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Blackstone explores $480M sale of stake Indian REIT to Bain

Written by Thu 26 Jan 2023

Leading global investment firm, Blackstone Group, is exploring the possibility of selling a significant portion of its 24% stake in Embassy REIT to Bain Capital. Should the transaction go through, it could be worth up to $480 million to Blackstone.

Reuters reports this would mark Bain’s first entrance into the Indian REIT market and Blackstone’s fourth stake sale in Embassy. Blackstone has been reducing its investment with stake sales every year since 2020, with the most recent being a $400 million sale to multiple investors last September.

According to a source inside the company, Blackstone has unloaded $1.4 billion worth of shares in the Embassy REIT over the past three years. An industry expert Shobhit Agarwal, Chief Executive Officer of Anarock Capital, said that Blackstone is likely looking to reduce REIT holdings and invest in more profitable assets.

“Blackstone’s strategy to pare it’s Embassy stake is to churn its capital,” Agarwal said. “Office assets in India have matured and Blackstone is looking at investing in emerging asset classes like retail and data centres where returns can be higher.”

Blackstone has a solid history of data centre investment, with one of the largest-ever deals in the industry – the $10 billion acquisition of QTS data centres in 2021. Greg Blank, Senior Managing Director of Blackstone Infrastructure Partners, said that investment in data centres is in alignment with the company’s investment theme.

“As thematic investors, sector selection really matters. Blackstone aims to deploy capital in our highest-conviction themes such as data proliferation,” said Agarwal. “We believe assets in the digital infrastructure sector are positioned to perform well over the long term, particularly in a higher inflation and rising rate environment.”

Embassy Office Parks was the first REIT to list in India, owning and operating more than 43 million square feet of office parks and buildings. The REIT was recently valued at over $4 billion.

Bain Capital Real Estate has over $6.1 billion in equity investments across multiple sectors, encompassing more than 500 assets globally. While investments in India have topped $3 billion in the past decade, this marks Bain’s first investment in an Indian REIT.

Image Source: Reuters

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Written by Thu 26 Jan 2023

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