Private Equity giant Blackstone is set to deal with Indiabulls Real Estate commercial properties for Rs 4,800cr.

By Abhay Shah, Realty Quarter

Blackstone Group, a private equity giant based in the USA, will purchase the remaining 50% share in commercial properties of Indiabulls Real Estate for about Rs 4,800 crore three people with direct knowledge of the development said. The deal is fixed as one of the biggest transactions in the country’s real estate portfolio.

This gives Blackstone complete control and further enhances its position as the biggest commercial property owner in the country. In March 2018, Blackstone signed a similar deal with a 50% stake of almost Rs 4,750 crore in this portfolio.

This transaction forms part of the approach of the Indiabulls Group, which aims to exit real estate completely and to concentrate on financial services when combined with the Lakshmi Vilas Bank. In addition, Indiabulls Real Estate plans to redeem and bring its debt down to zero using the proceeds from this deal.

“Over the coming weeks the transaction will be concluded,” said one of the above-mentioned individuals. “In principle, both parties agreed to conclude the agreement. The transaction should quickly be presented to his board by Indiabulls.”

In addition to controlling a 50% stake in this 5 million-sq-ft commercial portfolio — including two marquee properties in the Lower Parel and Prabhadevi areas of Mumbai and one in Gurgaon — Blackstone also acquired a 100% stake in the Chennai commercial property developer for around Rs 850 crore last year.

The private equity company is anticipated to add assets to the Embassy Office Parks Real Estate Investment Trust (REIT) portfolio, its joint venture with Embassy Group, the real estate developer estate based in Bengaluru.

In April, India’s maiden REIT was mentioned by Embassy Office Parks. It consists of 7 business parks and 4 city-centred buildings in Mumbai, Bengaluru, Pune and Noida, and it has 33 million sq ft of office and hospitality assets. The REIT raised Rs 4,750 crore by the issue which was subscribed 2.58 times.

In June, the Embassy Group entered into an agreement to obtain the entire 39.5% stake in Indiabulls Real Estate for Rs 2,700 crore from Sameer Gehlaut’s promoter. The transaction put an estimate of Rs 7,000 Crore on the portfolio of Indiabulls Real Estate — 23.5 million sq ft of residential projects and 2.4 million sq ft of commercial under-construction buildings. These commercial under-construction properties distinguish themselves from the 5 million sq ft portfolio of office properties in which Blackstone is picking up the remaining 50% of the stake.

As part of that agreement, Embassy has already purchased an open market stake of more than 14% of the listed Indiabulls Real Estate. The right of first refusals to Indiabulls Real Estate’s under-construction commercial portfolio, once prepared and rented, shall be exercised by Embassy Office Parks REIT. However, its Board will make the decision separately.

The U.S. multinational private equity, alternative asset management and financial services company have established as the most aggressive institutional investor in India’s real estate industry, the country’s largest portfolio of income-producing office assets. In the main markets of Mumbai, Noida, Pune, Bengaluru, Chennai, and Hyderabad it has committed $5.3 billion.

In India, it has invested in over 50 companies. It has deployed more capital in India than in any other emerging market, with an investment of almost $10.6 billion in private equity and real estate sector.