Embassy Office Parks to raise $300 million for office park acquisition and debt reduction

Embassy Office Expansion: India's premier real estate investment trust, Embassy Office Parks, has unveiled plans to raise Rs 2500 crore ($300 million) in capital. This move aims to facilitate its recent acquisition of an integrated office park and to alleviate debt burdens.

The Embassy, boasting a vast portfolio spanning over 45 million square feet (4.18 million square meters) of office space, serves prominent clients such as Google, Cisco, and IBM, all of whom are expanding their footprint in India.

Capital allocation strategy

The raised capital will primarily be allocated towards financing the acquisition of an integrated office park located in the southern state of Chennai, valued at Rs 1269 crore. Additionally, it will be utilised to decrease the existing leverage of the portfolio from 30 per cent to 27 per cent.

This development echoes an earlier report by Reuters, indicating the company's intention to garner up to $400 million from investors.

Pandemic rebound impact

The commercial real estate sector in India is witnessing a surge, buoyed by robust hiring activities by both local and international corporations following the aftermath of the COVID-19 pandemic. According to consultancy firm CBRE, office space leasing in India reached 61.6 million sq ft in 2023, with the final quarter marking a record high in quarterly leasing.

This trend stands in contrast to markets such as the United States, United Kingdom, and Australia, where office occupancy rates have declined due to remote work arrangements. Despite the adoption of hybrid work models in India, the demand for office spaces persists as companies require additional space to accommodate new hires and support their back-office operations, which entail a substantial workforce.

(With Reuters Inputs)