Mumbai: The world’s largest private equity manager Blackstone Group, which is also the most prolific investor in Indian commercial properties, is finalizing plans to raise Rs 4,000 crore (about $600 million), through a listing of Real Estate Investment Trust (REIT) on the domestic stock exchanges, people directly familiar with the matter said. This will perhaps be India’s first REIT listing and a test case for global investors who have poured big bucks into the country’s rent-yielding commercial assets, especially tenanted office spaces.
REITs are listed trusts holding income generating properties, earnings from which are distributed to shareholders. Market regulator Sebi came out with REIT guidelines two years ago, helping real estate developers list their rent-yielding assets, and also providing large and small stock market investors with an inflation indexed product. Blackstone, through its joint ventures with Bangalore-based Embassy Group and Pune’s Panchshil, is on the road to build 50 million sqft tenanted office buildings—of which 30 million are already leased—across top Indian cities. It could target a possible listing during the first quarter next calendar, though a decision on timing would be taken only after filing for permission with Sebi.
Blackstone and its local partners have been working with investment bank Morgan Stanley and law firm Cyril Amarchand Mangaldas for nearly six months and are expected to announce their “intent” by early October, sources added. Blackstone has met with other banks and law firms to induct them into the listing process.
While the decision on listing an REIT appears certain, Blackstone and its partners are deciding on the assets that may go into the initial trust and the name of the listed vehicle, sources said. Blackstone was unlikely to list its entire portfolio initially and could look at multiple trusts over a period of time given the size of its portfolio. “The specifics are still unclear as there are several moving pieces,” one of the sources cited earlier said. Embassy Office Parks is the largest unit among Blackstone’s tenanted office portfolio with annualized rental income of Rs 1,150 crore. Blackstone and its partners overall portfolio collected about Rs 2,200 crore, or slightly over $300 million, in rentals last fiscal.
They are targeting the rental income to touch $500 million by March, 2018. Blackstone, Morgan Stanley and Cyril Amachand Mangaldas declined to comment on the story.
credits Times of India