Singapore's GIC buys Rs 1,000-cr stake in mall

In one of the biggest retail property deals in recent years, Singapore government-owned $100-billion sovereign fund GIC bought 50 per cent stake in Viviana Mall in Thane, on the outskirts of Mumbai, for over Rs 1,000 crore, said an executive aware of the development.

The deal values the mall at around Rs 2,000 crore.

While the deal is done, GIC is yet to make the payment, said the executive. Both GIC and Sheth Corp have been in talks for the past six months and recently agreed on the valuation, the executive said.

Earlier, investors such as Xander and Blackstone looked into buying the mall, but developer Sheth Corp did not agree to outright sale, a source said.

"GIC is expected to hold the property and not go for a REIT (Real Estate Investment Trust) as they have perpetual capital. Investors such as Blackstone have third-party funds which need to find an exit after some time," said the executive who did not want to be quoted.

Emails sent to Sheth Corp and GIC did not get any response.

GIC also holds 50 per cent stake in Runwal Group's R City mall in Ghatkopar area in Mumbai, which is one of the best performing malls in the country.

GIC is one of the world's biggest investors, with over $100 billion in assets in over 40 countries. It is also one of the top 10 real estate investors in the world. Last year, GIC bought 40 per cent interest in five US malls as part of deals involving $5.4 billion worth of real estate.

"Viviana is doing very good business and it is a good buy for GIC, since the mall will ensure steady rental income for it," the executive said.

On Thursday, DLF, the country's largest developer, said it had sold its shopping mall in Saket in Delhi to its subsidiary for Rs 904 crore as part of its strategy to consolidate and monetise non-core assets.

"Many global investors are looking to buy good mall properties. It will help them build portfolio in the country and help mall developers to consolidate their projects," said Susil Dungarwal, founder of Beyond Squarefeet Advisory, a mall management company.

Late last year, Blackstone, the US-based private-equity firm, acquired two retail assets of Gurgaon-based developer Alpha G in Amritsar and Ahmedabad for around Rs 800 crore.

Viviana has gross leasable area of one million square feet (sq ft) and one of the biggest malls in the country. It has brands such as Shoppers Stop, Forever 21, Zara, Marks & Spencer. It boasts a multiplex with 14 screens, 19 large and mini anchors and 150 iStores.

According to experts, it is 100 per cent occupied when most malls have a vacancy of 20 per cent. Average rents in the mall are around Rs 150 per sq ft.

Deep inroads by e-commerce and long gestation periods are increasingly forcing developers of new malls to put their projects up for sale. According to consultants, around a dozen malls are on the block in the country.

For instance, L&T Realty, an arm of construction and engineering major Larsen & Toubro, recently sold its two million sq ft project, including a mall and a hotel, in Chandigarh to the Carnival group for Rs 1,785 crore.

L&T Realty is also trying to sell its upcoming mall in Navi Mumbai's Seawoods. The company was in talks with investors such as Blackstone and GIC, sources said. "It was our strategic decision not to run malls and hotels. We are in talks with investors to sell the Seawoods mall but nothing has been finalised," Shrikant Joshi, chief executive of L&T Realty, told this newspaper recently.

"Developers ask why they need to hold an asset for long before returns accrue. The construction business has a short gestation period," said Balaji Raghavan, head of the real estate practice at the IIFL Group, said recently.

A mall or a hotel has a gestation of seven to eight years while residential real estate has a gestation of three to four years.