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

  • Blackstone set to pare interest in India REIT-sources
  • Abu Dhabi's wealth fund eyes investment in Embassy REIT
  • Blackstone $400 mln sale will mark its third in Embassy
  • Block deals on Indian exchanges 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 biggest real estate investment trust, via Indian stock exchange block deals, three sources familiar with the matter told Reuters.

Abu Dhabi's sovereign wealth fund, one of the world's largest, is likely to pick up at least half of the stake that Blackstone is to sell, one of the sources said.

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

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

Spokespersons for Blackstone and Bengaluru-based Embassy did not immediately respond to a request for comment. A spokesperson for Abu Dhabi Investment Authority (ADIA) in Abu Dhabi declined to comment.

Shares in the Embassy REIT closed at 354.42 Indian rupees on Friday in Mumbai, giving it a market capitalisation of $4.15 billion.

Blackstone currently has a 32% stake in the Embassy REIT and at the 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 stake sale in Embassy, following two such sales in 2020 and 2021, where the private equity group has 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 trimming its interests over time in Indian REITs.

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 finalised early next week, before the block trade is executed, the sources added. The final shape of the block deals and asset sale are subject to changes.

ADIA INTEREST

ADIA is likely to pick up about $200 million of Blackstone's stake sale, with talks also ongoing with other possible investors, the first source said.

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

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

In June, ADIA said the fund would focus on "opportunities associated with long-term demand for Indian office space, which is being driven by global organisations seeking to capitalise on the country's skilled workforce."

Embassy has appointed Morgan Stanley and Bank of America Securities to run the process, the three sources said.

"Banks are doing full-on marketing to make sure 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.

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

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