Blackstone, Brookfield plan investment trusts in India, strengthen assets

Global rivals go for joint ventures, plan to list investments by next year.

Blackstone and Brookfield Asset Management, two of the world’s largest private equity (PE) investors, are planning to float multiple real estate investment trusts (REITs) from their portfolios and get them listed, said people in the know.

While Brookfield’s maiden public issue could materialise by end-2020, Blackstone’s joint ventures could hit the market in 2021, they added. Brookfield is likely to file its draft red herring prospectus (DRHP) for its maiden REIT in three months. It plans to raise $700 million, according to the people. The Canadian investor is said to have appointed bankers for the issue. However, it declined to comment on the matter.

It owns corporate parks in Gurugram and Kolkata, commercial properties in Powai (Mumbai) that it bought from the Hiranandani family, and Equinox Business Park (Mumbai) that it bought from the Ruias. In all, the PE firm has office assets of more than 22 million sq ft, along with 4-5 million sq ft in under-construction projects. Blackstone is also expected to go all-out on REITs. “There could be at least three from Blackstone by 2022,” said the people.

The firm’s two JVs — with Bengaluru-based Salarpuria Sattva and Pune-based Panchshil Realty — have started work on the REITs, said people in the know.

The Salarpuria-Blackstone JV has a portfolio of 16 million sq ft in commercial assets, mostly in Hyderabad. Last year, the JV bought Café Coffee Day group’s tech park in Bengaluru at an enterprise value of Rs 2,700 crore. 

A Salarpuria spokesperson declined to comment on the subject.

Pune-based Panchshil Realty, owned by the Chordias, has close to 15 million sq ft in commercial assets. It is said to have arrived at a valuation for its commercial assets.

An email sent to Panchshil did not elicit any response. However, Chairman Atul Chordia had told Business Standard last year that the firm was preparing for 2021, by when it should have 20 million sq ft in commercial properties.

A Blackstone spokesperson, too, declined to comment.

US-based Blackstone owns 60 million sq ft in commercial properties with partners in India, after it set up and listed REITs in JVs with both Embassy and Raheja.  Embassy Office Parks raised Rs 4,750 crore through the public issue of its REIT last year, while the IPO of Raheja-Blackstone’s Mindspace Business Parks REIT was subscribed 13x in July.

Buy-outs

Blackstone is also in talks with Bengaluru-based Prestige for the purchase of assets worth Rs 12,745 crore from the latter. Blackstone plans to acquire 20 million sq ft of commercial assets from Prestige, according to reports.

People in the know said Blackstone could put the entire chunk of Prestige’s assets into an REIT and get it listed within two years. “Given that most of Prestige’s assets are in Bengaluru and doing well, it would be easier for Blackstone to get investors,” they said.

Blackstone could also float a REIT for mall properties. Its mall management arm Nexus Malls owns nine properties with total area of 6 million sq ft.

Brookfield is also in talks with RMZ to buy a dozen assets in Bengaluru, Mumbai, Chennai, and Delhi-NCR. The deal is pegged at Rs 4,000-5,000 crore. Brookfield is also looking to buy CoWrks, a co-working space company, from the Menda family.

“There has been an improvement in sentiment towards REITs in India, due to which the Embassy Office REIT was subscribed 2.5x and Mindspace REIT 13x, suggesting there could be an additional 12 REITs accommodated to fulfil investors’ demand,” said Saurabh Shatdal, MD (capital markets), Cushman & Wakefield. 

Shatdal said around 62 million sq ft of office space was at present being traded; there is additional potential of 300 million sq.ft. in the commercial asset class.Ashok Kumar, MD of Gennex Partners, said both firms were growing their pie at the right time.