr>\n
\n \n Ordinary Business<\/b><\/p>\n<\/td>\n
\n - \n
- Resolution 1: To consider and approve the ETV acquisition for an enterprise value of <\/b>Rs<\/b>97,824 million
\n
<\/b>The Embassy Sponsor, the Blackstone Sponsor Group and their respective associates will abstain from voting on the above acquisition transaction related resolution\n<\/li>\n<\/ul>\n<\/td>\n<\/tr>\n\n \n - \n
- Resolution 2: To consider and grant authority to borrow up to 35% of the Gross Asset Value of the Embassy REIT and matters related thereto<\/b><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
\n \n Special Business<\/b><\/p>\n<\/td>\n
\n - \n
- Resolution 3: To consider and approve raising of funds through an institutional placement(s) of units of Embassy REIT not exceeding <\/b>\n
Rs<\/b>80,000 million to Institutional Investors in one or more placements<\/b><\/p>\n<\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
\n \n - \n
- Resolution 4: To consider and approve a preferential issue of up to 65,579,400 units of the Embassy REIT at a price of <\/b>\n
Rs<\/b>356.70 per unit<\/b><\/p>\n<\/li>\n<\/ul>\n<\/td>\n<\/tr>\n<\/table>\n
1<\/sup> Assumes c. Rs 37 billion Institutional Placement and c. Rs 23 billion Preferential Allotment to third-party selling shareholders. Market Capitalization computed as Units Outstanding as of September 30, 2020 multiplied by VWAP of Rs 349.32. VWAP computed basis BSE (exchange with highest trading volume for last 26 weeks) data for last 30 trading days up to November 11, 2020 (which is the date of intimation to Stock Exchanges for the meeting scheduled for November 17, 2020). The public float of the units of the Embassy REIT may fluctuate due to multiple reasons and the price of Units indicated above may not be indicative of any future trading price. Pre-Acquisition public float is based on unitholding pattern as of September 30, 2020. Post-Acquisition public float excludes the preferential allotment units issued to third-party selling shareholders.\n<\/p>\n
<\/p>\n
View source version on businesswire.com: <\/span>https:\/\/www.businesswire.com\/news\/home\/20201117005576\/en\/<\/a><\/span><\/p>\n
For more information please contact:
\n<\/b>
Ritwik Bhattacharjee
\n<\/b>
Head of Capital Markets and Investor Relations
\n
Email: ir@embassyofficeparks.com
\n<\/a>
Phone: +91 80 3322 2222\n<\/p>\nKEYWORDS:<\/b> United States India North America Asia Pacific New York<\/p>\n
INDUSTRY KEYWORDS:<\/b> REIT Other Construction & Property Residential Building & Real Estate Commercial Building & Real Estate Construction & Property<\/p>\n
- Resolution 4: To consider and approve a preferential issue of up to 65,579,400 units of the Embassy REIT at a price of <\/b>\n
- Resolution 3: To consider and approve raising of funds through an institutional placement(s) of units of Embassy REIT not exceeding <\/b>\n
- Resolution 2: To consider and grant authority to borrow up to 35% of the Gross Asset Value of the Embassy REIT and matters related thereto<\/b><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
- Resolution 1: To consider and approve the ETV acquisition for an enterprise value of <\/b>Rs<\/b>97,824 million
- \nGross Debt to GAV: 22%\n<\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
- Addition of 35+ blue-chip occupiers to REIT\u2019s existing marquee occupier base<\/i><\/li>\n
![\"Logo\"](\"https:\/\/mms.businesswire.com\/media\/20201117005576\/en\/839423\/3\/LogoEmbassyREIT.jpg\")
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