Embassy Services to sell 50% stake to Blackstone
A big news in the real estate market is that global private equity firm Blackstone Group LLP is close to buying 50 % stake in Embassy Services Pvt. Ltd. This is the property management arm of Embassy Property Developments Pvt. Ltd and the deal is expected to be closed at Rs.400 crore.
The transaction will take forward plans to list a real estate investment trust (REIT) by Blackstone. The new investment option REITs need to test waters now and Bangalore-based real estate firm Embassy Property has lined up several commercial office assets in Bangalore, Chennai and Pune for this purpose.
Embassy Services was formed in the year 2000 and they have a dedicated team, which looks after the office and residential projects developed by Embassy Property. The services firm makes about Rs.45 crore of profit annually. Once Blackstone and Embassy Property go ahead and list some of the projects in the form of a REIT, Embassy Services will naturally be in charge of managing those assets.
Rents received from these properties contribute to the income for these investment trusts. As per the regulations recently announced by the Securities and Exchange Board of India (SEBI), at least 80 % of the properties in the special purpose vehicle (SPV) should be complete and rent generating. According to the plan, as of now, four large commercial office projects—Embassy Golf Links, Manyata Tech Park and Embassy Tech Village in Bangalore and Embassy Tech Zone in Pune will come under the first REIT listing.
The company’s spokesperson expressed his happiness over the advancements of this deal and mentioned that the valuation of the company will increase with time. As and when more projects are added under an REIT, the size of Embassy Services’ portfolio will also grow and its income will increase.
Source- Mint
Blackstone Group, Embassy Property Developments Pvt. Ltd, LLP, property management arm, real estate investment trust, REIT
