There is an opportunity to purchase a 40,392 square feet commercial office space in Embassy Tech Square within the Cessna Business Park on Sarjapur Outer Ring Road, Bangalore for an all-in cost of Rs. 39,00,00,000 (Rs. 9,655 per sf) which implies a 7.6% yield.
Located within the Cessna Business Park which houses the HQs of CISCO and offices of LG, InMobi, Flipkart and Akamai, Embassy Tech Square is a 1.2 million sf Grade A office development by the Embassy Group comprising four towers, of which Property Share is planning to acquire a floor in the Delta tower. Sarjapur ORR is the largest office market in Bangalore with less than 2% vacancy (40 million sf, 35% of total Bangalore market) with offices of JP Morgan, CISCO, Accenture, Cognizant, Wipro, Oracle, Intel, Honeywell, SAP, HSBC, KPMG, ADOBE, Sony, Goldman Sachs, Flipkart among others.
Property Share’s unit is leased to US based Syniverse, a $2.6 billion telecom technology company headquartered out of Florida and owned by private equity major, The Carlye Group. Syniverse is paying a rent of Rs. 52.9 psf which is 25% below market rent (Rs. 70 psf) due to which the Seller is selling the floor at Rs. 8,853 psf which is 20% below market rate (Rs. 11,000 psf).
This is a leveraged opportunity. There is in-place debt from HDFC for 42% of the purchase price which magnifies returns and reduces tax leakage due to interest offset.