The USA-based private equity firm Blackstone has sold its stake in the Mindspace Business Park REIT. One of the leading owners of commercial office space in this country, Blackstone Group, has exited from this investment through the sale of its 9.2% stake to the sovereign fund of Abu Dhabi, i.e. Abu Dhabi Investment Authority.
Furthermore, using the block trade route, this sale is likely to generate $240 million at Rs. 320 per share for Blackstone. BREP Asia SG Pearl Holding NQ PTE, which is controlled by Blackstone, sold 54.29 million shares to the Platinum Illumination Trust, which is managed by Abu Dhabi Investment Authority.
This deal marks the debut of ADIA in India’s domestic REIT space.
Mindspace REIT: An Overview
Mindspace REIT, backed by the K Raheja Group, is a renowned player in India’s ever-growing real estate sector. Currently, the company has 10 office assets spreading over Mumbai, Hyderabad, Pune and Chennai. Out of these, 5 are independent offices, and the remaining are business parks.
Mindspace REIT currently has a total leasable area of 31 million square feet, and in 23.9 million square feet, the construction is complete. Moreover, 1.8 million square feet is under construction, and 5.6 million square feet is set aside for future projects.
As of 30 September 2021, the company has a portfolio of 171 tenants, and 85% of this portfolio is leased on WALE (weighted average lease expiry) of 6.7 years. Additionally, 31% of the company’s rent income is from Fortune 500 companies.
Mindspace REIT has a diverse client base of Indian and multinational corporations.
Moving ahead, let’s understand the concept of REIT.
What is REIT?
REIT or Real Estate Investment Trust is essentially an investment vehicle like a mutual fund. Similar to mutual funds, where funds are pooled in to invest in stocks, here, instead of investing in stocks, the investments are made in real estate.
Organizations like these own or manage properties that generate income. Shopping malls, office spaces, warehouses, industrial parks, etc., are usually under the portfolio of these companies.
The stakeholders of REIT generate income based on the revenue earned from various properties, but without actively getting involved in it. According to the norms, REITs must pay a minimum of 90% of their taxable income to their stakeholders.
The concept of REIT is similar to that of Infrastructure Investment Trusts or InvIT. The only difference, InvIT invests in long-term infrastructure projects, whereas REIT primarily focuses on rental properties.
Since no official comment is available from Blackstone and AIDA, it is difficult to understand the particulars of this deal. Nonetheless, the introduction of AIDA in this segment will be interesting to observe and learn how they move about their business.
Frequently Asked Questions
- When did the Blackstone Group invest in Mindspace REIT?
Blackstone Group acquired a 15% stake in the Mindspace REIT in 2017. This deal was worth $100 million.
- When was the public market debut of Mindspace REIT?
Mindspace REIT made its stock market debut on 27 July 2020. It was the second Real Estate Investment Fund to debut on the bourses after Embassy Office Parks REIT.
- What is the face value of Mindspace REIT shares?
The face value of Mindspace REIT shares is Rs. 275 per share.
Disclaimer: This blog is exclusively for educational purposes and does not provide any advice/tips on investment or recommend buying and selling any stock.