Blackstone sells Embassy Office Parks REIT units for Rs 2,270 crore

Post this deal, Blackstone stake will come down by around nine per cent from around 55 per cent shareholding earlier.

Blackstone on Wednesday raised around $300 million (about Rs 2,270 crore) by selling its units in Embassy Office Parks REIT to monetise part of its investment, said sources in the know. The global fund manager was targeting to raise up to $257 million (around Rs 1,950 crore), but increased the size of its offer on account of increased demand from institutional investors, sources said.

Sources said the demand was to the tune of $500 million (nearly Rs 3,800 crore) from both current REIT holders and new institutional investors. Foreign institutional investors such as American Balanced Fund, Nomura India Investment Fund, Signature High Income Fund, and others lapped the units. 

Existing investors such as Capital Group, CI Funds, ICICI Prudential also increased their holding in the REIT, sources said.

Post this deal, Blackstone stake will come down by around 9 per cent from around 55 per cent earlier, but will still hold majority stake. The block deals happened at Rs 341 per unit, which translates to about 6.51 per cent lower to the Tuesday’s closing price. On Wednesday, Embassy REIT’s unit ended at Rs 356.27 on BSE. About 70 million units of the REIT traded on Wednesday on BSE. 

Jonathan Gray, president and chief operating officer, Blackstone, said: “We continue to be big believers in India and its potential. This transaction helps diversify institutional ownership and improve liquidity.”

Embassy Office Parks REIT is the country’s first Real Estate Investment Trust, which was launched last year by Embassy Group and global investment firm Blackstone to raise nearly Rs 5,000 crore. Blackstone is the largest owner of offices in the country and owns real estate assets worth $20 billion in the country.

Meanwhile, Embassy Office Parks REIT distributed Rs 531.67 crore for its unitholders for the quarter ended March and nearly Rs 1,900 crore for the entire last financial year. “Our fourth-quarter income and distribution payout once again illustrate the stability of Embassy REIT delivering cash flows that are backed by the covenants of our 160+ largely multinational occupier base,” Embassy Office Park CEO Michael Holland had said. Since Embassy REIT listed in April 2019, the firm has delivered a total return of 25 per cent. Embassy REIT comprises 33.3 million sq. feet of completed and operational commercial properties across country. 

With approximately 7.1 million sq. feet of on-campus development in the pipeline, the total portfolio spans 33.3 million sq. feet across seven Grade A office parks and four city-centre office buildings in India’s best performing office markets of Bengaluru, Mumbai, Pune, and the National Capital Region.

Embassy REIT unit prices dropped last week after some reports claimed information technology firm IBM was planning to review its office leases amid the firm’s growing work-from-home culture. IBM, which called the reports mere “speculation”, is the biggest tenant for Embassy REIT and contributes 12 per cent to its rental revenue.