Global private equity giant Blackstone Group is set to sell its shares in Embassy Office Parks REIT for $250 million to $257 million, said a source privy to the development.
According to a share sale note, reviewed by Forbes India, a 100 percent secondary placement is being done in the price range of Rs 340 to Rs 350 per share, which is a 6.5 percent to 3.7 percent discount to the closing price of Rs 363.55 per share as on June 23 on the National Stock Exchange. In rupee terms, it is seeking to raise Rs 1,901 crore to Rs 1,957 crore.
Blackstone and Embassy Parks both declined to comment on the story.
Another person familiar with the development indicated that Morgan Stanley and Bank of America are the lead runners for the secondary sale program.
The REIT (real estate investment trust) raised ₹4,750 crore ($680 million) via an initial public offering (IPO) in April last year, with an offer price of Rs 300 apiece. Blackstone had contributed 100 percent of its owned assets to the REIT portfolio and it did not sell any of its units during the share sale.
The REIT has 26 million sq ft in completed assets and 7 million sq ft in upcoming assets. Currently, the REIT’s top ten occupiers contribute nearly 42 percent of the gross overall rental income as of March 2020.
A note by ICICI Securities, maintaining a buy rating on the stock, said that the Embassy REIT unit price has corrected by 23 percent in the last three months, owing to Covid-19 related market correction and concerns on medium-term office demand.
Adhidhev Chattopadhyay, research analyst at ICICI Securities wrote, “Further, in February 2020, the Government of India’s (GoI) 2020 Union Budget had proposed to impose a Dividend Distribution Tax (DDT) on REIT investors, which further dampened sentiment. Although the proposed DDT had negligible near-term impact as the Embassy REIT has been paying out distributions mostly in the form of interest and capital return, numerous representations by industry stakeholders has prompted the GoI to roll back the proposed DDT on REITs in March 2020. However, this waiver is on the condition that REIT SPVs will not move to the new tax regime (of lower tax rate).”
Embassy REITs’ tenants include global corporate entities such as JPMorgan, IBM, Facebook and Google. For the fiscal ended March 31, the REIT recorded a revenue of ₹2,144.9 crore, up 14 percent from the previous year.