BENGALURU: Embassy Office Parks — India’s largest tenanted office portfolio coowned by private equity giant Blackstone and commercial developer Embassy Group — will file documents with regulator Sebi on Monday to raise Rs 5,250 crore ($726 million) through a Real Estate Investment Trust (REIT) listing.This is set to be India’s first and Asia’s biggest office REIT listing by size in terms of square footage.The Bengaluru-based Embassy Office Parks owns and operates 33-million-sqft space across Mumbai, Pune and Noida, besides the home city. This includes seven large office parks, four citycentre office buildings and four Hilton and Four Seasons hotels. About 24-million-sqft assets are developed and the rest is under construction, sources said.The REIT generates annual income closer to Rs 2,200 crore. It is targeting a market value of around Rs 35,000 crore, or $5 billion, on debut, sources said. This translates to more than 7% capitalization rate or yield for investors betting on stable, long-term returns from leasing revenue.The REIT has the potential to add 50 million sqft more in the coming years, almost tripling its size.Embassy REIT assets are leased to global tenants like Google, Microsoft and JP Morgan. Fortune 500 corporations account for 44% and MNCs broadly bring in 80% of the rentals. The country’s grade-A office market is estimated at over 500 million sqft with another 197 million in the pipeline, to be added over the next 4-5 years.India’s services-driven economy has seen annual office absorption topping 40 million sqft in recent years. Vacancy levels in cities like Bengaluru and Pune are at record lows of under 5%. The REIT is expected to list before Diwali depending on market conditions and regulatory approvals. Blackstone and Embassy, which hold nearly 65% and 20% ownership interest, respectively, declined to comment on the report.Embassy Office Parks dates back to nearly eight years ago when Blackstone joined hands with billionaire developer Jitu Virwani of Embassy. Blackstone’s investment bets triggered a global investor rush to own Indian office portfolios with nearly $10 billion invested since 2010. Marquee investors like Blackstone, Brookfield and GIC of Singapore, among others, own about 200 million sqft of Indian office assets. In context, Embassy REIT’s success is crucial to global investor bets on Indian commercial real estate. “This office REIT will bring much-needed positivity that real estate desperately needs, especially with HNIs and retail investors staying away from the slow-moving residential market,” JLL India executive managing director Juggy Marwaha said.Morgan Stanley, Bank of America Merrill Lynch, JP Morgan and Kotak Mahindra are the lead bankers working on the REIT listing.

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