Embassy REIT block deal: Kotak Realty Fund invests $200 million in Embassy REIT through block deal

The transaction is part of the block deals being undertaken by Blackstone Group that is looking to raise around $400 million by selling its stake in the REIT.

Alternate assets investment major Kotak Investment Advisors has invested the money from its 12th real estate fund that has recently raised over $590 million and counts sovereign wealth fund Abu Dhabi Investment Authority (ADIA) as a key partner.

ET had reported last week that the US-based private equity major is planning to raise around $400 million or over Rs 3,200 crore by selling part of its stake in Embassy Office Parks REIT this week.

ADIA was likely to be participating in these block deals and picking up a stake worth $200 million.

Earlier this year, Kotak Investment Advisors has formed an alliance with a wholly-owned subsidiary of ADIA to set up this $590 million or nearly Rs 4,600-crore real estate investment platform.

The fund, which will be domiciled in Gujarat’s GIFT City, will be investing in office assets across India focusing on the top six property markets of Mumbai, Bangalore, Delhi-NCR, Pune, Hyderabad and Chennai.

With this, Kotak Investment Advisors had achieved closure of its 12th real estate fund and has raised, managed or advised more than $2.8 billion under its real estate fund series.

Calls and messages to Kotak Investment Advisors and Blackstone spokespersons remained unanswered.

This is the third time Blackstone has trimmed its stake in Embassy Office Parks REIT since its listing in April 2019.

In September 2021, too, the global private equity fund had trimmed its stake in Embassy Office Parks REIT through block deals.

The institutional investor then raised $275 million by selling an around 6% stake. The transactions reduced Blackstone’s stake in the REIT to 32%, from 38% previously.

Prior to the 2021 stake sale, Blackstone had $1.7 billion worth of exposure in Embassy Office Parks REIT. Blackstone had then sold shares at Rs 355.20 a unit.

Institutional investors and funds, including

Arbitrage, American Funds Global Balanced Fund, Stichting Depositary APG Tactical Real Estate Pool and Integrated Core Strategies (Asia) were among the key entities that had bought these units in block trades.

In June 2020, it had raised over $300 million by selling an 8.7% stake.

Co-sponsored by the Blackstone Group and the Embassy Group, Embassy Office Parks REIT was listed in April 2019.

In December 2020, Blackstone and Embassy sold Embassy TechVillage, an integrated office park in Bengaluru, to Embassy Office Parks REIT. Apart from this, a fundraising exercise by the REIT through a qualified institutional placement at that time had lowered Blackstone’s holding in the REIT to 38% from over 46%.

Embassy REIT owns and operates a 42.4 million sq ft portfolio of eight infrastructure-like office parks and four city-centre office buildings in India’s key office markets of Bengaluru, Mumbai, Pune and the National Capital Region. Its portfolio comprises 32.3 million sq ft of completed operating area and counts over 190 global companies as occupiers.

Blackstone is the largest office, retail and warehousing landlord in India and has deployed over $11 billion in the country’s commercial real estate so far.