The evolution of real estate investment trusts (REITs) went parallelly with Blackstone’s REIT journey in the country.
Blackstone is the pioneer in listing REITs in the country along with its partners. While it sponsored Nexus Select Trust REIT, the country’s first retail property REIT, it co-sponsored Embassy Office Parks REIT and invested in Mindspace Business Parks REIT sponsored by Mumbai-based K Raheja Corp.
Embassy REIT is the country’s first listed REIT, which came out with an initial pubic offering (IPO) in March 2019 and later got listed. Its shares have risen 25.4% since the IPO and Embassy Office Parks has a market capitalisation of `35,658.81 crore now.
Next came MindSpace Business Parks REIT from the Blackstone stable which got listed in 2020. Its share has risen 24.7% since the listing and its market cap is Rs 20,340.52 crore.
Interestingly, Blackstone had bought stakes in the properties of Embassy Group and stake in the special purpose vehicles or SPVs which held assets and later shifted to Mindspace REIT.
However, Nexus built its portfolio of malls through acquisition of malls from companies such as Tata Realty, L&T and so on. Nexus Select Trust was listed last year and its share has risen 37.1% since listing and its market cap is Rs 20,763.08 crore. It had a portfolio of 17 centres with a space of about 10 million sq ft as on June. Recently, Nexus Trust said it is in talks to buy five new malls.
“Blackstone knew the REIT product well before it came to India. Many global investors became investors in REITs here because of Blackstone,” said the head of a global property consultancy. He said Blackstone had the knowledge of best practices, structuring of REIT , filing and so on.
According to sources, Blackstone is also working on a mega REIT which will have assets of Bengaluru-based Salarpur is Sattva and Panchshil Realty and basic paper work has been done. However, it could not be independently confirmed with Blackstone .
Blackstone has been monetising its investments in listed REITs by selling them to other investors.
On Friday, two entities of Blackstone sold 21% in Nexus Select Trust and raised Rs 4,455 crore through the stake sale. The units were sold at Rs 138 apiece as Blackstone’s stake in the REIT has come down from 43.1% to 22%. Blackstone has exited its holdings in its listed REITs, including Embassy Office Parks and Mindspace Business Parks REIT.
A REIT is a trust that owns a pool of income-generating real estate assets held as special purpose vehicles (SPVs). At least 80% of these assets must be completed and income-producing.
REITs, which are mandated by Sebi to distribute at least 90% of their cash flow to unit holders, have a unique structure that allows investors to participate in the income generated by commercial real estate assets.
Typically, the income of these trusts comes from the rentals received from such properties. REITs offer a less risky alternative to investing in under-construction properties and also provide a regular income.