Blackstone Signs Non-Binding Agreement To Buy Prestige Assets

While Blackstone wants to acquire 20 million square metres of commercial space, including 16 million square metres of fully leased Prestige Estates assets, Business Standard said the company planned to build twice as many commercial assets as it would sell to the global fund manager. Blackstone is the largest office owner in the country with $20 billion in real estate assets in the country. He has joint ventures with Panchshil Realty, K Raheja Corp, Salarpuria Sattva, among others. The U.S. private equity firm is in advanced talks to acquire rental income assets from Prestige Estates, including offices and operating malls, for $2 billion, Bloomberg reported Friday, citing people who asked not to be identified because the conversations were private. According to a report by the Deccan Herald, hotels included in the prospective agreement would yield a total of 336 keys. Prestige lists nine hospitality properties on its site, including assets under the Conrad, Sheraton and Oakwood brands. The stock release did not give monetary figures on possible revenue, but local news reported, referring to sources familiar with the discussions, that Blackstone had signed newspapers to acquire assets with an enterprise value of INR 120 billion ($1.63 billion). In a statement on Saturday on India`s National Stock Exchange, the Prestige Group revealed that it had signed a non-binding letter of intent with companies acting on behalf of Blackstone funds for the sale of office, retail and hotel properties of the Bangalore-based developer.

Under the interim agreement, which also includes the sale of Prestige`s mall management and maintenance companies, the two parties have initiated exclusive discussions regarding Blackstone`s possible acquisition of the assets or the creation of joint ventures or partnerships. Although Prestige did not disclose the amount of the agreement, the U.S.-based PE fund manager could purchase the company`s assets for $2 billion (over 14,000 kronor). Indian developer Prestige Estates Projects Ltd. stated that Blackstone Group Inc. had signed a non-binding agreement to purchase part of its assets. With the agreement reached during the first stage, the two sides will now begin negotiations on the definition of a final deal structure and the implementation of due diligence, with a formal agreement expected by the end of November, according to local press reports. Contacted by Mingtiandi, Blackstone representatives declined to comment on what was in the Prestige file. According to an NSE submission, Prestige Estates has signed a non-binding Memorandum of Understanding with Blackstone and the transactions are complemented by a combination of primary investments, secondary transactions, joint ventures or other forms of mutual agreement between the parties. Also last year, the fund manager deployed $620 million to acquire a portfolio of Offices of Indiabulls Real Estate which earned him rights to commercial assets in Mumbai and the National Capital Region of India. Prestige Estates wants to sell the assets to get out of debt and generate cash through the Blackstone agreement.

Blackstone sees opportunities for redemption with discounted assets.