Blackstone in $200m IT park purchase

The firm has acquired its third IT park in Bangalore as part of its 50:50 joint venture with domestic developer Embassy.

The Blackstone Group has closed one of the largest commercial real estate deals in India this year with the long-anticipated acquisition of Vrindavan Tech Village, a 106-acre development in Bangalore, according to a joint statement.

The New York-based private equity real estate firm has acquired a 60 percent stake in Vrindavan alongside its equal joint venture with Bangalore-based developer and operator Embassy Group for a total of INR12 billion (€144 million; $200 million). The deal values the park at INR20 billion. The park is being renamed Embassy TechVillage, and with an anticipated 15 million square feet of floor area is set to be the JV’s largest IT park in the city, and second largest in terms of office space.

Blackstone’s portion of the capital is expected to come from the Blackstone Real Estate Partners (BREP) Asia fund, which is targeting $4 billion in commitments. Blackstone declined to comment on fundraising, but to date the firm is understood to have secured approximately $3.5 billion of capital for that fund. Once the deal is closed, the firm will have deployed more than $1 billion of equity from BREP Asia.

The Embassy Techvillage acquisition would be BREP Asia’s first commitment to India, although Blackstone has accumulated a portfolio of approximately $600 million from its global funds and its takeover of Bank of America Merrill Lynch’s Asian Real Estate Opportunities Fund’s portfolio in 2009.

“The acquisition of Embassy TechVillage is a significant milestone in strengthening our Embassy Office Parks portfolio and expanding our footprint across the country,” Tuhin Parikh, senior managing director at Blackstone in India, said in the statement. Blackstone and Embassy’s other IT parks in Bangalore include the 12.9 million square foot Embassy Manyata Business Park and the 6.33 million square foot Embassy Golflinks.

“Blackstone and Embassy came together with a common vision to create world class office spaces and enable business communities to drive greater efficiency and growth,” Embassy Group chairman and managing director Jitu Virwani added. He pointed to the JV’s previous tenant relationships as a significant asset in developing the new Embassy TechVillage.

Asheesh Mohta, principal at Blackstone, also told PERE that this acquisition has strategic significance because it gives the firm access to the southeast market of Bangalore, which is the city’s most dominant market in terms of leasing by occupiers. With Manyata located in the north and Golflinks in the central business district, Blackstone “can now cater to all the major markets in Bangalore, and keep all tenants in-house.”

TechVillage so far has 1.9 million square feet of office space already developed, and is planned as an integrated project with retail and residential portions as well, although Blackstone will not be involved in the latter portions. Some of the office buildings are also expected to be built-to-suit for a number of potential clients, according to the statement.