The Bengaluru-based Prestige Estates said on Monday it had bought out through a subsidiary investor CapitaLand’s stakes in its malls and residential projects for Rs 3.42 billion. The Singapore-based CapitaLand had entered into agreement with the Prestige group in 2008 to invest in its malls. The deal involves acquisition of CapitaLand’s 49 per cent stake each in Forum Centre City Mall in Mysuru, 50 per cent stake in Forum Fiza Mall in Mangaluru, 50 per cent stake in Forum Neighbourhood Mall and Oakwood serviced residences in Bengaluru, 25.4 per cent stake in Forum Sujana Mall in Hyderabad, 13 per cent stake in a mall in Kochi and residential developments, 100 per cent stake in Celebration Mall in Udaipur, and a 50 per cent stake in mall management company, Prestige said in a statement to the stock exchanges. The acquisition would boost Prestige’s annuity portfolio by an estimated Rs 750 million a year in rental income, the firm added. “This is a step in the expansion of our earnings. Our long-term strategy is to diversify our revenue streams, strengthen the annuity base and selectively deploy capital,” said Irfan Razack, chairman and managing director, Prestige group. “Our current estimated annual rental income is around Rs 7 billion. With this transaction it will grow by Rs 750 million.
The portfolio includes five operating malls in Bengaluru, Hyderabad, Mangaluru, Mysuru and Udaipur, a mall management company, the Oakwood serviced residences in Bengaluru and properties under construction in Kochi,” said Venkat K Narayana, chief executive officer, Prestige group. Analysts said the deal was a precursor to the group selling stakes in its rental portfolio. Prestige Estates has restructured its office, retail, hospitality and residential verticals and is planning to sell stakes in office and retail assets. According to sources, the group plans to sell a 40-50 per cent stake in rental assets and raise around $500 million. It intends to use the funds to invest in new projects and reduce its debts.