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Photo: Mint
Photo: Mint

Blackstone to sell Embassy REIT stake worth $257 mn in block deal

The sale represents around 7% stake of the REIT. Currently, Blackstone holds 55% stake in the REIT

MUMBAI : Blackstone, the world's biggest alternative assets manager, is selling a large chunk of units of Embassy Office Parks REIT through a block trade, said two people aware of the development.

Blackstone is looking to sell Embassy REIT units worth around $257 million, the people cited above said.

"The trade is happening in a price band of Rs340-350 per unit, which is a discount of 3.5% to 6.7% to the closing price on Tuesday," said one of the people cited above requesting anonymity.

The sale represents around 7% stake of the REIT. Currently, Blackstone holds 55% stake in the REIT.

Blackstone declined to comment.

The sale of the REIT units comes after media reports on Friday said that IBM is considering ending leases for nearly half of its office space in India amid increasing acceptance of flexible working options such as work from home. IBM described the speculation as incorrect.

IBM is the single largest tenant for Embassy REIT, contributing nearly 12% to its rental revenue, as per the company’s filings with stock exchanges.

As per the company’s IPO filings in 2019, IBM had leased 3.6 million square feet of office space from Embassy REIT as of 31 December 2018.

The value of Embassy REIT's units has fallen almost 7% since Friday.

In an analyst call in May, the Embassy REIT management said that while work from home has worked well for companies in the lockdown period, in the long run, it does not see a major impact for its business.

"It is clear that a significant reduction in the densities of the workplace is coming, given increased priority to employee wellness, and this will drive demand. Some of this de-densification, but certainly not all, will be offset by more flexible workstyles including work from home," said Michael Holland, chief executive officer of Embassy Office Parks REIT.

Holland added that while the work from home experiment in India has delivered in this crisis and while the industry may see more flexibility in employee workstyles, the total business environment which Embassy REIT provides to its occupiers and their employees cannot, in India, be fully replaced by solitary work from home changes.

In the near term, the REIT has upcoming lease expiry and renewals of approximately 1.4 million square feet in its portfolio in the next 12 months, representing 5.5% of rental income. Of this, the REIT is in advanced discussions for 400,000 square feet.

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