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Alternative Investment

Kotak’s realty fund invests ₹1,600 cr in Embassy Reit

MUMBAI : Kotak Realty Fund has picked up a stake in Embassy Office Parks real estate investment trust (Reit) for 1,600 crore in a block deal, through which the Blackstone Group was selling its stake in the Reit.

The realty fund was floated by Kotak Investment Advisors Ltd in alliance with a wholly-owned subsidiary of the Abu Dhabi Investment Authority. According to the terms of the deal, Blackstone offered 77 million units, or a 8.12% stake in the Reit, at a floor price of 345 per unit. Blackstone seeks to raise 2,660 crore. or $325 million, through the stake sale.

The document was seen by Mint before the trade was executed. Investment banks Bank of America, IIFL and Morgan Stanley acted as brokers for the block trade. According to stock exchange data, Kotak Performing RE Credit Strategy Fund-I picked up 46.3 million shares. Details of other buyers were not shared on the stock exchanges.

As of 30 June, Blackstone held a 31.71% stake in the Reit. This is the third time Blackstone has pared its stake in Embassy Reit since the IPO in 2019. It was the first publicly-traded Reit in the country.

Last September, the American private equity firm sold a 6% stake in the Reit for $275 million. In June 2020, it sold stakes worth $300 million.

Kotak Investment Advisors invested in the Embassy Reit from its twelfth realty fund for commercial office properties. In June, KIAL said it formed a $590 million platform with ADIA for the fund, which will be domiciled in Gujarat’s GIFT City. So far, KIAL has raised, managed or advised over $2.8 billion under its realty funds.

Embassy Reit operates 12 commercial office parks with a total space of 42.8 million sq ft and 87% occupancy comprising 214 companies. Its office properties are spread across Bengaluru, Delhi-NCR, Pune and Mumbai.

Embassy Reit units closed trading on Tuesday at 346.77, down 1.32% on the BSE.

Kotak Investment Advisors Ltd, a part of the Kotak Mahindra Bank, focuses on the alternative assets business. KIAL, set up in early 2005 to bring a sharper focus to Kotak’s alternative assets practice, has so far raised over $5.7 billion across different asset classes, including real estate funds, private equity funds, infrastructure funds, special situations fund, listed strategies and investment advisory, all of which was led by independent investment teams.

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