India’s First REIT Is Set To Hit India: What To Expect From Blackstone-Embassy JV?

Commercial office space
Commercial office space

India’s very first real estate investment trust (REIT) is here. Global investment company Blackstone and the realty firm Embassy Group is all set to launch India’s first REIT with an estimated issue size of Rs 5,000 crore in a few weeks.

“We will launch our REIT in a few weeks,” Embassy Office Parks CEO Mike Holland told PTI,  ET reported. “”We already have a strong book of the anchor and strategic investors. The REIT will be successful as in other countries and Embassy Office Parks will set a precedent for the REIT in India.”

Holland, however, refused to comment on the size of the issue and expected return to investors on this REIT platform. Banking sources are expecting the internal rate of return (IRR) for unit holders at around 9 per cent in the first year and about 18 per cent in a five-year horizon.

Embassy Office Parks is the joint venture firm of Blackstone and Embassy  Group. The firm in September last year filed the draft red herring prospectus (DRHP) with the market regulator Sebi to launch REIT. Touted as the Asia’s largest in terms of portfolio size, the firm has put 33 million sq ft of office and hospitality assets under its proposed REIT comprising of seven business parks and four city-centric buildings spread across Mumbai, Bengaluru, Pune and Noida.

Out of the 33 million sq ft, about 24 million sq ft area is already operational at 95 per cent occupancy and is yielding a rental income of over Rs 2,000 crore annually. Another 3 million sq ft area is under construction while the rest 6 million sq ft area is in the pipeline.

The JV has top clientele in its commercial projects. About more than 50 percent of the rent comes from Fortune 500 companies. Clients such as Microsoft, Google and Wells Fargo based in office parks.

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