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Exclusive: Blackstone in talks with Bain to sell $480 million stake in top Indian REIT

  • A deal will be the latest cut of Blackstone’s stake in India REIT
  • Blackstone owns 24% of Embassy REIT, plans up to 12% sales resources
  • Bain Capital sees investment in Embassy REIT resources
  • Indian office assets attract some investors as COVID eases

MUMBAI, Jan. 24 (Reuters) – Blackstone (BX.N) is in talks to sell about half of its stake in India’s largest real estate investment fund Embassy Office Parks (EMBA.NS) to private equity firm Bain Capital, two sources said. in a deal worth up to $480 million at current prices.

The deal would mark US-based Bain’s first REIT investment in India, where office space is attracting investors as many workers have returned to offices as the COVID-19 pandemic eases. For Blackstone, it would mean a further sell-off of its stake in the embassy as it adjusts its portfolio.

The talks are still in a preliminary stage, the sources tell Reuters. The plan is to execute the transaction through block deals on Indian exchanges in the coming weeks, though a timeline or pricing has not yet been finalized, said the first source with direct knowledge of the matter.

A Blackstone spokesperson declined to comment, while Bain Capital and Embassy did not respond to requests for comment. The sources declined to be named because the discussions are private.

Embassy Office Parks was India’s first REIT to be listed in 2019. It owns and operates more than 43.2 million square feet of office parks and buildings in cities such as Bengaluru and Mumbai and is also the largest office REIT in Asia by area.

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REITs own and operate real estate assets, similar to how mutual funds hold stocks. They earn rent from the properties they manage, which they use to pay dividends to investors.

Blackstone currently owns 24% of the Embassy REIT, which has a market cap of nearly $4 billion. The private equity group plans to sell about 10%-12% of it, the sources said. That will be worth $400 million – $480 million based on the Embassy REIT’s closing price on Monday’s Mumbai stock exchange.

A block trade will be Blackstone’s fourth stake sale in Embassy, ​​following sales in 2020, 2021 and 2022. In September, Blackstone sold $400 million in the REIT to investors including the Abu Dhabi Investment Authority.

Even as inflation concerns weigh in, India’s economy has bounced back since the COVID pandemic to become one of the fastest growing major economies in the world.

Knight Frank said this month that Bengaluru and Mumbai recorded the highest office rent growth in the Asia-Pacific market in October-December, adding that office rents in Indian cities are expected to rise in the coming year.

Bain Capital, which manages more than $160 billion in assets worldwide, has invested more than $3 billion in India over the past decade, including leading Indian private lender Axis Bank (AXBK.NS).

For Blackstone, it’s about cashing in.

If a deal is struck with Bain, Blackstone would have sold units worth $1.4 billion in the Embassy REIT over the past three years, the first source said.

“Blackstone’s strategy for winding down its stake in the embassy is to churn out its capital. Office assets in India have matured and Blackstone is considering investing in emerging asset classes such as retail and data centers where returns can be higher,” said Shobhit Agarwal. , CEO of Anarock Capital.

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“It’s placing a bet on the domestic consumption story.”

While Blackstone is selling its stake in some REITs, it is also investing in new assets, indicating it remains optimistic about the real estate landscape in India, Agarwal added.

The American group has invested more than $11 billion in Indian companies and assets over the years.

Reporting by M. Sriram; Additional reporting by Aditi Shah in New Delhi; Edited by Aditya Kalra and Muralikumar Anantharaman

Our Standards: The Thomson Reuters Principles of Trust.

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