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

The Economic Times - - Companies: Pursuit Of Profit -

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.

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