Tag: REIT

Business

Embassy REIT Announces the Completion of Embassy Splendid TechZone, Chennai Asset Acquisition

Jun 4, 2024 by Sujata Muguda 0 Comments #Aravind Maiya, #Chandigarh, #Chennai Asset Acquisition, #Completion of Embassy Splendid TechZone, #Embassy Office Parks REIT, #Embassy REIT, #Embassy Splendid TechZone, #REIT

Chandigarh, India, June 4, 2024

Embassy Office Parks REIT  (‘Embassy REIT’), India’s first listed REIT and the largest office REIT in Asia by area, announced today that it has completed the acquisition of Embassy Splendid TechZone (‘ESTZ’), a Grade-A business park in Chennai. The ₹1,185 crores acquisition was funded primarily through a debt raise of ~₹1,200 crores and internal accruals. This acquisition increases Embassy REIT’s total portfolio to 50.5 msf, positions it as one of the largest office REITs globally, and marks its entry into the new growth market of Chennai.

Aravind Maiya, Chief Executive Officer of Embassy REIT, said, “We are pleased to announce the completion of this accretive acquisition that facilitates the REIT’s entry into Chennai, one of India’s leading office markets. With this acquisition, we’re delighted to add another premium business park that perfectly complements and strengthens our high-quality office portfolio. While we evaluated funding this acquisition by issuing equity, we decided to finance it through debt and internal accruals, in the best interest of all our stakeholders. Given our diverse unitholder base and 92% public float, we will consider raising equity for defined purposes, when the markets are more conducive for us to do so.”

Transaction Highlights

  • 1,185 crores Enterprise Value is at a 9.2% discount to the average of two independent valuation reports
  • Accretive by 2.0% and 0.2% to FY2025 mid-point NOI and DPU guidance, respectively, and accretive to Mar’24 NAV by 0.2%, on a proforma basis*
  • Transaction financed primarily through debt at 8.05% and internal accruals
  • Stable cash flows from 95% occupancy on 1.4 msf completed buildings; leased to marquee multinational occupiers such as Wells Fargo and BNY Mellon, among others
  • Embedded growth from 1.6 msf of on-campus development and 2.0 msf future development potential
  •  Enhances Embassy REIT’s commercial portfolio by 11% to 50.5 msf, positioning the REIT as one of the largest office REITs worldwide
Business World

Indian real estate sector likely to register USD 4.8 bn institutional flow of funds in 2020: JLL

Nov 4, 2020 by Gouri Achary 0 Comments #Capital Markets Update | Q3 2020, #Dr. Samantak Das, #Indian real estate sector, #investors, #JLL, #Ramesh Nair, #real estate, #REIT

India’s real estate market attracted USD 235 mn in the capital in the third quarter of 2020 (Q3,2020), growing by 52% quarter-on-quarter (QOQ), according to JLL’s ‘Capital Markets Update | Q3 2020’ report released today. The India real estate sector is expected to draw USD 4.8 bn of capital in 2020, representing an 8% decline on 2019’s total transactional volume of USD 5.3 bn.

According to JLL, investors are most attracted to the country’s office sector, with interest remaining strong throughout the pandemic and the partial relaxation of the lockdown with USD 200 mn invested during Q3 2020. Concurrently, global investors actively sought asset portfolio opportunities, with two landmark portfolio transactions amounting to a total of USD 3.6 bn in investment value likely to be concluded in Q4 2020. In the primary markets, Mindspace Business Parks REIT- India’s second REIT issue of USD 600 mn was oversubscribed by 13 times in August 2020. The strong response to this REIT indicates a preference for cash flow opportunities in private and public markets.

“We’re expecting a broad-based ‘V-shape’ recovery in the Indian real estate market, but depending on the economic recovery and pandemic response, our estimates have substantial scope for an upward revision. We have already witnessed very positive signs of recovery in the office segment in Q3 with gross leasing at 13.8 mn sq. ft. The REITs market has done exceedingly well with the combined market cap of the India REITs at USD 6 bn accounting for 33% of the market cap of listed real estate companies,” said Ramesh Nair, CEO and Country Head (India), JLL.

Office assets remain the preferred choice

USD mn
Asset Class Q1 Q2 Q3 Q3/ Q2 growth rate Total
Residential 102 48 35 -28% 185
Office 505 66 200 202% 771
Warehousing 54 41        – -100% 93
Hotels 130             –        –                     –             –
Grand Total 791 155 235 52% 1180

Source: JLL Research

The review of investments in the first nine months of 2020 reveals that out of the USD 1.2 bn investments, Bengaluru, Chennai and Mumbai together accounted for 71% share. Bengaluru led the pack with 33% share of real estate investments.

“The impact of COVID-19 on the India real estate market has been unprecedented, but investors have remained bullish on the long-term prospects and voted with their deployments in the third quarter. Though we expect 2020 investments level to be marginally lower than 2019, the recovery will not be broad-based given that two large transactions slated to be concluded this year would account for 76% of the total investments estimated for 2020,” said Dr Samantak Das, Chief Economist and Head of Research & REIS (India), JLL.

Lessons from past and looking ahead

Post the Global Financial Crisis (GFC), investments in Indian real estate declined by 71% during Q1-Q3 2009 as compared to the same period in 2008. However, investors after the brief wait came back with lessons learnt. Investments during Q1-Q3 2010 saw a recovery of 92%. This year, a similar pattern has panned from Q1-Q3 2020 wherein investments declined by 73% although on a higher base.

Green shoots of recovery like a strong response to REITs, large office and retail asset portfolio deals in progress and robust office sector fundamentals indicate that a similar pattern which was witnessed in 2010 could unfold shortly. Indian real estate has come a long way, post the global financial crisis due to structural transformation as well as regulatory reforms introduced in the last decade.

REITs: Redefining investments in Indian real estate

According to JLL, increased awareness of REITs will ensure acceptability and lead to a gradual increase in retail interest and deeper institutional involvement in this segment. Brookfield Asset Management has filed for India’s third REIT with an expected issue size of USD 600 mn. As the market matures, JLL expects global funds are looking for an established track record, an ability to remain transparent and deliver predictable returns, which were demonstrated by India’s two listed REITs.