Embassy Office Parks, a joint venture of private equity firm Blackstone Group and commercial developer Embassy Group, is set to file papers with SEBI to raise INR 5,250 crore through a Real Estate Investment Trust (REIT) listing. As per trusted sources, the REIT will be Asia’s largest office REIT listing by size in terms of square footage.
Located in Bengaluru, the Embassy Office Parks possesses and operates 33 million square feet space across Mumbai, Pune, and Noida, besides its home city. The total establishment includes seven major office parks, four city-center office buildings as well as four Hilton and Four Seasons hotels. Around 24 million square feet assets have been developed, while nine million square feet is under construction, cite sources.
According to sources familiar with the development, the REIT’s revenue currently stands at INR 2,200 crore annually. On its debut, the REIT is targeting a market value of around INR 35,000 crore, which equals to more than 7 percent equity for investors who are banking on stable, long-term returns from leasing revenue. Experts believe, the REIT also has the potential to almost triple in size by adding 50 million square feet more in the coming years.
According to a report by Livemint, the REIT has come at a time when Indian real estate, particularly the residential segment is witnessing a slowdown due to several regulatory changes and slow sales. On the other hand, the commercial sector has continued to prevail through foreign investments and improved performance.
Embassy REIT assets are often leased by major global tenants like Microsoft, Google, and JP Morgan. Fortune 500 companies account for 44 percent, while MNCs bring approximately 80 percent of the rentals. The country’s grade-A office market is predicted to list at over 500 million square feet, along with another 197 million in the pipeline, to be added in the next four or five years.
Depending upon market conditions and regulatory approvals, the REIT is estimated to list before Diwali, cite sources.