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Embassy Office Parks REIT has agreed to purchase the Embassy Business Hub in Bengaluru for a total enterprise
value of Rs 3,348 million ($41 million). The acquisition will give Embassy REIT exclusive ownership rights to
approximately 1.4 million sq. ft of leasable area on full completion. The company plans to primarily fund the
acquisition through debt at 8.1% interest per annum. The acquisition is expected to be completed on or before April
30, 2023, subject to completion of customary conditions precedent.
The Embassy Business Hub is an integrated business park in North Bengaluru with a total leasable area of
approximately 2.1 million sq. ft upon completion. Philips India has committed to taking on lease as a tenant
approximately 0.62 million sq. ft in a building that is nearing completion. The company also secured a Right of First
Offer for future phases of Embassy Business Hub, totalling 46 acres.
Embassy REIT intends to leverage the financial expertise of ICICI Bank and Bajaj Housing Finance, for which it has
secured binding commitments to assess the credit profile of borrowers and provide them loans at competitive interest
rates. The company seeks to cater to potential customers who are new to credit or untapped by larger institutions and
build a secured loan book. Embassy REIT will also use the tech platform, Yubi, to process loans seamlessly as per the
co-lending guidelines. The collaboration with Shriram Housing Finance Limited (SHFL) is under the co-lending
model to offer secured MSME (Micro, Small and Medium Enterprises) loans and home loans to the middle and low-
income segment borrowers based in rural and semi-urban regions.
The acquisition of the Embassy Business Hub is expected to generate an expected net operating income (NOI) yield of
8.25%, proforma NOI accretion of 104 bps and proforma Net Asset Value (NAV) accretion of 2 bps. The company
also secured a Right of First Offer for future phases of Embassy Business Hub, totalling 46 acres. Ernst and Young
LLP provided financial and tax due diligence services, while S&R Associates served as the legal advisor to Embassy
REIT. Axis Capital Limited provided a fairness opinion to the independent directors of the Manager to Embassy REIT
for the proposed acquisition.
Embassy REIT aims to expand its portfolio through the acquisition of properties that have the potential to generate
long-term returns. The acquisition of Embassy Business Hub in Bengaluru is in line with its goal, as the company is
expected to benefit from the rising demand for commercial office space in India's technology hub. The acquisition also
aligns with the company's commitment to sustainable development by promoting environmental, social, and
governance (ESG) practices. Embassy REIT plans to continue to seek out opportunities to expand its portfolio and
provide attractive returns to its unitholders.
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