Embassy Office Parks REIT shares fell more than 1.7 percent in early trading Tuesday morning after about 77.1 million shares or 8.1 percent of equity changed hands in a big block deal, Bloomberg reported. . However, buyers and sellers are not yet known.
On Monday, CNBC-TV18 reported that Blackstone will sell 77 million units of Embassy REIT worth Rs 2,650 crore. The bid price of the block deal stands at Rs 345 per unit.
The transaction is reportedly worth about $325 million or Rs 2,660 crore as the bottom price was set at Rs 345 per unit, a discount of 1.66 percent from Monday’s closing price of Rs 350.82.
At 11:21 am, the stock was trading 0.83 percent lower at Rs 348.50 from its last day closing price of Rs 351.40 each. The stock has fallen about 7 percent in the past six months, while it is up about 6 percent last year.
It was also reported that Abu Dhabi’s sovereign wealth fund, one of the world’s largest, is likely to pick up at least half of the stake Blackstone would sell.
Embassy Office Parks, India’s first REIT to be listed in 2019, owns and operates more than 42 million square feet of office parks and office buildings in cities such as Bengaluru and Mumbai. It is the largest office REIT in Asia by area.
The block trade will be Blackstone’s third sale at Embassy, following two such sales in 2020 and 2021, with the private equity group jointly selling shares worth more than $500 million.
Blackstone has invested more than $11 billion in Indian companies and assets over the years, but has scaled down its holdings in Indian REITs over time.
Earlier this year, it sold its entire stake in Mindspace Business Parks REIT in India for $235 million.
What is a REIT?
REITs, or Real Estate Investment Trusts, are special companies created to own and manage real estate. REITs do not invest in just one real estate. Think of REITS as a mutual fund. A REIT invests in a real estate portfolio in various sectors.
Typically, these assets are leased properties designed to generate rental income. There can be sector specific REITs and they can even be defined based on the type of ownership. Some REITs actually own the assets they manage and operate. Others finance these real estate assets.
In most cases, once a REIT is established, it is listed on the exchange just like any other company. Individual investors can now buy units of REITs just as they would buy individual stocks or shares of an exchange. The rental income generated by the real estate portfolio is distributed to investors as dividend income, making REITs a stable, income-generating option to invest in.
Global REITs can work to add diversification to your portfolio, but they don’t really replace physical real estate assets.
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