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

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  • Blackstone is set to reduce interest in India’s REIT sources
  • Abu Dhabi investment fund eyes investment in Embassy REIT
  • Blackstone’s $400 million sale will be its third in the Embassy
  • Blocking deals in Indian bourses set for early next week by 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, through block deals on Indian exchanges, three sources familiar with the matter said. the subject told Reuters.

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

Embassy Office Parks, India’s first REIT to list in 2019, owns and manages a portfolio of over 42 million square feet of office parks and office buildings in cities such as Bangalore and Mumbai. It is the largest office REIT in Asia by region.

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In the block deals planned on Indian bourses early next week, the sale of Blackstone will be worth about $300-400 million, said the sources, who declined to be identified as the discussions are private and sensitive.

Bangalore-based representatives for Blackstone and the 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 354.42 Indian rupees 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 the proposed sale by Blackstone would represent 7.2% to 9.6% of its stake, according to Reuters calculations.

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

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

ADIA INTEREST

ADIA is likely to get about $200 million from the Blackstone stake sale, while talks are also continuing with other potential investors, the first source said.

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

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

In June, ADIA said the fund would focus on “opportunities related to the long-term demand for Indian office space, which is being 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 run 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. Editor: Jane Merriman

Our Standards: The Thomson Reuters Trust Principles.

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