Blackstone-sponsored Nexus Select Trust, which will soon launch the public issue of a Rs 3,200-crore retail Real Estate Investment Trust (REIT), sees the platform as an opportunity to double its size in the next four to five years ― from 9.8 million square feet (msf) to 20 msf, and potentially look at 30 metros and Tier 2 cities going forward, officials said on May 5.
Nexus Select Trust has acquired 17 shopping malls in the last seven years and will further expand the portfolio through the inorganic route as it remains bullish about retail consumption. Delhi’s Select City Walk, which houses the country's second Apple store, is one of the many malls owned by Nexus Select Trust.
“We have acquired about 9.8 msf in the last six to seven years. That has been our average, with a bumper during COVID-19. The idea is to double this and use the REIT currency to start acquiring assets. We are in conversation with people in metro and Tier 2 cities that are strong on consumption,” Nexus Select Trust Chief Leasing Officer Nirzar Jain told reporters in the capital.
"Since establishing the platform in 2016 with the acquisition of two malls in Ahmedabad, we have acquired 17 high-quality retail assets. We have acquired 1.4 msf retail space every year. We acquired seven assets from Prestige group in the midst of the COVID pandemic," he said, adding, “We have invested around Rs 90 crore to renovate and reposition these assets, where the occupancy has increased from 85 percent to 95 percent.”
“With the 17-asset portfolio, we now have the learning on how to make acquisitions and the sizes work for us,” he said, adding “we are clear that the acquisition will only be for Grade A assets and should be a value-add to the asset.”
“We can potentially look at 30 metro and Tier 2 cities for expanding our portfolio. North and East are definitely areas on our radar, but we intend focusing only on Grade A assets, going forward,” he said.
Nexus Select Trust has a portfolio of 17 operational shopping Grade A urban consumption centres with a total leasable area of 9.8 msf valued at around Rs 23,000 crore, two complementary hotel assets (354 keys) and three office assets (1.3 msf) as of June 30, 2022. The assets are located across 14 major cities. These include Delhi, Chandigarh, Mumbai, Chennai, Pune, Bengaluru, Hyderabad, Ahmedabad, Amritsar, Bhubaneswar, Udaipur, Mysore, Mangalore and Indore.
Jain said the company's total net operating income (NOI) is projected to grow organically by 17 percent to Rs 1,897.1 crore in financial year 2025-26 (FY26) from Rs 1,619.8 crore in FY24. In the first nine months of the last fiscal, the NOI stood at about Rs 1,050 crore.
Nexus Select Trust filed the draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) to launch its retail REIT public issue in November last year.
Earlier, the company had planned to raise up to Rs 4,000 crore from the proposed public issue of the REIT. To a question on the reduction in the IPO size, Jain said the units are being issued at a discount compared to the net asset value (NAV) of Rs 127 per unit. Post-IPO, the shareholding of Blackstone in Nexus Select Trust will come down to 43 percent from 60 percent. The stake of the promoters of Select City Walk will fall slightly to 24.3 percent from 25 percent.
Global private equity major Blackstone Group-backed Nexus Select Trust has set the price band of its initial public offering at Rs 95-100 per share. Earlier, the firm had said that the issue will open for subscription on May 9 and close on May 11, in what would be India’s maiden pure-play retail mall REIT offering.
Currently, there are three listed REITs, but all are backed by office assets.
REITs are investment vehicles that own, operate and manage a portfolio of income-generating properties for regular returns. REITable properties in India will include commercial assets ― primarily office spaces ― that can generate steady rental income. They will operate like mutual fund (MF) units or shares. REITs will have to be mandatorily listed on exchanges and traded like securities. Small investors can buy units of REITs from both primary and secondary markets just as they buy shares or MF units.