Blackstone exits Embassy REIT: Rs 7,100 cr block deal

What happened in the market

Global investment firm Blackstone has sold its entire 23.5 percent stake in Embassy Office Parks REIT for around Rs 7,100 crore through a block deal on stock exchanges, according to sources. The units were sold at around Rs 316 per unit. The sale marks Blackstone’s final exit from Embassy REIT after multiple stake sales over the years.

The transaction was executed through open market trades, with the units placed with a mix of domestic and foreign investors. Sources said some existing unitholders also participated in the deal. SBI Mutual Fund was mentioned as a new investor in the transaction.

Deal size, price and units sold

Sources said Blackstone sold nearly 22.36 crore units of Embassy REIT at around Rs 316 per unit. At that level, the deal value works out to about Rs 7,100 crore. Reuters also described the transaction as an $133 million deal and said the stake being sold was 23.59 percent, citing a term sheet.

The selling price was at a discount to the prevailing market price. Reuters said the block was priced at a 7.7 percent discount to Tuesday’s per-unit trading price of Rs 335.75. The REIT later closed at Rs 332.11 per unit on the BSE, down 1.02 percent, and at Rs 331.15 per unit on the NSE, down 1.37 percent.

Who bought the units

The buyers included a mix of mutual funds and foreign investors. Market data cited in the reports named SBI Mutual Fund, ICICI Prudential Mutual Fund, HDFC Mutual Fund, Fidelity Funds South East Asia Fund, Capital Group, and APAC Company XXIII among the entities that purchased units.

Sources also said existing unit holders participated, and ADIA was specifically mentioned as one of the participants. The allocation details across investors were not disclosed in the information provided.

Embassy REIT’s background and profile

Embassy Office Parks REIT is India’s first Real Estate Investment Trust (REIT), sponsored by Blackstone and Bengaluru-based Embassy Group. It listed in 2019 after raising around Rs 5,000 crore through a public issue.

The REIT owns and operates a 45.3 million square feet portfolio comprising nine office parks and four city centre office buildings across Bengaluru, Mumbai, Pune, and the National Capital Region (NCR). Its portfolio includes 35.3 million square feet of completed operating area.

A separate data point cited in the material said the annual rental income of the portfolio is over Rs 20 billion, which is Rs 2,000 crore, and is expected to go up by 50 percent in the next three years as rentals rise.

How Blackstone’s holding came down over time

Blackstone has sold down its stake in multiple tranches. One of the reports noted that Blackstone held about 55 percent at the IPO stage. Last year, Blackstone raised around USD 325 million, described as about Rs 2,650 crore, by selling its shares in Embassy Office Parks REIT.

After that sale, Blackstone’s stake fell to around 24 percent from around 32 percent earlier. The latest transaction completes the exit, with Blackstone selling its remaining 23.5 percent holding.

Blackstone launched two office REITs in India, Embassy REIT and Mindspace REIT, and the material said it has already exited Mindspace REIT.

Other stake sales around Embassy REIT

Separate disclosures in the provided material referenced other large transactions in Embassy REIT units. Realty firm Embassy Property Developments Pvt Ltd sold around 4.2 crore shares in Embassy Office Parks REIT to Bain Capital for around Rs 1,250-1,300 crore, according to sources, to pare debt.

After this share sale, Embassy Group’s stake in Embassy REIT was reported to have come down to around 8 percent from 12 percent earlier. The group said it would use the proceeds to reduce debt and aimed to reduce overall debt by approximately 30 percent before 30 June 2023.

The material also cited stock exchange data showing Blackstone sold a 4 percent stake in Embassy REIT to raise Rs 1,301 crore in an earlier transaction. Separately, American Balanced Fund sold 2,92,62,468 shares for Rs 1,046.45 crore at an average price of Rs 357.61 per share through an open market transaction, according to BSE bulk deal data.

Management change at the REIT

Embassy Office Parks REIT’s CEO, Vikaash Khdloya, has resigned, and the company appointed Aravind Maiya as the new CEO with effect from 1 July (year not specified in the provided material). The reports did not link the management change to the Blackstone stake sale.

Regulatory context: how REITs came to India

India’s REIT framework was enabled after Sebi notified REIT regulations in 2014, allowing such trusts to be set up and listed. Embassy REIT’s listing in 2019 was an important milestone for the domestic listed real estate market, given its scale and the institutional sponsorship behind it.

Key numbers at a glance

Why the transaction matters

Blackstone’s full exit is significant because it ends the sponsor’s long-running sell-down from a majority holding at the time of the IPO stage to zero. The size of the transaction, around Rs 7,100 crore, also makes it one of the most prominent secondary market placements in the listed REIT space referenced in the reports.

The buyer mix highlighted in the information shows continued participation from domestic mutual funds alongside foreign investors, with SBI Mutual Fund described as a new entrant among buyers in the block trade. For existing unitholders, the key immediate market datapoint was the discount to prior trading levels and the REIT’s fall on the day of the transaction.

Conclusion

Blackstone has completed the sale of its entire 23.5 percent stake in Embassy Office Parks REIT in a block deal valued at around Rs 7,100 crore, with units sold at around Rs 316 and acquired by multiple investors including SBI Mutual Fund. Separately, Embassy REIT is set to have a new CEO from 1 July, as Aravind Maiya takes over following Vikaash Khdloya’s resignation.