By M. Sriram

MUMBAI (Reuters) – India’s largest actual property funding belief, Embassy Office Parks, plans to lift as much as $400 million from buyers, two sources with direct data stated, because it appears to fulfill demand for workplace house from international and native giants.

Embassy, which manages 45 million sq. ft (4.18 million sq. meters) of workplace parks, has purchasers together with Google, Cisco and IBM who’re bolstering their presence on the planet’s fifth largest financial system.

The property group has appointed funding banks Morgan Stanley and India’s Kotak to run the deal, which it expects to finish by June, stated the sources, who didn’t wish to be named as a result of the talks are personal.

The funds raised can be used to repay debt and purchase land within the southern metropolis of Chennai, the place Embassy is trying to bolster its presence, each sources stated.

Commercial actual property is booming in India, with giant native and international corporations hiring in file numbers after the COVID-19 pandemic. In 2023, corporations in India leased 61.6 million sq. ft of workplace house, and the yr’s final quarter noticed file quarterly leasing, consultancy agency CBRE stated.

That’s in distinction with markets such because the U.S., UK and Australia, the place workplace occupancies have slumped with individuals working from dwelling. Although corporations in India too have ‘hybrid’ working fashions, many nonetheless want extra workplace house to suit new hires and for again places of work, which make use of 1000’s.

Embassy, Asia’s largest workplace REIT, goals to hunt board approval in coming weeks for the deal, which it plans to hold out by way of a Qualified Institutional Placement (QIP), a instrument utilized by listed Indian corporations to lift funds from mutual funds and different giant establishments.

With the increase in Indian workplace house, the deal is predicted to draw international asset managers and mutual funds, stated one of many sources with direct data.

Embassy and the banks didn’t reply to queries in search of remark.

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With properties in 4 cities – Pune, Mumbai, Bengaluru and the National Capital Region – Embassy has 245 occupants, primarily from the know-how and monetary companies sectors. A big portion of these occupants are Fortune 500 corporations.

Private fairness large Blackstone, which used to personal a controlling stake in Embassy, bought that down lately, totally exiting the corporate final yr.

Embassy’s items have risen 17% the previous yr, greater than India’s two different listed REITs, however lower than the broader NIFTY Realty index which has greater than doubled in the identical interval.

While Embassy focuses on places of work, India’s broader actual property house, together with residential and warehousing is seeing rising curiosity from buyers as demand and costs skyrocket.

For the December quarter, Embassy’s post-tax revenue rose 6% to 2.3 billion rupees ($27.58 million) whereas its complete earnings grew 5.3% to 9.8 billion rupees.

($1 = 83.3600 Indian rupees)

(Reporting by M. Sriram; Editing by Aditya Kalra and Sonali Paul)