Blackstone Exits India’s Embassy Office Parks REIT – Mingtiandi

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Embassy Office REIT

The REIT’s portfolio includes The Embassy Quadron office complex in Pune

Blackstone on Wednesday sold its remaining stake in India’s pioneering Embassy Office Parks REIT for around INR 71 billion ($853.5 million) via block sales on Indian stock exchanges, according to local media reports.

Buy/sell, rent/lease residential &
commercials real estate properties.

Affiliates of Blackstone exited the listed trust through sales of the 23.59 percent stake on the secondary market at a 7.7 percent discount to Tuesday’s per-unit trading price of INR 335.75 ($4.04), Reuters said, citing a term sheet for the transaction.

Blackstone issued no statement on the planned disposal, but a company representative confirmed to Mingtiandi that the press reports were “largely true”.

Embassy REIT went public as India’s first listed property trust in April 2019, with the IPO subscribed 2.5 times and generating more than INR 53 billion ($773 million) after anchor investors kicked in INR 17.43 billion. The milestone marked “the culmination of eight years of building one of the largest office portfolios in India”, as Blackstone president Jonathan Gray put it at the time.

Since then, the Manhattan-based fund manager has periodically sold down its stake, including a $400 million sale in September 2022 to buyers including the Abu Dhabi Investment Authority, Reuters reported.

Back to the Baseline

Embassy REIT’s units — which trade on India’s National Stock Exchange and the Bombay Stock Exchange — are now essentially on par with the trust’s pricing at the time of its 2019 IPO, having reached an all-time high north of INR 460 in March 2020.

Embassy Office Parks REIT chief executive Aravind MaiyaEmbassy Office Parks REIT chief executive Aravind Maiya

Embassy Office Parks REIT chief executive Aravind Maiya

The REIT owns and operates 45.3 million square feet (4.2 million square metres) of office space across India’s key markets. The portfolio also includes six hotel projects and a 100-megawatt solar park.

The trust’s co-sponsor, Indian property giant Embassy Group, commands a real estate empire spanning 62 million square feet of commercial, residential, retail, hospitality and educational space across India, Serbia and Malaysia.

In 2021, Blackstone acquired Embassy Industrial Parks, a joint venture of rival Warburg Pincus and the Indian group, for an undisclosed sum, gaining a portfolio with 10.6 million square feet of logistics and warehouse assets near major cities in India. That same year, Embassy launched a $500 million office development platform with Canada’s Ivanhoe Cambridge, but the plan was later shelved.

Against the Tide in Asia

India’s real estate market fared better than other large Asian markets in 2023, cementing itself as one of the most promising emerging markets globally, according to MSCI Real Assets’ latest Capital Trends report.

Commercial property investment in the world’s most populous country totalled $1.5 billion in the third quarter — up 44 percent year-on-year — with deal volume boosted by Brookfield Asset Management’s $683 million sale of a 50 percent stake in an office portfolio to Singapore sovereign fund GIC, MSCI said.

During the first nine months of the year, India was one of two markets in the region (along with China) where the count of deals in excess of $10 million increased compared with the same period in 2022, according to the data provider.

In a sign of the market’s appeal to foreign investors, Japan’s Sumitomo Realty & Development agreed to buy a 22 acre (8.9 hectare) land parcel in central Mumbai from Bombay Dyeing and Manufacturing for about $626 million, Mingtiandi reported in September. Sumitomo plans to invest $3.58 billion in office building projects in India, Nikkei Asia reported.

to be made by the private equity giant on Wednesday, according to terms of the deal seen by news agencies including Reuters and Bloomberg.

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