India’s first real estate investment trust (REIT), Embassy Office Parks REIT, backed by global private equity firm Blackstone Group LP, will open its initial public offering on March 18, with a target to raise Rs 4,750 crore.
Embassy Office Parks, a joint venture of Blackstone and realty firm Embassy, will issue 1,29,556,000 units at the price band of Rs 299-300.
Embassy Office Parks IPO, the first REIT IPO in India, will close on March 20.
The bid lot for the IPO is 800 units and in the multiple of 400 units thereafter. The minimum bid amount would be Rs 2,39,200- 2,40,000. The number of units allotted to the public is 129,124,400 units. Also, the anchor book subscriptions will open today.
Also Read: Five things to know about the Embassy Office Parks IPO
The joint venture firm has already entered into unit subscription agreements with strategic investors like American Funds Insurance Series, New World Fund INC and Smallcap World Fund Inc to allot them 29,208,800 units for Rs 876.3 crore.
Source: Motilal Oswal
The IPO will be launched at a 20 percent discount to the net asset value (NAV). Embassy REIT’s portfolio comprises of 7 best-in-class office parks and 4 prime city-center office buildings. The total market value of all completed and under-construction assets is Rs 34,000 crore.
In its research report, Motilal Oswal said, "The company’s lowly leveraged balance sheet is expected to drive growth by undertaking value accretive future acquisitions, both through new transactions and acquisition of ‘Right of First Offer’ (ROFO) assets from the Embassy Sponsor".
The post utilization of the IPO proceeds, total indebtedness should be less than 15 percent of Market Value initially, which compares favorably to key comparable office REITs in Asia and the 49 percent regulatory limit, says the research report.
Further, management believes that along with the sponsors, they have a strong relationship with numerous lenders, investors and other capital providers, which will provide significant financial flexibility to fund future growth, added Motilal Oswal
The report also said, “Embassy’s leasing income is expected to grow from Rs 180 crore in FY19 to Rs 250 crore in FY21 driven by embedded organic growth opportunities (MTM re-leasing), leasing of vacant space, on-campus development, acquisitions and ROFO with Embassy REIT’s sponsor.”Also, the company’s under-constructed hotels like Hilton and Hilton Garden Inn are expected to be completed after FY21; the construction plan is expected to add Rs 38.7 crore of rental revenue by FY21.