Embassy Office Park REIT plans to acquire stressed office assets in India

Embassy Office Parks REIT, India’s first listed Real Estate Investment Trust (REIT), a joint venture between private equity giant Blackstone Group Lp and Embassy Property Developments is planning to acquire stressed office assets in India.

By stressed assets, the company meant those assets owned by someone, which has a scarcity of capital. The company would be looking at assets which the owner is not able to reinvest to improve rentals or assets that needed correction in terms of their capital structure.

Currently, REIT portfolio includes 25 million sq.ft of completed commercial real estate and another 8 million sq. ft of under-construction office space across Mumbai, Pune, Bengaluru and the National Capital Region (NCR).

Embassy Office Parks REIT is considered to be the largest REIT in Asia by asset size raising around a whopping Rs.4750 crores during its launch in March. Vikaash Khdloya, deputy chief executive and chief operating officer, said that currently, Embassy Office Parks REIT’s net debt stands at Rs.3,500 crore, which is 11% of the total enterprise value. According to regulatory guidelines, net debt can go up to 49% of asset value. Khdloya added that the assets the company looks forward to buyout should be free from any kind of litigation or other major issues. He further stated that despite the ongoing liquidity issues, the company is at an advantageous position given that the company is pretty lowly levered.

Recently, due to an improved regulatory environment, India’s commercial real estate market has become much more lucrative. According to JLL, India currently has around 294 million sq. ft of office space stock that are eligible for REIT.