Daddy of commercial assets, Blackstone, seals another deal in Bangalore

Blackstone’s overall portfolio of India’s rent yielding commercial assets has got another boost after the US-based private equity firm decided to invest another Rs 500 crore in Bangalore’s Embassy Office Parks, which it equally owns with builder Embassy Group through convertible debentures.

According to a report in The Times of India Blackstone Group and Standard Chartered Bank will together extend Rs 1,150 crore ($184 million) funding to Embassy Office Parkto help the latter buy 60% stake in Bangalore IT special economic zone Vrindavan Tech Village (VTV).

VTV has developed office space of 2.1 million sq ft and 75 acres of undeveloped land. The current tenant list includes Cisco, Sony, Nokia, and Ness Technologies.

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According to the ToI report, Blackstone will invest Rs 500 crore in Embassy Office Parks while Standard Chartered will extend Rs 650 crore multi-year loan to clinch the majority stake acquisition.

This acquisition could take the Blackstone-Embassy JV’s development portfolio in excess of 20 million sq ft in India’s IT capital. Moreover the deal values the SEZ at around Rs 2,000 crore, making it one of the largest office space acquisitions till date.

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Blackstone has strung together joint ventures with IT park developers like the Embassy Group and Pune’s Panchshil Developers, besides outright acquisition of office assets from others including DLF.

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It had picked up a 50% interest in Embassy’s rent yielding office portfolio of 13.5 million sqft for over Rs 1,000 crore, while holding a large stake in Panchshil’s 4 million sq ft park.

It has spent more than $600 million in the past two years controlling about 21 million sq ft of office buildings, which are tenanted or nearing a lease deal.

It has another 7 million sq ft of development potential in the existing assets, making it the most significant consolidator of Indian work spaces with annual yields ranging between 10 percent and 15 percent.

With a bid of Rs 186 crore, Blackstone, along with Panchshil Realty has reportedly also emerged as the fruntrunner for buying Citibank’s old headquarters at the Bandra-Kurla Complex. For the Panchshil-Blackstone combine, this is the second tender after they jointly bid to buy Express Towers in Mumbai’s Nariman Point from ICICI Venture and Viveck Goenka for about Rs 900 crore.