Funds managed by Blackstone Real Estate, part of global asset management firm Blackstone Group Lp, has acquired Embassy Industrial Parks from Warburg Pincus Inc. and Embassy Group for an enterprise value of $700m in one of the largest deals in India’s emerging warehousing sector.
The transaction has been done in two tranches. In the first tranche announced on Monday, Blackstone has acquired 10.6 million sq. ft for $400m from private equity firm Warburg Pincus Inc.In the second tranche, expected to be completed by this month-end, Blackstone will buy the remaining 11 million sq. ft for $300m, said a person familiar with the development.
Warburg and real estate firm Embassy Group had earlier signed a $250m deal to build industrial and warehousing spaces in the country.
Embassy Industrial Parks comprises modern Grade A logistics and warehousing assets near urban centres, tailored for tenants in rapidly developing sectors, Blackstone said, and the transaction will help reinforce the firm’s leading position in office, retail and logistics.
“…Logistics is one of the firm’s highest global conviction themes, anchored by our belief that e-commerce trends will further fuel demand for logistics space, especially near city centres. This is particularly true in India, where e-commerce is in its nascent stage of development and has tremendous opportunities driven by positive trends in urbanisation, domestic consumption, and the emerging retail sector, which remains heavily under penetrated compared with major economies around the world,” said Asheesh Mohta, head of Blackstone’s Real Estate India Acquisitions.
Bengaluru, a leading e-commerce hub, only has 30 million sq. ft of total Grade A and B warehouse space compared with 1.2 billion sq. ft in Chicago, Mohta added.
Logistics is one of Blackstone’s core investment themes globally. Since 2010, Blackstone has acquired more than 1.2 billion sq. ft of logistics.
EIP’s warehouses are located across major industrial hubs in India, including Bengaluru, Delhi NCR, Hyderabad, and Pune, and are leased to leading e-commerce and retail players.
Tuhin Parikh, Blackstone’s head of real estate India, said, “We are committed to growing our presence in India. For the past 16 years, we’ve been partnering with local developers and governments to transform assets and businesses, and help communities prosper. We’ve successfully launched the country’s first two REITs (real estate investment trusts) and recently announced the acquisition of a portfolio of commercial properties.”
“The partnership with Warburg Pincus has been extremely valuable to us and they will remain our trusted partners. This transaction between Embassy Group and Blackstone further strengthens and reinforces our partnership. We are extremely focused on consolidating our resources towards the growth of our core businesses of office and residential development and management. This transaction with Blackstone Real Estate along with the upcoming merger with IBREL is a strategic move in that direction,” said Jitu Virwani, chairman and managing director of Embassy Group.