Blackstone's realty investee firms likely to take the REIT route

After the success of the initial public offering (IPO) of Embassy Office Parks’ real estate investment trust (REIT), two more of US-based Blackstone's investee firms — the rental arm of Mumbai-based K Raheja Corp and Pune based-Panchshil Realty — could join the queue for REITs in the country, said a person in the know.

The rental arm of K Raheja Corp, promoted by billionaire property developer C L Raheja, could float a REIT this year and go public next year. Panchshil could float it by 2021, said people in the know. 

“Raheja has a portfolio of about 25 million sq ft, and could raise a similar amount as Embassy,” the people said. 

Embassy REIT raised Rs 4,750 crore from investors and its REIT share sale was subscribed 2.5 times.

Embassy Office Parks has a rental portfolio of 25 million sq ft. REIT is an investment vehicle that owns rent-yielding real estate. The income generated is distributed to unit holders.

Panchshil has 14 million rent-yielding assets and 6 million sq ft under development.

According to the people, both Raheja and Panchshil could appoint Morgan Stanley — among the main bankers for Embassy REIT’s IPO — as one of the lead bankers for the IPO.

K Raheja Corp and Blackstone did not comment on the matter. When contacted, Atul Chordia, chairman of Panchshil, said: "We are preparing for 2021 when we have 20 million sq ft."

Blackstone bought 15 per cent in the rental arm of K Raheja Corp for $250 million, in 2017.

Blackstone and Panchshil jointly own properties such as Eon Free Zone and Panchshil IOCC Park in Pune, and 247 Park and Express Towers in Mumbai, which could be brought under the REIT, said the people in the know. 

“The success of Embassy REIT has opened up the REIT IPO market. Subscription of the Embassy REIT showed there is enough appetite in the market for such issuances and people understand the product,” said Shobhit Agarwal, managing director of Anarock Capital.

Experts said REIT issuances will continue from Blackstone’s stable, given it owns several commercial properties, including malls, in the country.

Blackstone’s real estate arm has committed over $5 billion to Indian real estate, of which $3.7 billion is in office space spanning 100 million sq ft. This makes it the largest office space owner in the country, along with its partners.

Apart from K Raheja Corp, Embassy and Panchshil, Blackstone has created joint platforms with Indiabulls Real Estate and Salarpuria Sattva group of Bengaluru.

Blackstone owns ten malls in the country. Analysts say that after Embassy, companies such as Prestige Estates, Phoenix Mills, and RMZ could tap the REIT market.

REIT rush

• Raheja arm could float a REIT this year; Panchshil by 2021

• Raheja could raise a similar amount to what Embassy had raised 

• Raheja has a rental portfolio of 25 mn sq ft

• Panchshil has rental assets worth 14 mn  sq ft; 6 mn sq ft under development

• Morgan Stanley could be the lead banker for both issuances