Exclusive: Blackstone to sell $400m stake in Indian REIT Embassy, ​​ADIA eyes investment

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  • Blackstone to reduce interest in REIT sources in India
  • Abu Dhabi Financial Fund seeks investment in Embassy REIT
  • Blackstone’s $400 million sale will mark its third Embassy sale
  • Block trades on Indian bourses set for early next week – sources

MUMBAI, Sept 23 (Reuters) – Blackstone Inc will sell a stake worth up to $400 million in Embassy Office Parks REIT ( EMBA.NS ), India’s largest real estate investment trust, in block deals on the Indian stock exchange, three sources familiar with the matter told Reuters.

Abu Dhabi’s sovereign wealth fund, one of the world’s largest, is likely to take at least half of the stake Blackstone will sell, one of the sources said.

Embassy Office Parks, India’s first REIT listed in 2019, owns and manages a portfolio of more than 42 million square feet of office parks and office buildings in cities such as Bengaluru and Mumbai. It is the largest office REIT in Asia by area.

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In block deals planned on Indian bourses early next week, the Blackstone sale would be worth about $300-400 million, said the sources, all of whom declined to be named because the discussions are private and sensitive.

Spokesmen for Blackstone and the Bengaluru-based embassy did not immediately respond to a request for comment. A spokesman for the Abu Dhabi Investment Authority (ADIA) in Abu Dhabi declined to comment.

Shares of Embassy REIT closed at INR 354.42 on Friday in Mumbai, giving it a market capitalization of $4.15 billion.

Blackstone currently has a 32% stake in Embassy REIT, and at current market value, Blackstone’s proposed sale would represent 7.2% to 9.6% of its stake, according to Reuters calculations.

The block trade will be Blackstone’s third sale of a stake in Embassy, ​​following two such sales in 2020 and 2021 in which the private equity group sold shares worth a total of more than $500 million.

Blackstone has invested more than $11 billion in Indian companies and assets over the years, but has been reducing its interests in Indian REITs over time.

Earlier this year, it sold its entire stake in India’s Mindspace Business Parks REIT ( MINS.NS ) for $235 million.

The pricing of the block trades is likely to be finalized early next week before the block trade is executed, the sources added. The final form of block deals and asset sales are subject to change.

ADIA INTEREST

ADIA is likely to take about $200 million from the sale of the Blackstone stake, with other possible investors also in talks, the first source said.

For ADIA, the investment will expand its interest in the Indian office market. As the COVID-19 pandemic subsides, many workers have returned to offices, making office space an attractive bet for investors.

Two of the sources said ADIA plans to buy a stake in Embassy REIT through a $590 million fund set up in June with India’s commercial real estate firm Kotak Investment Advisors.

In June, ADIA said the fund would focus on “opportunities related to the long-term demand for Indian office space, driven by global organizations looking to tap into the country’s skilled workforce.”

The embassy has appointed Morgan Stanley and Bank of America Securities to manage the process, the three sources said.

“The banks are doing full marketing to make sure the book is well covered,” said the third source with direct knowledge.

Bank of America declined to comment, while Kotak and Morgan Stanley did not immediately respond.

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Reporting by M Sriram, Aditya Kalra and Aditi Shah; Additional reporting by Scott Murdoch in Hong Kong and Abhirup Roy in Mumbai. Editing by Jane Merriman

Our standards: The Thomson Reuters Trust Principles.

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