Embassy Office Parks REIT, India’s first listed Real Estate Investment Trust (REIT), recently announced its successful debt raise of Rs 1,050 crore through non-convertible debentures (NCDs). This campaign is being held in order to refinance bank loans whose interest rates are about to reset.
By opting for refinancing at a 7.77 percent coupon, Embassy REIT or Real Estate Investment Trust expects to achieve significant interest savings of approximately 138 basis points (bps) compared to the expected interest rate upon repricing. This move demonstrates the company’s proactive debt management and aims to optimize its financial performance.
Embassy REIT Series VII NCDs, with a two-year tenure and a 7.77 percent quarterly coupon rate, have been approved for issuance by the Debenture Committee of the Board of Directors of the Manager Embassy REIT. The NCDs will be listed on the wholesale debt market of BSE Limited, offering investors the opportunity to participate in this investment. The rating agency CRISIL has assigned a ‘AAA/Stable’ rating to these NCDs, ensuring investor confidence in the reliability and credibility of the investment.
The debt raise of Rs 1,050 crore through NCDs will enable Embassy REIT to refinance its existing bank loans and reduce its interest expenses. The company expects to secure substantial interest savings of approximately 138 basis points (bps) compared to the expected interest rate upon repricing. This strategic move will enhance Embassy REIT’s profitability and financial performance, ultimately benefiting its unitholders.
The two-year tenure of the NCDs offers Embassy REIT a favorable timeframe for managing its financial obligations and cash flows. This allows the company to prudently replace higher-cost bank loans with lower-cost NCDs, resulting in improved financial efficiency. The proactive debt management and industry-leading creditworthiness of Embassy REIT continue to attract capital from mutual funds, insurers, and corporates, as evidenced by the strong participation from institutional investors in this fundraiser.
The ‘AAA/Stable rating assigned by CRISIL to Embassy REIT’s NCDs further reinforces investor confidence in the company. This high credit rating indicates the company’s strong financial position, reducing perceived risks for investors. Embassy REIT aims to ensure the reliability and credibility of its NCDs, ultimately fostering trust and attracting more investments in the future.
To facilitate the debt raise, Axis Bank Limited, Barclays Bank PLC, and ICICI Bank Limited served as arrangers. Their expertise and support contributed to the successful execution of this fundraiser. Talwar Thakore & Associates additionally offered Embassy REIT legal guidance, guaranteeing adherence to rules and regulatory requirements. This comprehensive approach strengthens the company’s commitment to transparency and responsible financial practices.
Embassy Office Parks REIT‘s successful debt raise through non-convertible debentures (NCDs) marks a significant step in the company’s proactive debt management strategy. By refinancing existing bank loans at a lower interest rate, Embassy REIT expects to achieve substantial interest savings. The two-year tenure of the NCDs provides a favorable timeframe for managing financial obligations, while the ‘AAA/Stable’ rating from CRISIL enhances investor confidence in the reliability of the investment. With the support of arrangers and legal counsel, Embassy REIT demonstrates its commitment to responsible financial practices.
