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Business News/ Companies / News/  Nexus Select Trust open to acquiring more top malls after 1,000-crore Hyderabad deal

Nexus Select Trust open to acquiring more top malls after ₹1,000-crore Hyderabad deal

CEO Dalip Sehgal said the company is keen to expand its footprint in the 14 markets in which it already operates, potentially through acquisitions.

Dalip Sehgal, executive director and CEO at Nexus Select TrustPremium
Dalip Sehgal, executive director and CEO at Nexus Select Trust

Mumbai: Nexus Select Trust, a retail real estate investment trust (REIT) backed by Blackstone, said it was open to acquiring more top-tier malls in India after announcing plans to buy three grade-A malls in Hyderabad for 1,000 crore. The three malls will be acquired from Larsen and Toubro (L&T), a person aware of the development told Mint.

Dalip Sehgal, executive director and chief executive at Nexus Select Trust, said in an interview Friday, “It is difficult to name [the malls] since the permissions have not [yet] come in. There are three malls — one million square feet in total."

He added, "The acquisition will be distribution-per-unit accretive in FY26. It is strategic from our perspective because we already have a fairly good presence in Hyderabad with Nexus Hyderabad. So for us, there is a synergy benefit in terms of being able to manage it." An accretive acquisition one that increases the acquirer's earnings per share or distribution per unit.

Also read: REITs: A failed investment avenue or the next big opportunity?

Considering the low loan-to-value or LTV of 14%, the acquisition will be fully funded by debt without any equity dilution, the company said in its earnings presentation.

“Hyderabad is a market that is growing quite rapidly. There's a very strong presence of IT firms, a lot of young people, and so on. It's a market where we believe consumption growth will be significantly higher than in other metros," Sehgal said. 

Expansion plan

He added that the company is keen to expand its footprint in the 14 markets in which it already operates, potentially through acquisitions. He also hinted at the possibility of exploring opportunities in eastern India.

Also read: Sebi wants to nurture Indian real estate's 4,000-crore baby. But why?

“Of course, there are other deals in the making. Unfortunately, we can't tell you names, locations, etc, because none of these have fructified yet. Our strategy is essentially to look at grade-A assets. There are 100-110 grade-A malls in India. These are typically owned by developers whose core business may not be running malls," he said.

The company’s portfolio includes 17 grade-A malls 14 cities, with a gross leasable area of 9.9 million square feet and more than 1,000 domestic and international brands. It also operates hotels and three office assets.

In FY24 the company leased 1.1 million square feet of space, and tenant sales grew by 13% year-on-year. Net operating income grew by 16% year-on-year to 1,600 crore.

Also read: India sees 59% surge in ghost shopping malls: Report

Nexus Select said it plans to add 1 to 1.5 million square feet of mall space every year. “At the time of the IPO we had basically said two things — that over the past seven years we've acquired roughly one-and-a-half million square feet, and that we believe can acquire and assimilate at least that much every year [going forward]. Over the next three to five years, the aim is to add that much to our portfolio. We're adding a million with Hyderabad and hopefully we will add more in this financial year," he added.

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Suneera Tandon
Suneera Tandon is a New Delhi based reporter covering consumer goods for Mint. Suneera reports on fast moving consumer goods makers, retailers as well as other consumer-facing businesses such as restaurants and malls. She is deeply interested in what consumers across urban and rural India buy, wear and eat. Suneera holds a masters degree in English Literature from the University of Delhi.
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Published: 10 May 2024, 06:02 PM IST
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