Bengaluru: Embassy Office Parks REIT on Monday said that it has received a right of first offer invitation from Embassy Property Developments Pvt Ltd for the potential sale of around 8.7 million sq ft of completed and under-construction office space in Embassy Tech Village, Bengaluru.
Blackstone Group Lp and Bengaluru-based real estate firm Embassy Property Developments are the main sponsors to the real estate investment trust or REIT, that was launched earlier this year and is also India’s first listed REIT.
Embassy Property’s right of first offer (ROFO) notice states the intention to potentially sell 6.2 million sq ft of completed office space and 2.5 million sq ft of under-construction area in Embassy Tech Village, a large office park in Bengaluru’s Outer Ring Road location to the REIT.
A right of first offer is a contractual obligation a rights holder to buy an asset before the owner tries to sell it to someone else. If the rights holder is not interesting in the asset, the owner can sell it to a third party.
The Embassy REIT owns a variety of assets, which are owned by Blackstone and Embassy, including individually-owned properties as well as those which they jointly own. Embassy Tech Village is currently not part of the REIT and would significantly expand the size of the REIT portfolio if included.
Embassy Property chairman Jitu Virwani had said in October that the company plans to divest some of its assets to institutional investors to raise around ₹4,000 crore to primarily pare debt and keep a cash reserve. The company has around ₹7,000 crore of debt, with a large exposure to HDFC Ltd and another bank.
On Monday, the board of directors of Embassy Office Parks Management Services Pvt Ltd, the manager to the Embassy REIT, has authorized the manager to undertake necessary action as prescribed under the ROFO Deed framework, Embassy REIT said in a statement.
“The manager will evaluate the opportunity including, pursuant to the terms of the ROFO Deed, applicable laws and any approvals and consents as may be required. There can be no assurance that the Embassy REIT will enter into any definitive arrangements for the proposed acquisition," the statement said.