Embassy Office Parks Reit receives an offer of Rs 6,500 crore.

Embassy Property Developments could raise its investment trust joint-venture with Blackstone, Embassy Office Parks Reit, to as much as Rs 6,500 crore from the selling of office space. The area is part of the TechVillage Embassy in Bengaluru.

Embassy Office Parks Reit CEO Michael Holland stated: “We got an offer from Embassy Sponsor and we are deciding in the due time. Although, I cannot comment on the valuation.”

If the deal happens, it is going to be one of the largest in the space. The company executives said that the Reit might have to increase the amount either by means of equity or debt, or both if they decide to proceed. The Reit has approximately 45 days to accept the offer and sign a nonbinding agreement.

The Reit, which was established earlier this year, is mainly sponsored by the Bengaluru real estate company Embassy Property Development and Blackstone Group LP.

“Expected potential will be determined by the manager, including the relevant regulations and permits as necessary, according to the terms of the Rofo (right of first offer) deed,” said Embassy Office Parks Reit in the results of its announcement. “The Embassy Reit cannot be guaranteed to enter into any definitive acquisition arrangements.”

A Rofo notice from the Embassy sponsor on the prospective sale of 6.2 msf for the completed premises and 2.5 msf of under-construction space in the Embassy TechVillage has been confirmed from the Embassy Office Parks Reit.

“The assets are at Rs 12,000 per sft, at 8.5% cap rate. The land itself is currently at Rs 60 crore per acre at Outer Ring Road,” a real estate consultant said. Embassy TechVillage includes Flipkart, Morgan Stanley and Wells Fargo as a tenant.

The Embassy Group announced in October that it was raising Rs 4,000 crore by the divestment of assets to repay debt and invest in the growth of WeWork (India’s co-working space operator).

The developer owes about Rs 7,000 crore in debt. Embassy Office Parks Reit has 25 msf of constructed property and an 8 msf pipeline for campus development in four major cities, including Bengaluru and Mumbai. Holland said, “Reit Embassy has 40 msf Rofo opportunities with the Embassy Group which might be finished over the next ten years. Earlier this year, Reit raised Rs 3,000 crore through listing nonconvertible debentures maturing in June 2022, at a rate of 9.4%.

“Through most of our portfolio, we are leased 94.7% and continue to see strong office leasing performance,” said Holland. Presently, 80% of its clients are multinational companies. The net office space absorption in the country is forecast to register a new 42 msf peak by the end of 2019 according to various industry forecasts.