Singapore based independent wealth fund backs out from the deal with global asset manager Blackstone Inc to buy half the stake in some commercial real estate assets that the US-based firm has with the Panchshil group and Salarpuria Sattva, over valuation of the assets.
After this, Blackstone is left with little option but to launch a REIT for its office properties housed under Nucleus Office Parks and the two joint ventures. The report also highlighted that, it is moving fast towards launching a REIT in the region of $1 billion. Investment bankers were identified who were connected to this issue. Both the companies did not respond regarding the clarification and more details on the matter. During last year, the both firms were on the way to take a decision on the pricing and valuation of assets.
Singapore based firm GIC is one of the very few overseas funds which invests in the Indian commercial market. Somehow, it drew back from the asking price of $1.5-2 billion for properties on the block. The pricing of the deal would have valued the property at around $4 billion.
The part of properties which are put on sale consists of a leasable area of 26 million square feet. The projects with Panchshil include Eon Free Zone, Tech Park One, a 415-key JW Marriott hotel, and Pavilion Mall. Projects with Salarpuria in Hyderabad that are up for sale are Knowledge City and Knowledge Capital.
The joint ventures will come in effect for 7-10 years and the sources said that Blackstone is under pressure from its global investors for payback. The usual period for investments that private equity firms like Blackstone, after that they monetise their investments either through a sale or a listing.
Blackstone is acquiring over 20 million square feet of commercial assets in Nucleus Office Parks. Combined with its joint venture assets, it has over 46 million square feet of real estate. This will be part of Blackstone’s REIT portfolio, on which work is progressing at a fast pace.
During the last year, real estate investment trusts’ performance in the stock markets were uninspiring after having touched highs in the initial months of their listing. This resulted in global downturn in the office market, slowdown in the software sector.
The December quarter witnessed a spurt in office absorption and 2023 ended with gross absorption of close to 60 million square feet, and is forecast to cross 50 msf this year. Blackstone-owned Nexus Select Trust has gained 23% from its 52-week low, while Embassy Office Parks REIT, in which Blackstone was a sponsor and exited in December last year, has surged over 40%.
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