Embassy Office Parks Plans to Raise $1b via India’s First REIT JV between Blackstone & Embassy plans to file DRHP for listing real estate investment trust by Dec-end
Kailash Babar & Sobia Khan
Mumbai | Bengaluru: Embassy Office Parks, a joint venture between private equity major Blackstone Group and realty developer Embassy Property Developments, is planning to file a draft red herring prospectus (DRHP) for listing its real estate investment trust (REIT) by the end of December, two people familiar with the development said.
The trust, which has received registration approval from the Securities and Exchange Board of India (Sebi), is aiming to raise about $1billion through the listing. As per Sebi’s REIT guidelines, Embassy Office Parks will have to divest a minimum 25% stake through the listing. The trust, to be named Embassy REIT, will be India’s first REIT. The application for registration approval was filed last year and Sebi has now cleared it. The people cited earlier did not say how much the developer will divest. “Both Blackstone and Embassy plan to remain invested in the com- pany and are not looking to exit their investments completely. The plan is to pay dividend to shareholders and reduce larger amount of debt,” said one of the persons. Blackstone and Embassy declined to comment. Bengaluru-headquartered Embassy Office Parks owns 20 million sq ft of office space as leased and under-construction properties, of million sq ft of office space under construction in four projects across Hyderabad and Chennai. “The company is currently going through a lot of legal work and there are a series of meetings that are scheduled this week,” said one of the persons cited earlier.
Several large commercial office developers are looking to list assets through REITs to create liquidity options for investors. RMZ Corp, another Bengaluru-based property developer which is backed by Qatar Investment Authority, plans to file a DRHP soon.
Sebi recently said that REITs are allowed to invest up to 20% in underconstruction assets. This will allow for more portfolios to be listed, which hitherto could not be considered as their under-construction portion was greater than 10%. The regulator has also allowed REITs to invest in a two-level special purpose vehicle (SPV) structure through a holding company (Holdco), subject to sufficient shareholding in the Holdco and the underlying SPV, besides other safeguards.