Embassy Group gives India its first REIT in association with Blackstone Group

Real Estate Investment Trust (REIT) is finally set to launch in India, 4 years after the ground rules were presented. An application to raise over Rs 5,000 crore by Embassy Office parks will be filed with Securities and Exchange Board of India (SEBI). Embassy Office Parks is a joint venture of US private equity firm Blackstone Group and Embassy Group.

India’s first and Asia’s largest in terms of office portfolio area, the Blackstone Embassy REIT will be more than twice the size of others in the continent. 33 million square feet of office real estate portfolio will be listed by Embassy Office Parks under the REIT. India will now join the list of global REIT markets including UK, USA, Australia, Canada and Japan.

Of the planned 33 million square feet, 24 million square feet have already been developed and has 95 per cent of the occupancy. The tenants on this area include Microsoft, Google, IBM, Cisco, Mercedes Benz, Wells Fargo and JP Morgan.

The REIT with Blackstone and Embassy Group will offer numerous benefits to the real estate market in India. With easy access, there will be increased liquidity in terms of buying and selling stocks and tactical allocation of assets. Further, the diversification will lead to risk-adjusted returns with real, tangible assets. The transparency will help build a better system and thus, the performance will increase with higher returns than corporate bonds.

Rajiv Memani, chairman of EY India, said, “REITs will provide the much-needed option to inject growth-oriented equity capital into the Indian real estate sector.” He further added, “Since 2011, Blackstone has been a pioneer in identifying office space as an investment opportunity and been one of the largest investors in this segment.”

A person aware of the matter told that Embassy Group also has a pipeline of around 50 million square feet of commercial development under its belt that can be up for grabs in the next few years. This will also lead to an increased interest of numerous investors. The currently proposed REIT portfolio has over 70 assets in Mumbai, Pune, Bengaluru and the National Capital Region. Other assets owned by Blackstone in the REIT portfolio are Express Tower in Nariman Point, a part of the First International Financial Center in the Bandra-Kurla Complex and the 247 Park at Vikhroli in Mumbai.

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