Embassy REIT raises Rs4,600cr debt at 6.5%

The proceeds from this debt raise will be utilized by Embassy REIT to repay its existing zero-coupon bond outstanding of Rs4,530cr.

Oct 18, 2021 04:10 IST India Infoline News Service

Embassy Office Parks REIT has announced today that it has successfully raised Rs4,600cr coupon-bearing debt at an attractive interest rate of 6.5%. The proceeds from this debt raise will be utilized by Embassy REIT to repay its existing zero-coupon bond outstanding of Rs4,530cr. Embassy REIT will be able to secure c.300 basis points (“bps”) interest savings annually through this refinance.

Aravind Maiya, Chief Financial Officer of Embassy REIT, commented, “We are delighted to announce this comprehensive debt raise of Rs4,600cr which is a key milestone in our financing journey.

With this refinancing, our consolidated debt cost reduces to 6.8% from the original 9.4% at the time of listing, thereby significantly reducing our interest cost to the benefit of our Unitholders. Also, we have been able to diversify our debt investor base by tapping into newer avenues of capital such as insurers, thereby underscoring the growing investor confidence in our business.”

Earlier today, the Debenture Committee approved the allotment of Rs3,100cr Series V rupee-denominated, listed, rated, secured, redeemable, transferable NCDs by way of private placement at 6.5% average fixed coupon. The NCDs will be listed on the Wholesale Debt Market of BSE Limited (“BSE”). Further, Embassy REIT has secured a term loan facility at SPV-level from a bank for Rs1,500cr at 6.4% floating coupon. Both these proceeds, totaling Rs4,600cr, will be utilized to redeem the Series I NCDs on November 2, 2021.

Transaction Highlights
  • Issuance of Rs3,100cr of Embassy REIT Series V NCDs 2021 at 6.5% average fixed coupon payable quarterly ‒ Rs1,100cr of 5-year NCDs at 7.0% and Rs2,000cr of 3-year NCDs at 6.3% ‒ Robust demand from Mutual Funds, Life and General Insurers ‒ “CRISIL AAA/Stable” rating assigned by rating agency CRISIL to the NCDs issued
  • Secures Rs1,500cr of term loan facility at SPV-level from a leading bank at 6.4% floating coupon payable monthly
  • Proceeds to be used for early refinance of zero-coupon bond (Series I NCDs), resulting in a c.300 bps positive refinance spread
  • Average tenure of debt raised is 4 years and compares favorably to the 3-year listed bonds raised earlier
  • Post this refinance, proforma gross debt of Embassy REIT would be Rs11,532cr at 6.8% interest rate with a maturity of 3.7 years
Morgan Stanley, Kotak Mahindra Bank and HSBC served as arrangers on the private placement and Talwar Thakore and Associates served as the legal counsel on the transaction.

Embassy Office Parks REIT ended at Rs351.57 apiece up by Rs1.63 or 0.47% on the BSE.

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