BackEmbassy REIT raises ₹4,600 cr
The firm plans to refinance existing bond outstanding
PremiumBENGALURU : Embassy Office Parks REIT, India’s first listed real estate investment trust, on Monday said it has raised ₹4,600 crore debt at a lower interest cost of 6.5%, which will be used to refinance its existing bond outstanding of ₹4,530 crore that will mature in early November.
With this, the company will effectively save around ₹135 crore annually on interest cost.
In May 2019, Embassy REIT had raised ₹3,650 crore through bond at zero coupon rate along with redemption premium.
The redemption amount of ₹4,530 crore is maturing and needs to be repaid on 2 November, said a top company executive.
Embassy REIT is sponsored by Blackstone Group Lp and realty firm Embassy Group. It got listed on the stock exchanges in April 2019 after raising about ₹4,750 crore through a public issue.
The firm has raised ₹3,100 crore debt through issue of bonds in two tranches. Of this, ₹2,000 crore is at 6.25% interest rate for a three-year tenure, while ₹1,100 crore is for a longer, five-year tenure. Additionally, it has raised ₹1,500 crore through lease rental discounting (LRD) with a bank at 6.4% floating coupon against its business park in north Bengaluru.
“The implications are three-fold. There is significant reduction in cost of debt. Secondly, the tenure has been partly widened to five year and thirdly, new investors such as insurance companies have participated in this," Aravind Maiya, chief financial officer of Embassy REIT said in an interview.
Embassy REIT’s consolidated gross debt is at ₹11,500 crore, with an average cost of 6.8%, down from 9.4% at the time of listing.
On Monday, the debenture committee approved the allotment of ₹3,100 crore Series-V rupee-denominated, listed, rated, secured, redeemable and transferable NCDs (non-convertible debentures) by way of private placement at 6.5% average fixed coupon.
In September, Blackstone Group Lp sold about 5.7 crore units in Embassy REIT over ₹2,000 crore as part of its strategy to monetize part of its investment.
Embassy Office Parks REIT raised $501 million in December through a qualified institutional placement of its units, to support the $1.3-billion acquisition of Embassy TechVillage, an office park in Bengaluru.
Embassy REIT owns and operates a 42.4 million sq. ft, including eight office parks and four office buildings in Bengaluru, Mumbai, Pune, and National Capital Region. Its portfolio comprises 32.3 million sq. ft completed operating area and is home to 190 companies.
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