Phoenix Mills signs term sheet with GIC for mixed-use retail platform

Mall developer The Phoenix Mills Ltd said that the listed company and few of its SPVs have signed a non-binding term sheet with GIC Private Equity (PE) for the formation of a retail-led mixed-use platform.

The assets include Phoeix Mills' Mumbai (Kurla), Pune malls and Mumbai (Kurla) offices having a total leasable area of 3.36 million sq ft (2.33 million sq ft of malls and 1.03 million sq ft of offices) that generated FY20 NOI of Rs 3,700 crore.

The indicative pre-money EV for these assets is Rs 5,600 crore to Rs 5,700 crore or an equity value of Rs 4,000 crore to Rs 4,100 crore (debt of Rs 1,600 cr as of Mar-20).

This implies a cap rate of 6.6 per cent at pre-Covid rentals which is commendable given 50 per cent waiver in FY21E mall rentals, said Adhidev Chattopadhyay of ICICI Securities.

GIC PE has the option to initially acquire an equity stake of 26 per cent in these SPVs and increase it to 35 per cent in another 12 months which implies a potential equity investment of Rs 1,000 crore to 1,300 crore.

Phoenix Mills already has a joint venture with Canada based CPPIB to invest and develop malls.