Blackstone a deal away from becoming No 2 mall operator

Buys 2 malls in Indore for Rs 1,200 cr; in final leg of talks to acquire project in Chandigarh

US-based private equity giant Blackstone has bought two malls in Indore from mall developer Manish Kalani and his partner in a deal estimated at Rs 1,200 crore, sources in the know said. The malls — Treasure Island and Treasure Island Next —have a total area of 700,000 square feet (sq ft). 

Blackstone is also in the final leg of talks to acquire a commercial project of Carnival Group in Chandigarh for about Rs 2,200 crore. The property measures 1.8 million sq ft, which includes a 1 million sq ft mall, a Hyatt Hotel and some office space. If this deal also goes through, Blackstone will become number two mall owner/operator in the country. 

Currently, Phoenix Mills is the biggest mall owner in the country with a portfolio of 6 million sq ft, followed by Prestige Estates of Bengaluru, which owns 4.5 million sq ft of mall space. “Kalani who built malls in tier-II and tier-III towns faced financial difficulties and could not pay his dues. That is the reason he is selling his assets,” said a source. 

While Kalani could not be contacted for comment, a spokesperson for Blackstone said, “As a matter of policy, Blackstone does not comment on media or market speculations.” Early this year, Phoenix Mills bought an under-construction mall owned by the Kalani family in Indore’s MR 10 area for Rs 235 crore. The mall was sold in an auction conducted by JM Financial Asset Reconstruction Company after the Kalani family failed to pay its dues. Phoenix Mills has formed a joint venture with Canadian pension fund CPPIB for buying and developing malls.

Blackstone, which currently has mall space measuring 3 million sq ft, has steadily built its mall portfolio over the past one-and-a-half years. It has set up a separate company, Nexus Malls headed by Vikram Garg, to operate these malls. 

The company is also expected to go for a separate real estate investment trust (REIT) for its malls and list it.  In 2015, Blackstone acquired AlphaOne malls in Ahmedabad and Amritsar for Rs 800 crore. It has revamped and rebranded the malls since then. Last year, Blackstone bought a 1 million sq ft mall in the Seawoods area in Mumbai from L&T Realty for Rs 1,400 crore. Recently, it also bought a 50 per cent stake in West End mall in Pune. According to sources, the company’s mall portfolio is valued at Rs 1,800 crore.

Blackstone has been investing in the country since 2005 and has invested about $6.7 billion in private equity and real estate. Private equity deals in mall space have been on the rise in recent months. Recently, Virtuous Retail South Asia (VRSA), a joint venture between Xander and Dutch pension fund APG, bought a 2 million sq ft mall in Chandigarh, called North Country Mall, from Sun Apollo -Gumberg for Rs 700 crore, beating contenders like The Phoenix Mills and Blackstone.