The Blackstone Group, the world’s largest real estate private equity firm, is looking at listing its own marquee income-producing commercial assets in India and office properties jointly owned with the Embassy Group under its Real Estate Investment Trust (REIT).
The REIT, registered in 2017 as Embassy Office Parks, is sponsored by Blackstone and Bengaluru-based realty developer Embassy Property Developments. It is currently in the process of filing the draft red herring prospectus for the REIT.
The Blackstone-Embassy alliance is expected to raise around $1 billion (Rs 6,850 cr) through this issue, which will be India’s maiden REIT. The papers are expected likely to be filed over the next couple of weeks.
Blackstone is adding a few of its own assets in Mumbai, the Delhi-National Capital Region and Pune to the portfolio, a part of which will be listed as a REIT. With a fundraising estimate of around $1 billion, the portfolio would value at over $5 billion.
The addition of Blackstone’s own prime assets across three major property markets would expand the size of the portfolio being considered for the proposed listing. With this move Blackstone is putting together integrated office parks and city-centre buildings in the REIT.
Embassy Office Parks owns around 35 mln sqft office space in Bengaluru and Pune. Most of these office properties are fully leased and occupied.
The assets to be added to this portfolio include the 247 Park in Mumbai’s Vikhroli suburb and Blackstone’s 50% ownership in First International Financial Center (FIFC) in Mumbai’s Bandra-Kurla Complex business district.
The US-based private equity firm and Embassy have roped in Bank of America, Morgan Stanley, Kotak Mahindra Bank and JPMorgan among others as the bankers for the issue.
Over the past few years, Blackstone has emerged as the most aggressive institutional investor in India’s real estate sector, picking up properties across major cities in deals that are turning out to be benchmarks in the sector. It owns India’s biggest portfolio of income-producing office assets, totalling more than 110 mln sqft across the property markets of Mumbai, Noida, Pune and Bengaluru.
In addition to its own assets, it holds stake in properties through joint investment platforms with developers including the Embassy Group, Pune-based Panchshil Group, Mumbai’s K Raheja Corp and the Salarpuria Sattva Group of Hyderabad.
In March, Blackstone formed its latest alliance with Indiabulls Real Estate by creating a joint venture platform by acquiring 50% in the developer’s prime commercial office-space assets in the heart of Mumbai for an enterprise value of Rs 9,500 cr. The deal represented Blackstone’s largest transaction in India.
Large global institutional investors, including Blackstone, Brookfield Asset Management, GIC, Canada Pension Plan Investment Board, Ascendas-Singbridge and Qatar Investment Authority have been investing aggressively in Indian real estate assets over the past few years.
In addition to these, more funds are eyeing investment and alliance opportunities in the backdrop of recent policy reforms in the country. While such entities had earlier shown interest in investing in commercial real estate, they are increasing their investment portfolios in the backdrop of the opening up of an avenue for monetisation through REITs.