Nexus Select Trust, India's sole listed retail REIT partnered with Blackstone, aims to double its 10 million sq ft portfolio to 20 million sq ft in 5 years, capitalizing on India's retail boom. Unlike developers, Nexus focuses on acquiring malls, boasting a low debt ratio of 14%. A successful IPO raised INR 3,200 crore in 2023, funding expansion. Their strategy involves acquiring established malls and revitalizing them, as seen with a 2021 acquisition. With India's retail sector thriving post-pandemic, Nexus' growth aligns with rising consumption and favorable market conditions, promising a modern retail experience and benefits for consumers and global brands.
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Nexus Select Trust, India's only listed retail REIT backed by US giant Blackstone, is setting ambitious goals. The company plans to double its current portfolio of nearly 10 million square feet to 20 million square feet within the next five years. This aggressive expansion strategy aims to capitalise on India's booming retail sector and position Nexus as a key player in the country's shopping mall landscape.
Unlike traditional mall developers who build from scratch, Nexus focuses on acquiring existing properties. This approach allows for faster growth and the company is confident about securing the necessary funds. According to CEO Dalip Sehgal, Nexus has a low debt ratio of around 14% and could borrow up to USD 1 billion (approximately INR 8,100 crore) to finance acquisitions. Additionally, they are open to various options, including outright property purchases and share swaps with existing owners.
Nexus has a proven track record of success. In 2021, they acquired eight retail properties totaling nearly 1 million square feet from Prestige Estates Projects. They saw significant growth after strategically refurbishing the malls, introducing new brands, and rebranding the entire southern India portfolio. Tenant sales and net operating income in these acquired malls jumped by 50% and 33% respectively, showcasing their ability to revitalise existing assets.
A successful initial public offering (IPO) in May 2023 that raised over INR 3,200 crore provided Nexus with additional funds to fuel its growth strategy. They are currently evaluating various acquisition proposals, focusing on acquiring well-established "A-grade" malls from developers who don't consider retail their core business. Sehgal believes by replicating their past success stories, they can achieve significant growth within the next five years.
Nexus' expansion plans align perfectly with India's thriving retail sector. The post-pandemic rebound has been strong, with the third quarter of 2023 seeing record tenant sales of nearly INR 3,300 crore, representing an 8% on-year growth and a 14% increase year-to-date, significantly exceeding market averages. Notably, nine out of their 17 malls achieved their highest-ever tenant sales in December 2023, with key markets like Mumbai, Bangalore, and Chennai exceeding market growth. This positive outlook on the retail industry, fuelled by increased consumption, rising institutional participation, strategic partnerships of Indian retail chains, and a supportive regulatory environment, makes Nexus' ambitious goals seem achievable.
Overall, Nexus Select Trust's expansion plans are a positive sign for India's retail sector. By acquiring and revitalising existing malls, Nexus is contributing to a more modern and vibrant retail experience for Indian consumers. This growth will benefit shoppers and global brands seeking a foothold in the booming Indian market.
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