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ADIA Considers Investment As Blackstone Sells $400 Million Stake In Indian REIT Embassy

ADIA Considers Investment As Blackstone Sells $400 Million Stake In Indian REIT Embassy
Blackstone Inc. will sell a stake in Embassy Office Parks REIT, India's largest real estate investment trust, for up to $400 million through block deals on the Indian stock exchange, according to a report published by Reuters quoting sources familiar with the situation.
One of the sources stated that the largest sovereign wealth fund in the world, Abu Dhabi's, is most likely to purchase at least half of the stake that Blackstone is planning to sell.
Embassy Office Parks, the first REIT to list in India in 2019, owns and manages a portfolio of office parks and buildings totalling more than 42 million square feet in cities like Bengaluru and Mumbai. By area, it is Asia's largest office REIT.
The sources, who all declined to be named because the discussions are private and sensitive, estimated that Blackstone's sale would be worth between $300 and $400 million in the block deals scheduled to take place on the Indian exchanges early next week.
There were no comments on the issue from spokespersons for Blackstone, Bengaluru-based Embassy and Abu Dhabi Investment Authority (ADIA) in Abu Dhabi.
The Embassy REIT's market capitalization was $4.15 billion as of Friday's closing price in Mumbai of 354.42 Indian rupees per share.
According to calculations by Reuters, Blackstone currently owns a 32% stake in the Embassy REIT, and at the current market value, the proposed sale by Blackstone would represent 7.2 per cent to 9.6 per cent of its holding.
Following two similar sales in 2020 and 2021 where the private equity firm sold shares worth more than $500 million collectively, the block trade will be Blackstone's third stake sale in Embassy.
Over the years, Blackstone has invested more than $11 billion in Indian businesses and assets, but it has gradually reduced its holdings in Indian REITs.
It paid $235 million earlier this year to sell its entire holding in India's Mindspace Business Parks REIT.
Before the block trade is carried out, the pricing for the block deals is anticipated to be finalized early next week, the sources added. The block deals' and the asset sale's final form could change.
According to the sources, ADIA will probably purchase about $200 million of Blackstone's stake sale, and negotiations with potential investors are still ongoing.
ADIA's interest in the Indian office market would increase as a result of the investment. Many workers have returned to their offices as the COVID-19 pandemic has subsided, making office space an appealing investment for investors.
The sources added that ADIA intends to purchase the Embassy REIT stake using a $590 million commercial real estate fund it established in June with Kotak Investment Advisors of India.
The fund will concentrate on "opportunities associated with long-term demand for Indian office space, which is being driven by global organizations seeking to capitalize on the country's skilled workforce," according to a statement made by ADIA in June.
According to the three sources, Embassy has chosen Morgan Stanley and Bank of America Securities to oversee the procedure.
"Banks are doing full-on marketing to make sure book is well covered," said the third source with direct knowledge.
There were no comments on the issue from Bank of America, Kotak and Morgan Stanley.

Christopher J. Mitchell

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