Bengaluru-headquartered Embassy Office Parks, a joint venture (JV) between private equity major Blackstone Group and realty developer Embassy Property Developments, is considering filing of the draft red herring prospectus (DRHP) for listing its real estate investment trust (REIT) by the end of December.
The trust, which has got the registration approval from the Securities and Exchange Board of India (SEBI), is looking to raise about $1 billion through the listing. As per SEBI REIT guidelines, Embassy Office Parks will have to divest a minimum 25% stake through the listing.
Embassy REIT will be India’s first REIT. Application for registration approval was filed last year and SEBI has now cleared it.
Blackstone and Embassy plan to remain invested and are not looking to exit investments completely. The plan is to pay dividend to shareholders and reduce larger amount of debt,” said one of the persons. Blackstone and Embassy declined to comment.
Embassy Office Parks owns 20 mln sqft office space as leased and under-construction properties, of which 13 mln sqft is under construction. Its capital expenditure over the next three to five years is expected to touch Rs 5,000 cr.
Embassy Property Developments separately owns 5 mln sqft of office assets in Bengaluru and Chennai which is not included in the joint venture. It also has 11 mln sqft under construction in four projects in Hyderabad and Chennai.
The company is carrying out a lot of legal work. There are a series of meetings scheduled this week.
A number of large commercial office developers are looking to list assets through REITs to create liquidity options for investors. RMZ Corp, another Bengaluru-based property developer which is backed by Qatar Investment Authority (QIA), plans to file a DRHP soon.
SEBI recently said that REITs can invest up to 20% in under-construction assets. This will allow for more portfolios to be listed, which hitherto could not be considered as their under-construction portion was greater than 10%. The regulator has also allowed REITs to invest in a two-level special purpose vehicle (SPV) structure.