Embassy Office Parks REIT on Tuesday said that it will acquire Embassy Business Hub, Bengaluru for an aggregate value of Rs 334.8 crore. This acquisition will come with an exclusive ownership rights to approximately of 1.4 million square feet of leasable area on full completion.

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The company plans to primarily fund the acquisition through debt at 8.1 percent interest cost per annum, for which it has secured binding commitments from leading financial institutions.

As per the approval, Embassy REIT will acquire the rights, title and interest of Sellers in Embassy Construction Pvt. Ltd. (ECPL), the developer of Embassy Business Hub, Bengaluru, consisting of ECPL’s entitlement to exclusive ownership rights over approximately 1.4 million square feet of leasable area out of the 2.1 million square feet mentioned above, including the right to provide common area maintenance services and common infrastructure services.

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Transaction Highlights

Total enterprise valuation of Rs 334.8 crore ($41 million) at a 4.5 percent discount to the average of two independent valuations

Fully financed acquisition with binding commitments from leading financial institutions at 8.1 percent interest cost per annum

Attractive acquisition with expected Net Operating Income (‘NOI’) yield of 8.25 percent, proforma NOI accretion of 104 basis points (bps) and proforma Net Asset Value (‘NAV’) accretion of 2 bps, all on a stabilized basis

Secured a Right of First Offer (‘ROFO’) for future phases of Embassy Business Hub, totaling 46 acres, further extending REIT’s growth options

The acquisition is expected to be completed on or before April 30, 2023, subject to completion of customary conditions precedent.

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Embassy Office Parks REIT shares are trading 1.5 percent lower at Rs 309.61.

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(Edited by : Hormaz Fatakia)