Embassy Office Parks REIT Raises Rs 2,000 Crores Through Debt.Raise to Repay NCDs Maturing in 2024
Embassy Office Parks REIT, India’s first listed REIT and the largest office REIT in Asia by area, recently announced the successful raise of Rs 2,000 crores through coupon-bearing debt. This development is significant for both Embassy REIT and the broader real estate sector in India.
Debt Raised at an Attractive Interest Rate of ~7.95%
In an encouraging move, Embassy REIT secured the debt capital at an interest rate of approximately 7.95%. This will allow the company to effectively manage its financial obligations and allocate funds for future growth initiatives.
Utilizing Proceeds to Repay NCDs Maturing in October 2024
The raised funds will primarily be utilized to repay the Non-Convertible Debentures (NCDs), amounting to Rs 2,000 crores, which are set to mature in October 2024. By ensuring the repayment of these debentures on time, Embassy REIT aims to maintain a strong financial position and preserve investor confidence.
NCD Issuance of Rs 900 Crores and Robust Demand
As part of this fundraising endeavor, Embassy REIT had also issued Rs 900 crores worth of Series XI NCDs with an effective interest rate of 7.87%. Remarkably, these NCDs witnessed robust demand, attracting subscriptions of 3 times the issued value. Mutual funds, life insurance companies, and general insurers played a significant role in driving this overwhelming response.
Ratings and Savings
The NCDs issued by Embassy REIT were assigned the prestigious “CRISIL AAA/Stable” rating by CRISIL, a leading rating agency. This reassuring rating demonstrates the reliability and creditworthiness of Embassy REIT in the market.
Moreover, due to the oversubscription of the NCDs, Embassy REIT was able to secure a savings of approximately 10 basis points on the offered interest rate. This reflects the strong demand for REIT credit among banks seeking to actively deploy capital.
Addition of Term Loans Further Strengthens Funding
Embassy REIT also secured term loans amounting to Rs 1,100 crores from prominent PSU & MNC Banks at an attractive floating coupon of ~8.0%. This injection of funds adds to the financial arsenal of the REIT, ensuring a diversified and strong funding base for its ongoing and future projects.
Legal Assistance and Stakeholders
Throughout this important fundraising exercise, Talwar Thakore & Associates served as the legal counsel to Embassy REIT, aiding the company in navigating the legal and financial complexities. The involvement of such reputed legal experts further highlights the significance of this significant achievement.
A Positive Signal for the Real Estate Sector in India
Embassy Office Parks REIT’s latest debt raise is not only a noteworthy accomplishment for the company itself, but it also serves as a positive indicator for the wider real estate sector in India. The successful fundraising efforts and the assured repayment of NCDs underscore the resilience and prospects of the commercial office space segment in the country.
With a favorable interest rate, strong demand, and the confidence of rating agencies, Embassy REIT has solidified its position as a key player in the Indian real estate market. Furthermore, the support from leading banks and legal experts signifies the market’s confidence in Embassy REIT’s financial health and growth potential.
As scheduled repayments are effectively managed and capital is raised in an aligning manner, Embassy REIT continues to exhibit its commitment towards sustainable growth and value creation for its investors. This remarkable feat contributes to the overall confidence and optimism surrounding the real estate sector in India.
