Blackstone, Embassy Group to sell office park to REIT for $1.3 bn

Private equity giant Blackstone and Bengaluru developer Embassy Group will sell an office park they own in Bengaluru to a real estate investment trust they have jointly sponsored for Rs 9,782.4 crore ($1.3 billion).

Embassy Office Parks REIT said Tuesday it will acquire Embassy TechVillage from its two sponsors and some other shareholders to consolidate its presence in one of India’s top office markets.

India’s first publicly traded REIT said the deal will add 6.1 million square feet of completed area and 3.1 million square feet of under-construction area to its portfolio, taking the total to 42.4 million square feet.

Of the total area being acquired, 36% of the space has been leased to US-based banking giant JP Morgan. Cisco, Sony and Flipkart also have offices in the park. Embassy TechVillage also includes two proposed 518-keys Hilton hotels.

Embassy REIT CEO Mike Holland said the purchase of the “trophy asset” will boost the trust’s stable cash flows.

“The acquisition further deepens our presence in Bengaluru, which remains India’s strongest office market, and significantly enhances our scale and ability to deliver embedded growth,” Holland said.

Jitendra Virwani, chairman and founder of Embassy Group, said the developer will continue to develop top-quality office assets and provide the REIT with a potential pipeline of assets that will help it grow inorganically.

The REIT proposes to fund this acquisition by issuing units worth $812 million through a combination of an institutional placement and by way of a preferential issue to third-party selling shareholders.

Embassy TechVillage houses more than 40 companies and 45,000 employees. It is spread across 84 acres and derives 88% of its rent from multinational companies. It is 97.3% occupied.

The development comes at a time when the real estate market has seen a bunch of mega transactions. Recently, Blackstone struck a deal with publicly listed developer Prestige Project Estates to buy a bunch of completed and under-construction office assets, retail properties and hotels for $1.2 billion.

Canadian investor Brookfield Asset Management Inc. also recently finalised a deal with Bengaluru-based office space developer RMZ for lapping up 18% of the developer’s overall portfolio of 67 million square feet in the biggest deal in the country’s real estate market. It has agreed to pay $2 billion for the deal.

Source: https://www.vccircle.com/ifc-to-make-debt-investment-in-fairfax-controlled-warehousing-firm