Blackstone Nears $286M India IT Park Sale in Run-Up to $1B REIT IPO

Blackstone is close to selling a pair of business parks in Pune, India to Indian private equity firm Xander Group for 20 billion Indian rupees ($286 million), according to a report in the Business Standard.

The US private equity giant’s reported plan to sell phase one of the BlueRidge Special Economic Zone (SEZ) and another Pune asset, believed to be DLF Ackruti Info Parks, comes after Blackstone had earlier been in reported discussions with both CapitaLand and Ascendas-Singbridge of Singapore regarding separate potential sales of the BlueRidge project within the last year.

According to reports in the Indian press, Blackstone may be aiming for successful exits from the pair of properties to establish benchmark valuations for its planned $1 billion IPO next month of the Embassy Office Parks REIT, a real estate investment trust composed of a portfolio of similar business park assets, which the PE giant has assembled together with Indian partner Embassy Group.

Two SEZs and Millions of Square Feet

Phase one of the BlueRidge Special Economic Zone (SEZ), is a 1.5 million square foot (140,000 square metre) large footprint office property in Hinjawadi, a suburb of Pune about 40 minutes from the city,

Like BlueRidge, DLF Ackruti Info Parks, which was built by local developers DLF and Hubtown before being acquired by Blackstone in 2011, is in the Hinjawadi suburb of Maharashtra state’s second-largest city, which hosts an integrated residential and industrial township.

DLF Ackruti Info Parks measures 2.5 million square feet and both properties are 100-percent owned by Blackstone. Previous reports have suggested that the business park assets might be rolled up into Blackstone’s upcoming Embassy Office Parks REIT, the details of which are still emerging.

Morgan Stanley Marketing Blackstone India Assets

Morgan Stanley has been hired to sell the assets, according to the Business Times, with CapitaLand and Ascendas-Singbridge’s Ascendas India Trust among a number of players to have reportedly been in discussions with Blackstone regarding potential acquisitions over the last year.

In late 2017, Ascendas India Trust was said to be looking into purchasing both facilities from Blackstone, after the Singapore-listed trust had agreed in 2014 to acquire the 1.5 million square foot Phase II of Blue Ridge at a price of 6.9 billion Indian rupees. Before those discussions ultimately fizzled, the Singapore suitor was said to be discussing a price of nine billion Indian rupees to unite phase one of BlueRidge with its second phase, which would make it the sole owner of the SEZ.

In April 2018, Singapore’s CapitaLand was said to be buying the two assets currently in play for a total of 22 billion Indian rupees. The Business Times reported at the time that the deal was in the final stages, and other contenders said to have considered Blackstone’s Pune SEZs include Shapoorji Pallonji-Allianz, GIC, CPPIB and Brookfield Asset Management. In April, Xander had already been named as a contender for the Pune properties, before the CapitaLand transaction faded.

Blackstone purchased phase one of BlueRidge in 2014 from IDFC as well as the 1.3 million square foot Galaxy IT Park for a total of 9 billion Indian rupees, after the Indian developer had purchased the BlueRidge project in 2013 in a deal which valued it at 4.6 billion Indian rupees.  Blackstone had acquired Ackruti Info Parks from DLF and BSE-listed, Mumbai-based Hubtown for 8.1 billion Indian rupees in 2011.

Previous reports have mentioned the possible sale of the 1.35 million square foot Galaxy IT park and the 1.8 million square foot Oxygen Boulevard, both located in Noida, in India’s National Capital Region. But more recent reports don’t mention these assets.

Big Players Moving the Pieces

Xander, a Singapore-based private equity group founded in 2005, owns about 6 million square feet of office space investments in the country, with assets in Bengaluru, Chennai and Delhi. Blackstone has an estimated $5 billion committed to India in 30 investments. The total portfolio with partnership interests included is estimated at almost 80 million square feet.

The Indian market has been especially active in recent years with participation from a wide range of private equity groups, local and international. An estimated $2.6 billion was invested in Indian property in 2017, and $5 billion a year is expected over the next decade.