Synopsis: Embassy Office Parks REIT (Embassy REIT), a leading Indian real estate investment trust, has announced the successful acquisition of a Grade-A business park in Chennai. The deal, valued at Rs 1,185 crore, marks Embassy REIT’s entry into the Chennai market and is financed primarily through a debt raise of Rs 1,200 crore.
Embassy Office Parks REIT (Embassy REIT) has strategically expanded its portfolio by acquiring a prominent business park in Chennai. The company announced the deal’s completion on Monday, marking its foray into the southern Indian market.
The acquired business park, Embassy Splendid TechZone (ESTZ), boasts an area of approximately 5 million square feet. This includes 1.4 million square feet of completed buildings, with an additional 1.6 million square feet under construction. The park also offers promising future development potential of around 2 million square feet.
To finance this acquisition, Embassy REIT primarily utilized debt funding. The company raised approximately Rs 1,200 crore at an interest rate of 8.05%, with the remaining amount coming from internal accruals.
This strategic move allows Embassy REIT to capitalize on the growing demand for office space in Chennai, a major Indian commercial hub. The existing occupancy rate of 95% in the completed buildings at ESTZ, leased to multinational corporations like Wells Fargo and BNY Mellon, further strengthens the company’s position.
The acquisition expands Embassy REIT’s total portfolio to a substantial 50.5 million square feet. The company expects to benefit from the under-construction area at ESTZ, along with the potential for future development, ensuring sustained growth in the coming years.
Analysts view this move positively, suggesting it demonstrates Embassy REIT’s commitment to geographical diversification and its confidence in the Indian office space market. The success of this acquisition will be contingent on maintaining high occupancy rates and leveraging the development potential at ESTZ.
