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Embassy REIT, India's first listed REIT, is considering the sale of its Quadron office campus in Pune's Hinjawadi suburb as part of a strategic move to optimize its portfolio. The Quadron property has significantly lower occupancy at 54% compared to the REIT's other Pune assets, Embassy Tech Zone and Embassy Qubix, which are performing exceptionally well. The REIT is expected to fetch over INR 1,200 crore for the 1.9 million square feet Quadron asset, which commands standard Grade-A office rents in the area. The planned sale comes as the REIT looks to finance the acquisition of new projects, particularly from its manager, the Embassy Group.
Embassy REIT, a real estate investment trust managed by the Embassy Group, is considering the sale of its Embassy Quadron office campus located in Pune's Hinjawadi suburb, according to people familiar with the matter. The Embassy Quadron property is one of the three office assets owned by the REIT in Pune, and it has significantly lower occupancy at 54% compared to the other two properties. Advertisement
One of the people familiar with the matter stated that this is a strategic move to optimize the REIT's portfolio. The other two Pune assets, Embassy Tech Zone and Embassy Qubix, are performing exceptionally well in terms of occupancy, and the Quadron building is also in good condition.
The REIT has not responded to queries regarding this potential sale. However, according to one of the sources, the Embassy REIT, which was India's first listed REIT and is backed by Blackstone, is expecting to fetch over INR 1,200 crore for the Quadron asset. The property has a leasable area of 1.9 million square feet, spread across four towers on a 25.5-acre land parcel in Hinjawadi's Rajiv Gandhi Infotech Park.
The Embassy Quadron property commands a rent of INR 55-60 per square foot per month, which is considered standard for Grade-A office spaces in the area. The campus started operations in 2008, and 62% of its occupiers are in the technology sector, with the next largest clients being research, consulting, and analytics firms.
The marketing for the transaction is expected to commence as early as this month, but the deal is likely to be concluded next year. Developers in Pune, as well as sovereign wealth funds, are anticipated to show interest in the asset.
The planned sale of the Quadron property comes at a time when the REIT has a number of new projects lined up for acquisition, particularly from its manager, the Embassy Group. The REIT has been actively raising funds through debt and other measures to finance these acquisitions.
Despite reporting a total leasing of 8.1 million square feet in FY24, the REIT has lowered its leasing guidance for FY25 to 5.4 million square feet while increasing its distribution target to INR 22.40-INR 23.10 per unit, up from INR 21.33 per unit in FY24.
Embassy Tech Zone is the largest of Embassy REIT's three assets in Pune and has a current occupancy of 78%. It has a leasable area of 5.5 million sq ft, of which 3 million sq ft has been completed. Besides large technology clients, Embassy Tech Zone also has a sizable presence of engineering and manufacturing clients, hosting their global capability centres and research and development facilities. Qubix has an occupancy of 68%, although its leasable area is lower than Quadron, at 1.5 million sq ft.
The potential sale of the Quadron property highlights Embassy REIT's proactive approach to managing its portfolio and optimizing its assets. While the Quadron building is in good condition, the REIT's decision to sell the underperforming asset suggests a focus on high-occupancy properties that can drive stronger returns for unit holders. With new acquisitions on the horizon and a revised leasing guidance for FY25, the REIT is positioning itself for continued growth and delivering on its mandate to provide stable distributions to investors.
Source: Moneycontrol
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