Global investment firm Blackstone-sponsored Nexus Select Trust plans to double its portfolio of shopping malls in next 4-5 years to 20 million square feet through acquisition mode. Nexus Select Trust has acquired 17 shopping malls since the 2015-16 fiscal year and intends to grow its business inorganically.
The company has no plans to develop greenfield shopping malls. Nexus Select Trust has bundled all its 17 malls, including the 5 lakh square feet ‘Select City Walk’ in South Delhi, under REIT (Real Estate Investment Trust) structure and will soon launch Initial Public Offer (IPO).
According to sources, Nexus Select Trust is likely to hit the capital market in early May with India’s first retail REIT IPO to raise up to Rs 4,000 crore. In November last year, Nexus Select Trust had filed the Draft Red Herring Prospectus (DRHP) with market regulator SEBI to launch its retail REIT. Nexus Select Trust has a portfolio of 17 operational shopping malls across 14 major cities, covering 9.8 million square feet area valued around Rs 23,000 crore.
According to sources, Nexus Select Trust would continue its strategy to acquire Grade-A shopping malls to expand its portfolio. It also makes investment, if needed, to upgrade the facilities in malls. There are 100 premium shopping malls in the country, of which 40 are owned by large players. Therefore, the remaining 60 malls could be potential acquisition targets for Nexus Select Trust, sources said.
Many mall owners are willing to put their assets under Nexus REIT, they added. Sources said Nexus Select Trust intends to double its mall portfolio to 20 million square feet in the next 4-5 years. Blackstone spokesperson declined to comment.
As per the sources, Nexus Select Trust is expecting to get Sebi approval for its IPO soon.The size of the IPO of Nexus Select Trust REIT will be around Rs 4,000 crore, of which Rs 1,600 crore would be the primary offering of shares.The part of the proceeds will be utilised to bring down debt, which stood at Rs 4,500 crore at the end of June quarter.This will be the third REIT sponsored by Blackstone.
It launched India’s first REIT named Embassy Office Parks REIT and then Mindspace Business Parks REIT.The REIT, a popular instrument globally, was introduced in India a few years ago to attract investment in the real estate sector by monetising rent-yielding assets. It helps unlock the massive value of real estate assets and enable participation of retail investors.
At present, there are three listed REITs — Embassy Office Parks REIT, Mindspace Business Parks REIT and Brookfield India Real Estate Trust — on Indian stock exchanges but all these are of leased office assets.Nexus Select Trust will be the first REIT with rent-yielding retail real estate assets.There are around 3,000 stores across 17 shopping malls while the number of brands is nearly 1,100.
On the operational front, the occupancy level in the malls currently stands at 94 per cent with annual footfall of over 130 million.The net operating income of Nexus Select Trust is projected to grow at nearly Rs 1400 crore during the last fiscal year.Blackstone has a big presence in the India market with an overall assets under management estimated to be USD 60 billion across various sectors.
Real estate accounts for nearly USD 22 billion of this market value across over 40 investments.Blackstone is among the largest office owners in India with an office portfolio of around 100 million sq ft across 38 assets in 7 cities.Of this, around 13 million sq ft offices are under construction and 16 million sq ft is future development.
Blackstone has created Nucleus Office Parks platform with 25 million sq ft for hosting 100 per cent owned commercial assets.Blackstone additionally owns over 10 million sq ft of retail space under the Nexus malls portfolio and 35.5 million sq ft of logistics space under Horizon Industrial Parks portfolio and Greenbase Industrial and Logistics Park.
India’s first REIT of Rs 4,750 crore issue size was listed in April 2019 by Embassy Office Parks, sponsored by Blackstone and realty firm Embassy Group. In August 2020, K Raheja and Blackstone-sponsored Mindspace Business Parks launched the country’s second REIT to raise Rs 4,500 crore. Blackstone has exited Mindspace REIT now. Global investment firm Brookfield has listed the country’s third REIT after raising Rs 3,800 crore through an IPO.