THE HEADACHES OF INDIA'S LARGEST OFFICE LANDLORD

A few months back, American asset manager Blackstone Inc., India’s largest office landlord with about 111 million sq ft of office space under its belt, wanted to sell half the stake it holds in two office portfolios developed by Pune-based builder Panchshil Realty and Bengaluru-based Sattva Group. Blackstone’s talks on the stake sale with GIC Pvt Ltd, Singapore’s sovereign wealth fund, fell through.

- Madhurima Nandy

In a similar story, again this year, Blackstone wanted to sell part of its stake in Embassy Office Parks REIT. The deal talks with private equity investor Bain Capital didn’t go anywhere.

REIT is short for real estate investment trust. It functions like a mutual fund—a sponsor raises capital and invests it in real estate projects like office parks or shopping malls. REITS allow smaller retail investors to own a portion of income-generating real estate properties that would otherwise be unaffordable.

India has three office REITS—the Mindspace Business Parks REIT, the Embassy REIT and the Brookfield REIT. Blackstone was a sponsor to Mindspace and Embassy.

In January 2022, Blackstone sold its entire 9.2% stake in Mindspace Business Parks REIT to Abu Dhabi Investment Authority (ADIA) for $235 million, at a 16% premium over the REITS’s August 2020 initial public offering (IPO) price. It also made a partial exit from the Embassy REIT in September 2022. It sold around 8% stake through open market block deals for $326 million.

But the markets have changed since then.

India’s largest office landlord has struggled to find buyers for a good valuation in 2023. In fact, there have been no big bang exits for a year now, with market watchers citing Blackstone’s return expectation from capital invested to be way higher than what buyers are willing to pay—at the moment.