Blackstone Buys Warburg’s Embassy Industrial Parks India JV

Blackstone has completed its long-anticipated acquisition of Embassy Industrial Parks, gaining a portfolio with 10.6 million square feet (984,772 square metres) of Grade A logistics and warehouse assets near major cities in India.

Funds managed by the US private equity giant’s real estate arm acquired the joint venture formed by rival Warburg Pincus, which had held a 70 percent stake, and Bengaluru-based developer Embassy Group, which owned 30 percent.

In a Monday press release, Blackstone called the deal “one of India’s largest logistics transactions” but didn’t disclose the price paid.

“We are excited to announce this acquisition of a best-in-class logistics portfolio from Embassy Industrial Parks,” said Asheesh Mohta, head of real estate India acquisitions for Blackstone. “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.”

Months in the Making

Reports had surfaced in early February that Blackstone, already India’s largest office landlord, was on the verge of becoming the country’s biggest warehouse owner.

Having acquired more than 1 billion square feet of warehouses globally over the past decade, Blackstone was reportedly offering $700 million to purchase Embassy Industrial Parks, according to local media accounts at the time. A deal was said to be imminent, but the parties kept their silence for three months until Monday’s announcement.

Established by Embassy Group and Warburg Pincus in 2015, the joint venture has been expanding its portfolio as India’s e-commerce market drives demand for warehouse space.

“The partnership with Warburg Pincus has been extremely valuable to us and they will remain our trusted partners,” said Jitendra Virwani, chairman and managing director of Embassy Group. “This transaction between Embassy Group and Blackstone further strengthens and reinforces our partnership.”

Virwani said Embassy was focused on consolidating its resources towards the growth of its core businesses of office and residential development and management. The group has frequently partnered with foreign investors in India, including with Blackstone on Embassy Office Parks REIT, the country’s first real estate investment trust, and with Canadian pension fund manager Ivanhoe Cambridge on a $500 million office platform.

Strategic Acquisitions

With the Embassy assets in hand, Blackstone could be set to reprise a strategy it has employed in Europe and Australia: assembling a logistics mega-portfolio with an eye towards a later exit.

Blackstone first entered India’s warehouse market in December 2019 through a $350 million joint venture with Mumbai-based real estate developer Hiranandani Group. Blackstone took a 50 percent stake in that joint venture, according to local press accounts at the time. The company also bought a $53.6 million slice of Mumbai-listed Allcargo Logistics in January of last year.

In 2017, Blackstone scored Europe’s single largest real estate deal ever when it sold the Logicor platform to China Investment Corporation for $13.82 billion. That deal, which involved 630 distribution centres in 17 European countries, came after Blackstone had completed more than 50 transactions to acquire and tune the Logicor platform.

Last month, Blackstone agreed to sell its Milestone Logistics portfolio in Australia to ESR Milestone Partnership, a collaborative venture of Hong Kong-listed ESR and Singapore sovereign wealth fund GIC, for $2.9 billion after a protracted bidding contest against four other contenders.