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Blackstone-sponsored Nexus Select Trust is planning to acquire more malls in major and strategic locations across the country, as part of its overall plan to ramp up its presence not only geographically but, also in terms of area, at an average rate of 1-1.5 million square feet, annually.
The mall-focused real estate investment trust has progressed significantly, in concluding the acquisition of three malls in Hyderabad with a total area of 1 msf. “Hopefully, if we get the government approvals, this should happen pretty soon,” Chief Executive Officer, Dalip Sehgal told businessline. This acquisition was announced last year.
“We are looking at both markets where we are present – that’s the first choice – and then somewhere we may not be represented,” Sehgal said. He pointed out that the REIT already has malls in Hyderabad and “having three more assets in Hyderabad, makes a lot of sense.”
The REIT, currently has a portfolio of 17 malls with a gross leasable area of around 10 msf across 14 cities. Sehgal said that prospective acquisitions could be in metro and non-metros. Its non-metro malls in Bhubaneswar and Mangalore, were doing “very well”, he added. The trust had turned around many of the malls in its portfolio by getting good tenants and rejigging the profile.
“I think that model of acquisition and then setting the assets right, is working and I think that’s the route by and large that we wish to grow,” said Sehgal. He added a rider that if there was a good market and “no asset in that market that can be a possible acquisition target,” then it would even look to do a couple of greenfield sites, but that would be an exception rather than the rule.
On the pace of acquisitions and yearly additions, Sehgal said that over the last seven years, it has been roughly adding around 1 to 1.5 msf a year. “Very clearly, I think that’s something that is possible going forward as well every year.” He added that it could be lumpy depending on the acquisition targets available and the time to conclude the deals.
“But, I think the key really, is that we now have a playbook that allows us to acquire and quickly stabilise the asset and then make it grow substantially more than its track record.”
In FY24, Nexus Select Trust reported net operating income at ₹1,760 crore, meeting its guidance, while tenant sales rose 13 per cent to ₹12,000 crore. In FY25, it has guided for a 9 per cent growth in NOI and 9-10 per cent higher payout.
Tenants
Both domestic and international brands, were looking for more and larger spaces, Sehgal said. “They are all increasing stores.”
Some of the existing brands are launching new formats such as Zara with Zara Home and H&M also with a home outlet.
Direct-to-consumer brands such as Nykaa and Mamaearth, were also adding more stores as they expand their omnichannel reach.
While supermarkets are shrinking, other formats are taking up larger spaces, Sehgal said. Footwear stores for instance, were looking at larger stores where they can have more merchandise and have better engagement with customers.
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