TechVillage, a property that will be inducted by Embassy REIT.

Embassy REIT has moved to acquire Embassy TechVillage (ETV) for IDR97,824 million (USD1.3 billion).

The property is being acquired from affiliates of the REIT’s sponsors, Embassy and Blackstone, and other shareholders.

The property features approximately 6.1 million square feet of completed area, with a further 3.1 million square feet under construction.

ETV derives 88% of its rents from multinational occupiers, is 97.3% occupied, and has a 9.7-year weighted average lease expiry (WALE).

36% of the asset has been pre-leased to JP Morgan, and two proposed 518-keys Hilton hotels within the overall ETV campus.

Other notable tenants at the property include Cisco, Sony and Flipkart.

“The proposed accretive acquisition of Embassy TechVillage will mark the addition of another trophy asset to our existing office portfolio, while reinforcing our stable cash flows”, said Mike Holland, CEO of Embassy REIT.

“We are delighted to purchase an asset of the quality and scale of ETV at a 4.6% discount to the average of the two independent valuations. This acquisition aligns perfectly with our overall strategy to maximize total returns for our unitholders”, he added.

“The Embassy TechVillage ROFO reaffirms the commitment we made at the time of the REIT’s listing to provide Embassy REIT with a pipeline of opportunities for completed and rent-yielding assets”, said Jitendra Virwani, Chairman & Founder of the Embassy Group.

Embassy REIT has proposed to fund the acquisition via an IDR60 billion equity fund raising exercise.

This will comprise an institutional placement of IDR37 billion, and a IDR23 billion preferential issue of units.

The proposed placement of units is expected to increase the REIT’s public float, enhance its liquidity, and serve as a catalyst for the REIT’s potential inclusion into additional benchmark global equity indices, Embassy REIT noted.

The REIT also plans to refinance existing ETV debt facilities of up to IDR36 billion through a combination of equity, and issuance of new coupon bearing debt.

The acquisition is subject to approvals from unitholders and regulators.

Embassy REIT was last done on the BSE at INR338.16.

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By Shariffa Al-Habshee

Shariffa joined REITsWeek in 2017, and monitors Asia-Pacific REITs for the publication.