© Reuters. FILE PHOTO: A man walks along a wall overlooking the skyline of Mumbai’s central financial district, India, March 9, 2017. REUTERS / Danish Siddiqui / File Photo
By M. Sriram, Aditya Kalra and Aditi Shah
MUMBAI (Reuters) – Blackstone (NYSE: Inc) will sell a stake worth up to $400 million in the Parks REIT Embassy Office, India’s largest real estate investment trust, through block transactions Indian stock exchange, three sources familiar with the matter told Reuters.
One of the sources said the Abu Dhabi sovereign wealth fund, one of the largest in the world, is likely to buy at least half of the shares Blackstone will sell.
Embassy Office Park, India’s first REIT listed in 2019, owns and operates a portfolio of over 42 million square feet of office parks and office buildings in cities like Bengaluru and Mumbai. It is the largest office REIT in Asia by area.
Sources said that in block transactions being planned on Indian exchanges early next week, the sale of Blackstone will be worth around $300-400 million.
A spokesperson for Blackstone and the Bengaluru-based Embassy did not immediately respond to requests for comment. A spokesman for the Abu Dhabi Investment Authority (ADIA) in Abu Dhabi declined to comment.
Shares at 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 values, Blackstone’s proposed sale would represent between 7.2% and 9.6% of its stake, according to Reuters calculations.
The block transaction will be Blackstone’s third sale of shares at the Embassy, following two such sales in 2020 and 2021, where the private equity consortium collectively sold more than $500 million worth of shares. .
Blackstone has invested more than $11 billion in Indian companies and assets over the years, but over time has trimmed its interest in Indian REITs.
Earlier this year, it sold its entire stake in India’s Mindspace Business Parks REIT for $235 million.
The sources added that the valuation of block transactions is likely to be finalized as early as next week, before the block transaction is executed. The final shape of block transactions and asset sales is subject to change.
ADIA is likely to raise about $200 million from the sale of Blackstone’s shares, with talks also ongoing with other potential investors, the first source said.
For ADIA, the investment will broaden their interest in the Indian office market. As the COVID-19 pandemic eases, many workers have returned to the office, making office space an attractive option 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 Kotak Investment Advisors in the commercial real estate sector.
In June, ADIA said the fund would focus on “opportunities related to India’s long-term demand for office space, which is being driven by global organizations looking to capitalize on the the country’s highly skilled workforce.”
Appointed Embassy Morgan Stanley (NYSE:) and Bank of America (NYSE:) Securities to run the process, three sources said.
“Banks are doing exhaustive marketing to make sure the book is well covered,” said a third source with direct knowledge.
Bank of America declined to comment, while Kotak and Morgan Stanley did not immediately respond.