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Embassy Office Parks REIT (Embassy REIT), India's first publicly traded Real Estate Investment Trust (REIT), has announced a major expansion move. They have agreed to purchase a business park in Chennai, Embassy Splendid TechZone (ESTZ), for INR 1,269 crore. This marks Embassy REIT's first venture into the Chennai market.
To finance this acquisition and strengthen its financial position for future growth, Embassy REIT also plans to raise INR 2,500 crore by selling units to investors. This capital infusion of INR 2,500 crore will not only fund the Chennai purchase but also help reduce its current leverage ratio, providing greater flexibility for future expansion.
The newly acquired ESTZ business park comprises 1.4 million square feet of completed, high-quality office space. This space is currently 95% occupied by major global companies like Wells Fargo and BNY Mellon, highlighting the strong demand for office space in Chennai.
The acquisition goes beyond the immediate benefits of the existing office space. ESTZ boasts an additional 1.6 million square feet of under-construction space and a further 2 million square feet of development potential. This positions Embassy REIT to capitalize on Chennai's growing office market, particularly the demand from Global Capability Centres (GCCs) seeking a combined total of 3.6 million square feet of prime office space in India.
Aravind Maiya, Chief Executive Officer of Embassy REIT, remarked that the proposed accretive acquisition of Embassy Splendid TechZone would mark the addition of another quality asset to their existing office portfolio. This acquisition will bring the total size of Embassy REIT's portfolio to over 50 million square feet, further diversifying its presence across India.
This strategic move into Chennai demonstrates Embassy REIT's commitment to growth and its confidence in the Indian office space market, particularly in key cities like Chennai that are experiencing significant economic development.
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