Blackstone, GIC in race to buy Lodha’s XPeria Mall

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Mumbai: Global investors Blackstone Group LP, GIC Pte Ltd and Xander Group are in separate discussions to acquire Mumbai’s XPeria Mall in Palava City, developed by Lodha Developers, according to two people aware of the development.

The deal size would be in the Rs600-700 crore range, one of the persons cited above said on condition of anonymity. Lodha Group has hired a leading global real estate adviser to find a buyer for the mall, he added.

The mall, located on the outskirts of Mumbai, is spread over 500,000 sq. ft and comprises 135 stores with large brands such as PVR, Marks & Spencer, Big Bazaar, Reliance Digital, Reebok, Adidas, Allen Solly, Biba, Subway, Moti Mahal, Metro and Lenovo present. PVR launched a six-screen multiplex at XPeria last year.

“Given the strong performance of Lodha Xperia at Palava City, we have received interest from various marque investors to invest in the mall. We are considering these offers for divestment of a partial stake in the mall. We continue to be committed to growing the mall and, generally, our retail business,” said a Lodha Group spokesperson.

A Blackstone spokesperson declined to comment while emails sent to GIC and Xander went unanswered.

According to Cushman & Wakefield, leasing of retail space in malls increased by 55% during January-September this year at 2.3 million sq. ft. After a prolonged period of slow growth, the retail sector has regained momentum and its trust in traditional brick and mortar retail space has returned, acknowledging the role that it will play in the future growth of the sector, the property consulting firm said in a report published in October.

An estimated Rs8,000 crore has been invested by private equity funds in malls between January 2016 and September 2017, the report added.

It is estimated that India will see close to 34 new malls by 2020 in the top eight cities. Totalling approximately 13.6 million sq. feet, the new supply will add approximately 20% to the total available mall inventory in these cities, the Cushman & Wakefield report said.

Blackstone Group has widened its footprint in India through multiple buyouts of shopping malls. Last year, it acquired a 50% stake in Westend Mall in Pune, which houses brands such as Cinepolis, H&M, Max, Shoppers Stop and Starbucks. It had also acquired L&T Seawoods Mall in Navi Mumbai from L&T Realty last year.

In 2015, it bought two AlphaOne malls in Amritsar and Ahmedabad from Alpha G:Corp. It also acquired Elante mall from the Carnival Group in Chandigarh last year.

Blackstone has invested about $3 billion in real estate projects in India across 20 transactions and manages the largest portfolio of office parks in India. It opened its real estate division in India in 2007, hiring Tuhin Parikh as senior managing director.

“All income yielding opportunities are attractive from an investor’s perspective due to the fact that you still get high yields of 8.5-9.5% and there is no development and leasing risk,” said Sanjay Dutt, chief executive, India operations, Ascendas-Singbridge India, the local arm of business space solutions provider Ascendas-Singbridge Group.

“Grade A office space as an investment is already saturated from an investor’s perspective. It is quite expected that retail, hospitality, hospitals and warehouses will witness more capital chasing Grade A assets,” Dutt added.

Similarly, global investment firm Xander Group Inc., which has invested around $2 billion in India’s real estate sector, is also stepping up its presence in the country through acquisitions of shopping malls. It had set up retail arm Virtuous Retail South Asia Pte Ltd (VR) — a JV between Xander and APG Asset Management NV. In April, Xander had acquired North Country Mall in Mohali for $108 million.

The Singapore government-owned $100-billion sovereign fund GIC holds a 50% stake each in Runwal Group’s R City mall in Ghatkopar and Viviana Mall in Thane, on the outskirts of Mumbai.