Blackstone picks 6 lead I-banks for India's first retail mall REIT IPO for $2.5-billion portfolio

Blackstone, the world’s largest real estate investor and India’s biggest corporate landlord, has picked 6 investment banks as lead advisors for the REIT (real estate investment trust) IPO of its retail mall portfolio in India, multiple industry sources with knowledge of the matter told Moneycontrol.

If plans fructify , it would be India’s first ever pure play retail mall REIT listing and the third domestic REIT listing by Blackstone, which also backs the Embassy REIT and the Mindspace REIT, which made their market debut’s earlier.

“ Investment banks Morgan Stanley, Kotak Mahindra Capital, BofA Securities, JP Morgan, Axis Capital and Citi have been picked by Blackstone for this transaction,” said one of the persons cited above.

A second person told Moneycontrol that the top private equity firm which is looking to raise around $500 million -$600 million  via the REIT IPO was likely to file draft papers with Sebi by the end of the month. He added that more i-banks may come on board later if required and that the IPO was likely to be launched in the first half of 2023.

Two other persons confirmed the above and told Moneycontrol that the REIT portfolio was valued at $2.5billion.

All the four persons above spoke to Moneycontrol on the condition of anonymity.

In response to an email query from Moneycontrol, Blackstone declined to comment. Bofa Securities and Citi declined to comment and Moneycontrol could not elicit an immediate comment from the other i-banks.

THE NEXUS STORY AND RETAIL RESURGENCE

Nexus Malls is the Indian retail portfolio arm of the Blackstone Group and made its entry into the Indian market In 2016. According to its website, Nexus Malls has a portfolio of close to 10 million square feet of Grade A retail space in the country across locations ranging from Indore and Chandigarh to Bengaluru and Navi Mumbai.

The firm which is the largest mall operator in the country has acquired 17 malls in 13 cities. During the pandemic, it clinched a $1.2 billion deal to acquire seven to eight ’Forum’ malls from the Prestige Group and is reportedly looking to also acquire New Delhi's premium Select Citywalk mall in a deal.

Dalip Sehgal, CEO, Nexus Malls told Fortune India in an interview dated September 6 that sales across the firm’s properties increased by 125 percent in the April-June quarter compared to the corresponding pre-Covid period of Q1FY20. "Growth is coming from both metros/large towns as well as tier two and three towns. Aspirationally, the smaller towns are no different from the larger towns. Our mall in Bhubaneswar has seen a growth of 150% over the pre-Covid period,"  Sehgal said.

Highlighting recent trends in the retail mall space, Abhishek Goenka, Founder and Partner , Aeka Advisors said “Unlike the commercial office segment which witnessed large scale consolidation leading to the emergence of a handful of big owners and operators, the retail sector has seen long awaited consolidation only over the last couple of years and there are only 3 players of some scale with one of them substantially ahead of the others. Having seen prolonged closures, the sector is now witnessing a strong rebound and with India bucking the trend on slowing retail spending, the malls are looking at the end of the tunnel finally. “

He added, “ Therefore, the timing for a mall REIT is very opportune and will establish a clear marker on the valuations resulting in further growth for the sector.”

A REIT is a company that owns and operates income-producing properties or real estate. Modelled after mutual funds, REITs pool the capital of numerous investors and generate steady income for their investors. REITs own many types of commercial real estate, ranging from office and apartment buildings to warehouses, hospitals, shopping centres and hotel.