India's first REIT is here: Embassy Office Parks proposes to raise Rs 52 bn

The joint venture of Blackstone and Embassy Group eyes Rs 52 bn through listing of 33 mn sq ft of office space

Embassy Office Parks, a joint venture between US private equity major Blackstone and Embassy Group, is set to file its offer documents with Sebi to raise around Rs 52 billion through the country's maiden Real Estate Investment Trust (REIT) listing.

According to sources in the know, the Bengaluru-based real estate group will on Monday file documents with the regulator to list 33 million square feet of office space.

Once listed, India will join the league of other countries such as the US, UK, Singapore and Japan which have vibrant REIT markets. In square footage term, this will be the biggest office REIT listing in Asia.

REITs own, operate and finance rental yielding real estate properties and are structured like mutual funds. After listing, it enables investors to earn dividend-based returns.

Embassy Office Parks, which will list 33 million sq ft of office space portfolio under the REIT, currently has 24 million sq ft under operations. The remaining is under construction. The real estate group owns and operates office space in cities like Bengaluru, Mumbai, Pune, and Noida, among other cities.
 

The company currently earns office rentals of more than Rs 20 billion from tenants, which include Google, JP Morgan, Microsoft, Cisco, IBM, Wells Fargo and Mercedes Benz. Sources also said that apart from Embassy's office portfolio, Blackstone also has its own commercial assets for listing. These include Express Tower at Mumbai's Nariman Point and part of the First International Financial Centre at Bandra-Kurla complex.

Despite rules related to REITs being in place for the past four years, the Indian real estate space has yet to see a listing of such a kind of investment vehicle. However, an uptick in office leasing space has prompted global PE giant Blackstone to raise money through the listing of such instruments. According to a Knight Frank report, office space segment saw 21.7 million square feet of the transaction in the first half of this calendar year across India, a rise of around 13 per cent on year-on-year basis.

Market experts are of the opinion that a successful listing of REIT will attract more number of foreign investors into the real estate space as it will open another avenue of liquidity. In India, Blackstone has been one of the most aggressive PE players in the real estate space. Apart from Blackstone, other institutional investors such as Brookfield Asset Management, GIC, and Canada Pension Plan Investment Board are also betting big on commercial office space in the country.