Blackstone And K Raheja Corp Eye India’s Second REIT Listing Next Fiscal
People work at a co-working space in Singapore. (Photographer: Wei Leng Tay/Bloomberg)

Blackstone And K Raheja Corp Eye India’s Second REIT Listing Next Fiscal

Months after the successful listing of Blackstone Group LP-backed Embassy Office Parks—India’s first real estate investment trust—a joint venture between the private equity firm and K Raheja Corp is in advanced stages of filing papers with the market regulator to list the nation’s second REIT, two people aware of the development told BloombergQuint.

K Raheja Corp is in the process for finalising bankers for the REIT and is expected to file it’s draft red herring prospectus by the end of this year, the first person quoted above said requesting anonymity as the information is not public yet. The listing, the person said, will most likely take place in 2020-21.

In this REIT, the stake of Blackstone Group will be 15 percent, while K Raheja Corp will hold the remaining 85 percent, both the persons quoted above said. The fine print is still being worked out but at least 10 offices of K Raheja Corp will be part of the REIT portfolio, they person said, adding that this REIT will have 10 million square feet of under-construction and 20 million square feet of completed properties.

K Raheja Corp’s commercial properties are present across the country under the brand name of “Mindspace” and “Commerzone”. The real estate developer recently acquired Citibank’s former headquarters in Mumbai’s Bandra Kurla Complex, which will be part of the REIT portfolio, the second person quoted above said.

REITs are mutual fund-liked listed instruments that pool in income-generating assets and allow investors to take exposure in real estate without physically owning it. India cleared such trusts in 2015 but the first public offer came about four years later after several tweaks to the original rules. Embassy Office Park—a joint venture between Blackstone Group and Embassy Property Developments Ltd.—listed its REIT in April.

Embassy office Park REIT listed at nearly a 5 percent premium to its issue price, led by higher demand from retail investors.

The success of the first REIT has offered hope to India’s real estate sector, which is struggling to raise funds as lenders turned selective after a shock default by IL&FS Group subsidiaries. Also, an economic slowdown stalled its nascent recovery from the disruption caused by Prime Minister Narendra Modi’s note ban and a stricter housing law that armed homebuyers against frauds.

According to a latest report by JLL India, the country’s commercial real estate market has 294-million-square-feet office space that can be potentially pooled in REITs.

Blackstone and K Raheja Corp have yet to answer BloombergQuint’s emailed queries.

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