Embassy Office Parks REIT Acquires ROFO (Right of First Offer) For a Property in Chennai

Bangaluru based Embassy Office Parks REIT has acquired a right of first offer ('ROFO') from one of its sponsors, the Embassy Group, for an Embassy Splendid TechZone property in Chennai. The transaction is expected to be worth more than Rs 2,500 crore.

The acquisition, which includes approximately 5 million square feet of office space in Old Pallavaram, Chennai, is estimated to take around six months and is now under assessment as per sources in the real estate market.

The complex is now under construction and will eventually include 1.4 million square feet of completed and leased space for tenants such as BNY Mellon, Accenture, and Wells Fargo. The entire asset is expected to be completed during the next three years. Once completed, this would be the Embassy REIT's second acquisition in the last two years.

Embassy Office Parks REIT bought Embassy TechVillage in 2021 for Rs 9,782 crore in a ROFO settlement with Embassy Sponsors' affiliates – Blackstone and Embassy Group – and completed the property's integration.

"We have not completed an assessment of the project's value and have yet to begin extensive work on it," stated Michael Holland, CEO of Embassy REIT.

Growth 

The largest office REIT in Asia by space announced a 30% year-on-year increase in quarterly net operating income (NOI) with an 84 percent working margin.

"Our business continues to show a number of encouraging signs. Positive leasing momentum enables us to raise our full-year FY22 projection, as we move beyond the external headwinds of the last two years," as CEO of Embassy REIT  Mr. Holland.

Embassy REIT increased its FY2022 full-year guidance for net operating income ('NOI') and dividend per unit ('DPU'); NOI is expected to increase by 3% to Rs 2,450 crore.

The business increased its full-year FY22 guidance for new leasing from 400 000 to 1 million square feet.