Realty Income to buy commercial property landlord VEREIT for about $11 billion – ET RealEstate

BENGALURU: Realty Income Corp said on Thursday it would buy commercial property landlord VEREIT Inc for about $11 billion and spin off office properties of both companies into a publicly traded REIT.

VEREIT shareholders will receive 0.705 shares of Realty Income stock and will own 30% of the combined company, while Realty shareholders will own 70%.

Realty Income expects the deal, likely to close during the fourth quarter of 2021, to result in over 10% accretion to its adjusted funds from operations per share in the first year.

Moelis & Company LLC and Wells Fargo Securities are acting as financial advisers to Realty Income.

J.P. Morgan Securities LLC is serving as the financial adviser to VEREIT.

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Embassy Office Parks REIT’s net profit dips 19% in Q4 FY21 – ET RealEstate

NEW DELHI: Embassy Office Parks REIT reported a dip of 19% in its net consolidated profit during January-March 2021. Its profit after tax (PAT) stood at Rs 46.70 crore in Q4 FY21 as against Rs 57.80 crore it recorded in the similar quarter last year, the company said in a BSE filing.

The company’s net consolidated income stood at Rs 770.20 crore in Q4 FY21, a growth of 32% from Rs 583.50 crore it registered in the corresponding quarter previous fiscal.

The board of directors of Embassy Office Parks Management Services (EOPMSPL), manager to Embassy REIT declared a distribution of Rs 530.80 crore or Rs 5.6 per unit for 4Q FY2021. The distribution comprises Rs 117.50 crore/Rs. 1.24 per unit in the form of interest, less applicable taxes, if any, Rs 209.40 crore/Rs. 2.21 per unit in the form of dividend and Rs 203.70 crore/Rs 2.15 per unit in the form of proceeds of amortization of SPV level debt.

The cumulative distribution for FY21 totals Rs 1,836.40 crore or Rs 21.48 per unit, which is on target with the guidance issued earlier by management.

The company said that it simplified the holding structure of Embassy Manyata, thereby increasing the tax-free component of distributions to 78% for Q4 FY21.

It also raised Rs 52 billion debt at 6.9% coupon and refinanced Rs 32.8 billion leading to 336 bps interest savings.

The company said its occupancy was at 88.9% with rent collections at 99.8% on 32.3 million sq ft operating portfolio. It claims to have seen rent increase of 13% on 8.4 million sq ft across 90+ leases.

It declared net asset value of Rs 387.54 per unit for Embassy REIT as at March 31, 2021.

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Embassy REIT expedites office property construction – ET RealEstate

Embassy REIT has said that large corporate clients have started soliciting request for proposals (RFPs) for 2023-24 and the company has expedited construction to meet future office space demand.

“This is the opportunity to build the product and keep it ready. We are constructing 57 lakh sq ft in Pune, Bengaluru and Noida with the investment of over Rs 2,000 crore and half of it was started in the middle of lockdown. We expedited the construction sensing opportunity in long term,” Vikaash Khdloya, Deputy CEO and COO of Embassy REIT told ET.

The company is also looking for acquisition of large scale brownfield office parks in Noida, Gurgaon, Hyderabad and Chennai. In Q3FY21, Embassy REIT net operating income was Rs 4,780 million and it distributed Rs 4,313 million or Rs 4.55 per unit to unitholders.

Embassy REIT, listed in April 2019 has a portfolio of eight infrastructure-like office parks and four city centre office buildings in Bengaluru, Mumbai, Pune, and the NCR.

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Brookfield India REIT to raise Rs 3,800 crore – ET RealEstate

Canadian alternative investment major Brookfield Asset Management-backed Brookfield India Real Estate Trust will be raising Rs 3,800 crore through a public issue of its Real Estate Investment Trust next week.

The issue, priced between Rs 274 and Rs 275, will open for subscription on February 3 and close on February 5, Brookfield said in regulatory notification.

In July, ET was first to report that Brookfield Asset Management is planning to raise $500 million to $700 million by listing a REIT by the end of the current financial year.

This will be India’s third REIT listing and second in the country during the ongoing pandemic. The proposed issue will be India’s first REIT which is 100% managed by an institution.

In India, Brookfield owns and operates a portfolio of infrastructure and real estate assets, including 42 million sq ft office properties. Around 14 million sq ft out of this will be offered under the REIT and 93% of the portfolio value is derived from completed assets.

Last month, in the largest ever real estate deal in India, Brookfield completed acquisition of RMZ Corp’s 12.8 million sq ft real estate assets for around $2 billion. These assets are not part of the REIT portfolio right now. The REIT has an identified growth pipeline of 15 million sq ft.

Prior to that, in India’s largest commercial space portfolio deal, it had acquired Hiranandani Group’s offices and retail space in Mumbai’s Powai suburb, for around $1 billion or Rs 6,700 crore in October 2016.

Some of the marquee properties that are being offered under the REIT include Kensington SEZ in Mumbai Powai’s suburb that counts large tenants such as Nomura, Deloitte, Credit Suisse. Candor Tech Space in Gurgaon and other key assets in Noida and Kolkata will also be part of this REIT portfolio.

Bank of America, Morgan Stanley, HSBC, Citibank are the lead bakers to the issue.

India’s REIT segment is now catching momentum with large portfolio owners increasingly gearing up to list part of their holdings here after the successful listing and performance of both the REITs Embassy Office Parks and Mindspace Business Parks.

Listed in April 2019, Embassy Office Parks REIT is co-owned by Embassy Group and the US private equity major Blackstone Group. Mindspace Business Parks that listed on bourses last month is co-owned by K Raheja Corp and Blackstone.

REITs and Infrastructure investment trusts (InvITs) can potentially raise up to Rs 8 lakh crore of capital for India’s infrastructure buildout over the next five fiscals, showed a CRISIL Ratings analysis.

Both the fundraising avenues are gaining currency in India, following the footsteps of the developed world and a deeper debt market where investors can discern risks and returns across infrastructure asset classes, and stable regulations will be critical to achieving this goal.

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