Second tranche of the investment by CPPIB in the Island Star Mall Developers (ISMDPL) has been completed with an investment of Rs 938 crore from CPPIB for acquisition of 19% equity in ISMDPL. CPPIB had executed a share subscription and purchase agreement and shareholder’s agreement with ISMDPL and Phoenix Mills and had acquired 30% equity shareholding through combination of fresh equity and secondary transfer of equity shares held by Phoenix. Through the second tranche CPPIB has increased its investment to Rs 1,662 crore for a 49% ownership stake. The additional funding will allow ISMDPL to undertake new developments and acquisitions, creating new retail-led mixed-use assets that will offer superior shopping and entertainment experiences. Since the inception of the platform, ISMDPL has acquired a land parcel in Pune (Wakad), and is exploring other investment opportunities.
Overall investment in Island Star Mall by CPPIB has been Rs 1,660 crore higher than initially guided at the time of first infusion (Rs 1,600 crore). Cap rate of total infusion remains close to the earlier levels (6.5%). We believe the infusion by CPPIB could imply deal closure in short term. Management has earlier indicated interest in Bangalore, Ahmedabad and Indore market for growth. Micro market competition, stage of construction and acquisition value will be key monitorables going forward.
In order to make REITs and InvITs more attractive, there should be a mechanism for resolution of disputes with the shareholders and partners in the holding company, as per markets regulator Sebi. Sebi has also amended REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts) regulations in order to facilitate the growth of such trusts.
Shareholders’ agreement or partnership agreement shall provide for an appropriate mechanism for resolution of disputes between the InvIT and the other shareholders or partners in the holdco and/or the SPV (special purpose vehicle). The provisions of these regulations will prevail in case of inconsistencies between such agreement and the obligations cast upon an InvIT and REIT.