Blackstone is in talks to promote round half of its stake in India’s largest actual property funding belief Embassy Workplace Parks to non-public fairness agency Bain Capital, two sources stated, in a deal price as much as $480 million at present costs.
A deal would mark U.S.-based Bain’s first REIT funding in India the place workplace area is drawing in buyers as many staff have returned to workplaces with the waning of the COVID-19 pandemic. For Blackstone, it will imply an additional selldown of its Embassy stake because it adjusts its portfolio.
The talks are nonetheless at a preliminary stage, the sources instructed Reuters. The plan is to execute the transaction through block offers on Indian inventory exchanges within the coming weeks, although a timeline or pricing has not been finalized, stated the primary supply who had direct information of the matter.
A spokesperson for Blackstone declined to remark whereas Bain Capital and Embassy didn’t reply to requests for remark. The sources didn’t want to be named because the discussions are personal.
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Embassy Workplace Parks was India’s first REIT to record in 2019. It owns and operates greater than 43.2 million sq. ft of workplace parks and workplace buildings in cities equivalent to Bengaluru and Mumbai and can be the most important workplace REIT in Asia by space.
REITs personal and function actual property property, much like how mutual funds maintain shares. They earn lease from the properties they handle, which they use to distribute dividends to buyers.
Blackstone at the moment owns 24% of the Embassy REIT, which has a market capitalization of almost $4 billion. The personal fairness group is planning to promote about 10%-12% of it, the sources stated. That will probably be price $400 million-$480 million primarily based on Monday’s closing worth of the Embassy REIT on the inventory trade in Mumbai.
A block commerce will probably be Blackstone’s fourth stake sale in Embassy, following gross sales in 2020, 2021 and 2022. In September, Blackstone bought $400 million within the REIT to buyers together with the Abu Dhabi Funding Authority.
Whilst inflation considerations weigh, India’s financial system has rebounded for the reason that COVID pandemic to change into one of many quickest rising main economies on the earth.
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Knight Frank stated this month that Bengaluru and Mumbai recorded the best workplace rental development within the Asia-Pacific market throughout October-December, including that Indian cities’ workplace leases are anticipated to rise over the subsequent yr.
Bain Capital, which manages greater than $160 billion in property globally, has already invested greater than $3 billion in India previously decade, together with in main Indian personal lender Axis Financial institution.
For Blackstone, it is about cashing in.
If a deal is accomplished with Bain, Blackstone would have bought items price $1.4 billion within the Embassy REIT during the last three years, stated the primary supply.
“Blackstone’s technique to pare its Embassy stake is to churn its capital. Workplace property in India have matured and Blackstone is taking a look at investing in rising asset courses like retail and knowledge centres the place the returns may be increased,” stated Shobhit Agarwal, chief govt of Anarock Capital.
“It’s putting a guess on the home consumption story.”
Whereas Blackstone is promoting its stake in some REITs, it’s also investing in new property, indicating it continues to stay bullish concerning the India actual property panorama, Agarwal added.
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The U.S. group has invested greater than $11 billion in Indian firms and property through the years.