Blackstone may sell partial stake in Embassy REIT for ₹4,000 crore

January 25, 2023

Private equity firm Blackstone is considering selling a part of its remaining stake in Embassy Office Parks REIT, sources said.

Blackstone will be offloading only a part of its stake, up to 12 per cent, in Embassy REIT in a deal to raise up to ₹4,000 crore. Sources indicated that it is in talks with potential investors, including Bain Capital for the stake sale.

A spokesperson for Blackstone said it had no comments to offer on the deal, while Bain Capital did not respond to an email requesting clarification on the deal.

Blackstone, one of the sponsors to the country’s first listed REIT, has been bringing down its stake in Embassy REIT that listed in April 2019. As of December 31, the US-based private equity firm held 23.59 per cent stake in the REIT, exchange data showed. The other sponsor in the REIT is Embassy Property Developments Pvt Ltd, which holds 12.18 per cent stake.

In September, the PE firm sold about 8 per cent stake in the REIT in block deals raising over ₹2,700 crore. The stake was picked up by a number of funds, including Kotak Realty Fund, ICICI Prudential and HDFC Life Insurance.

“Blackstone’s stake sale in Embassy REIT is part of normal investment exit,” a source said.

As one of the major sponsors of Embassy Office Parks REIT, Blackstone has made a profitable return on its investment. At Tuesday’s closing price of ₹343 on the NSE, its holding in Embassy REIT is worth ₹7,669.4 crore. It has also got substantial returns in the form of distributions made by Embassy Office Parks REIT every quarter.

Embassy Office REIT had listed at ₹312 against its issue price of ₹300. Since then, the units touched a 52-week high of ₹406.95 on June 8, 2022, on the NSE. It has also distributed a decent amount of money to its unitholders. In 2021-22, it distributed over ₹2,000 crore to its unitholders, while in the first half of 2022-23, it has returned over ₹1,000 crore to its unitholders in distributable surplus.

Blackstone, one of the largest asset owners in India valued at over $60 billion, is monetising some of its profitable holdings as it seeks to launch REITs of its own wholly-owned assets. In November, Nexus Select Trust, a portfolio of retail assets sponsored by the PE firm, filed for a REIT IPO to raise about $500 million. It also has a portfolio of office assets under Nucleus Office Parks, which it is expected to list as a REIT sometime in the future. It has 20 million sq ft of office space and Blackstone is understood to be adding to it to bring it to a sizeable amount for a REIT offering.

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