Embassy REIT to raise $300 million for fund acquisition, lowering debt

Real estate investment trust Embassy Office Parks will raise Rs 250 crores ($300 million) in order to fund the acquisition of an integrated office park and repay its debt.

Embassy handles more than 45 million square feet (4.18 million square metres) of office parks and has clients including Google, Cisco and IBM which are expanding their presence in India.

Embassy, which is Asia's biggest office REIT, said the raised funds from the investors would be utilised for financing the acquisition of an integrated office park in Chennai for Rs 126 crore, and lower its existing portfolio leverage from 30 per cent to 27 per cent.

There were previous reports of the company’s plans to secure up to $400 million from investors.

In a regulatory filing, Embassy REIT informed that it has agreed to purchase Embassy Splendid TechZone (ESTZ), which is a Grade-A business park, from sponsor Embassy Group for a company value of Rs 1,269 crore.

Commercial real estate is expanding in the country with large local and global companies recruiting in record numbers after the COVID-19 pandemic. Organisations leased 61.6 million square feet of office space in 2023, with the year's last quarter registering record quarterly leasing according to consultancy firm CBRE.

This trend is in contrast with markets such as the United States, United Kingdom and Australia where office occupancies have gone down as more and more people work from home. 

Even as companies in the country also have hybrid working models, several still require more office space to make space for new recruits and for back offices employing in thousands.

(With agency inputs)