Embassy set to raise over Rs 5,000 crore

Embassy Office Parks, co-owned by property developer Embassy Group and private equity giant Blackstone, on Monday filed documents with market regulator Securities and Exchange Board of India (Sebi) to raise over Rs 5,000 crore ($726 million) through a Real Estate Investment Trust (REIT).

Embassy Office Parks REIT was registered with the Sebi in July 2017 and the decision to list comes at a time infrastructure investment trusts (InvITs) got a poor response in the market.

Speaking to DH, Blackstone official said the company is very hopeful of raising the money as it comprises of seven projects already generating a rental income of over Rs 2,000 crore.

"We believe many of the existing clients who are occupying these projects will renew their agreements and will fetch even more returns. So, investors will be assured more returns for their REIT investment," she said.

REITs and infrastructure investment trusts (InvITs), two instruments promulgated by Sebi, were notified in September, 2014 as part of an initiative to formalise the real estate investment across the country.

The Bengaluru-based developer is going to add 50 million square feet in the coming years, almost tripling the company's capacity.

Embassy Office Parks owns and operates 33-million-sq feet space across Mumbai, Pune and Noida and Bengaluru. The company also leased its properties to global tenants like Google, Microsoft and JP Morgan.

According to the Blackstone official, the REIT is expected to list before the end of current fiscal year. "There is a likelyhood of raising 25% above the amount while filing the REIT. Then the total funds raised will be more than Rs 6,000 crore," she said.

Colliers International India Managing Director Joe Verghese said Embassy's decision to team up with Blackstone for the first REIT in India is one of the biggest milestones for the Indian Real Estate industry this year.

"Positioned to be the biggest REIT in Asia in terms of portfolio, the REIT will also be the first opportunity for retail investors to participate in investing into a single office asset platform with assets not only in Asia’s No 1 city of choice for technology occupiers but also in the major office districts of India," he said.

Verghese also added that for the industry, it opens up a new avenue for the exit for institutional office assets investments as well as provides developers a new avenue to gain more liquidity.

"Considering the buoyancy in the India Office leasing market and the forecasted growth, it seems to be very well timed both for the existing investors as well as for the market," he said.

Commenting on the development, SKY Dealz Inc CEO and Founder Satish B N said REIT will reduce debt instruments like LRDs and this will improve availability of credit to the larger number of developers.

"I do believe that larger investment in realty sector will have an overall positive impact on our economy and government's efforts to build massive infrastructure to spur growth," he said.

Morgan Stanley, Bank of America Merrill Lynch, JP Morgan and Kotak Mahindra are the lead bankers working on the REIT listing.