US firm & Sun Apollo in talks to sell Chandigarh mall

Discussion on with Blackstone, Phoenix and Xander APG JV; owners eye Rs 700 cr from sale

In what could become the biggest retail property deal so far this year, North Country Mall, a million sq ft one in Chandigarh Tri City, Punjab, has been put on the block by its owners.

The mall is owned by a US-based global real estate developer-cum-investor, JJ Gumberg, and private equity fund Sun Apollo, now being renamed Lapis India Capital, said a source.

They are reportedly in talks with Blackstone, the world's biggest alternative asset mangaer; with Phoenix Mills, largest mall owner in the country, and Virtuous Retail South Asia, a joint venture (JV) between private equity (PE) entity Xander and Dutch pension fund APG.

The mall is valued around Rs 700 crore. The buyer will also have to take over Rs 450 crore debt in the asset.

"Currently, all players are doing due-diligence and the deal is expected to close in the next couple of months," the source said.

The mall was a 50:50 JV between Gumberg and the PE fund. They are selling to exit their investments, the source said.

"Our policy is not to comment on such inquiries," a Gumberg spokesperson said. Blackstone declined to comment. Mails to Phoenix Mills and Xander did not elicit a response.

PE deals in malls have gathered pace in the past couple of years, with their bet on the Indian consumption story, healthy rentals and success of good malls.

Early last year, Blackstone bought a mall in Navi Mumbai from L&T Realty for Rs 1,450 crore. Year before, it had bought two malls from Alpha G Corp for Rs 1,300 crore. Singaporean fund GIC bought a 50 per cent stake in the Viviana mall in Thane for Rs 350 crore.

Blackstone already owns at least 2.5 million sq ft of malls in Amritsar, Ahmedabad, Pune and Navi Mumbai. It has set up a separate company, Nexus Malls, and housed all these investments under it. Blackstone also plans to float a Real Estate Investment Trust for its malls in the future. Recently, it bought a 50 per cent stake in Pune’s West End Mall for Rs 400 crore.

Phoenix Mills managing director Atul Ruia recently said they were looking to build new malls and acquiring existing ones. Phoenix has a little over six mn sq ft of malls in the counrty.

Canadian fund manager CPPIB recently took a stake in the Bengaluru subsidiary of Phoenix, which will spearhead all its acquisitions.

Virtuous Retail South Asia, a recently established JV between Xander Funds and APG, is also looking to buy new malls, Xander founder Sid Yog said recently.

Abu Dhabi sovereign fund Adia (estimated assets of $773 billion) is in the final leg of talks with Lake Shore India Advisory, promoted by retail property veteran Ashwin Puri, and others to give a managed account to the latter to invest in malls in top Indian cities, said sources. Lake Shore is an investment manager.

Australian investor Macquarie is also looking to invest in Indian malls.

Bengaluru, Hyderabad, Delhi, Chennai, Mumbai and Pune are among the top 10 cities with highest retail sales growth forecast between 2015-2019 in the JLL Destination Retail 2016 report. India has also emerged at second position in the 2016 Global Retail Development Index by A.T Kearney.

"There is little doubt that the country is becoming an attractive destination for global retailers, with further liberalisation of the foreign direct investment policy and creation of a business-friendly environment. The growing potential of the Indian retail market is already manifested by the entry of several marquee global retailers in the past one year," property consultant JLL said in a report last year.