India: Phoenix Mills buys back stakes in four malls for $210m

Photo: Mint.

Retail developer Phoenix Mills Ltd is buying back stakes from various investors in four of its mall projects for around Rs1,350 crore, making it the sole owner of the assets.

Once the firm pays the last tranche of Rs34 crore to one of the investors, IL&FS Investment Managers Ltd, for the remaining 6% stake in a suburban Kurla mall in Mumbai by 30 September, the process of giving exits to all its investors will be complete, Shishir Srivastava, joint managing director, Phoenix Mills, said.

Phoenix Mills, which had 24-70% ownership in these assets and raised capital from a bunch of investors between 2006 and 2007, has been progressively buying back stakes in many of its special purpose vehicles (SPVs) holding various assets.

The process is now complete.

After these buyouts, the firm will still have partners in its Chennai and Bengaluru malls.

In April, Phoenix Mills and Canada Pension Plan Investment Board (CPPIB) announced the Canadian investor will invest $250 million in multiple tranches, to eventually own up to 49% in Island Star Mall Developers, a unit of the developer.

Island Star Mall Developers currently owns Phoenix MarketCity in Bengaluru, a mall with gross leasable area of 1 million sq. ft.

Since the CPPIB tie-up, Island Star bought a land parcel in Pune from Kolte-Patil Developers Ltd for Rs160 crore. Phoenix Mills is also in the last leg of buying a partly-constructed mall in Indore for Rs230 crore, which may be brought under CPPIB-Phoenix investment platform later.

“We are committed to deploying the capital before the year-end and have four new assets under CPPIB platform, each exceeding 1 million sq. ft. Our growth strategy revolves around the urban consumption story,” said Srivastava.

Phoenix owns and operates around 6 million sq. ft of shopping malls in Mumbai, Pune, Bengaluru, Lucknow, Chennai and Bareilly.

Along with CPPIB, it plans to double this in 5-6 years.

Srivastava said the firm has three parallel approaches to growth.

“First, the buyback of stakes which gives us full ownership. Second, expansion of existing, operating malls and, finally, robust growth under CPPIB platform,” he said.

Property advisory CBRE South Asia Pvt. Ltd’s India Retail Market View report in August said India topped the global retail development index in 2017, overtaking China.

It said in January -June, there were 70 entries or expansions by global and domestic brands in Mumbai, Delhi-NCR and Bengaluru, with around 1.5 million sq. ft of fresh supply in the market.

“The fact that demand for quality space continues to outstrip supply is indicative that the retail real estate segment… is growing exponentially. While global brands continue to evaluate and consider quality retail developments in the top cities, with growing globalization, smaller cities are also gaining prominence…,” said Vivek Kaul, head, retail services, India, for CBRE South Asia.

Also Read:

India: Kolte-Patil sells Pune land to CPPIB-backed Island Star for $25m

Canada’s CPPIB tops real estate investments in India in the first half of 2017

This article was first published on Livemint.com