Phoenix Mills, one of the biggest mall developers in the country, expects to return to normalcy only in the next financial year.

“We hope FY22 will see normalcy, and bring us back to the levels of FY19, if not FY20,” said Shishir Shrivastava, managing director of the company in a conference call early this month.

Phoenix Mills has reached an agreement to waive 50 per cent of rent during lockdown period with 75-80 per cent of retailers (except for multiplexes). Further, once malls reopen after lockdown, the company would consider a waiver of 30 per cent on a minimum guarantee of 3-6 months' rent.

“The solution broadly entails relief to a certain percentage level, subject to negotiation with retailers on the minimum guarantee rent. But on the other side, the retailers have also understood that in the event consumption does go up, they would be willing to share a higher percentage of the revenue when compared to the contract for this limited period and also generally we also address that should the retailers arrive at a 70 per cent to 75 per cent of consumption for the last year then we revert to the original rental terms,” Shrivatsava said.

With the Covid-19 issue likely to linger till at least Q2FY21 (July-September 2020), in a worst-case scenario, the company stands to lose 40-50 per cent of its FY21 revenue, Adhidev Chattopadhyay of ICICI Securities said.

“We have assumed that Phoenix will lose Rs 400 crore or 40 per cent of FY20 rental income in FY21 (on like-for-like basis) owing to Covid-19 and expect FY22 rental income to recover to FY20 levels of Rs 1,000 crore. Hence, we expect Phoenix to now see 35 per cent YoY decline in rental income to Rs 660 crore in FY21 (adjusted for some marginal revenues from new Lucknow mall),” Chattopadhyay said.

War chest

Shrivastava however, said the company is readying a war chest to pay down its debt or buy distressed opportunities in the market.

“… We are seeing unprecedented times and there is no visibility to the end of the crisis, so it will help to have some kind of a war-chest to meet uncertain times to pay down debt to probably even if there is some spectacular distress opportunity that comes our way because we believe in the long-term potential of our business to be able to participate in such an acquisition opportunity,” said Shishir Shrivastava, managing director of the company in a recent conference call with investors.

Though the company has a liquidity of around Rs 770 crore, it has taken enabling resolution to raise upto Rs 1200 crore. The company would take equity route for fund raising and is not looking to raise any significant debt, Shrivatsava said.

“The decision on whether we want to raise capital at the listed company level or not will finally be taken—has not yet been taken—and we are going to be deliberating on that. As of now we are not contemplating any debt increase except to the extent where we may drawdown on debt free projects.,” he said.

The company has availed moratorium on debt repayments on its mall properties, he added.

The company last week opened a mall in Lucknow in Uttar Pradesh. The mall has an area of 950,000 square feet. Analysts have termed this as a positive sign for the company.