Blackstone India Mall REIT Buying Bengaluru Shopping Centre for $104M

Blackstone-backed Nexus Select Trust, India’s first retail REIT, is buying a shopping mall in the southern Indian city of Bengaluru for up to INR 8.77 billion ($104 million).

A vehicle of BSE and NSE-listed Nexus is acquiring the Vega City Mall from local developer Blue Horizon Hotels Private Limited in an all-cash deal, with the purchase also including the property’s underlying land, which is being acquired from the Raju family who founded Blue Horizon Hotels.

“With this Proposed Acquisition, Nexus Select Trust will consolidate its presence in Bengaluru and aim to benefit from embedded upsides from potential operational synergies,” Nexus’ manager said in an announcement.

The deal comes as Blackstone has made the growing wealth of India’s population a focus for its investment in Asia, with the company’s president Jonathan Gray saying of its operations on the subcontinent in an April interview that, “It’s about building companies at scale that can meet the needs of the middle class.”

11% Discount

At INR 19,361 per square foot, the acquisition price represents a 11 percent discount to the property’s independently appraised valuation of INR 9.85 billion as of 31 August. The mall generated operating revenue of INR 927 million in the fiscal year ended 31 March 2024, representing an 8.6 percent increase from the prior year.

Vega City Mall has a total leasable area of 452,975 square feet (42,083 square metres) across five basement levels, ground floor, six upper floors and a terrace level and occupies a 12,748 square metre plot.

The property on Bannerghatta Road was 95.8 percent occupied as of 31 August by a roster of 138 tenants including Adidas, Miniso, H&M, and Levi’s.

The proposed acquisition was approved by the trust’s board of directors on 16 October and is expected to close by Tuesday, Nexus’ manager said.

Nexus, which went public in May 2023, owned 17 grade A malls across 14 Indian cities as of 30 June, with the portfolio totaling approximately 9.9 million square feet in leasable area. The trust also owns two hotel assets totaling 354 keys and three office assets with a combined gross leasable area of 1.3 million square feet.

Total consumer spending and retail sales in India are expected to grow by 5 percent and 9 percent respectively in 2024 from the prior year, according to a July report by CBRE citing projections from Oxford Economics and EMIS. Retail absorption in Bengaluru from January through 30 June grew 39 percent from the corresponding period a year ago, according to the consultancy.

“Our focus is on the rising middle class and sectors impacted by that transition,” Gray said in his April remarks. He added that, “This includes investments in shopping malls, last-mile logistics, data centres, healthcare, and financial services.”

India Consumption Targetted

The mall acquisition comes after Blackstone entities in August trimmed their stakes in Nexus from around 43 percent to 21 percent through block sales, with proceeds from the selldown totaling INR 45.5 billion ($542 million).

Blackstone-backed Nexus is growing its portfolio after the New York-based firm vowed in April this year that it would be investing $2 billion annually in India in the coming years.

That prediction came after the fund manager’s co-head of global real estate Kathleen McCarthy said in March that the firm plans to more than double its logistics portfolio in India with an eye toward a potential future public listing for its Indian warehouse holdings.

Market sources told Mingtiandi that Blackstone has entered exclusive negotiations to purchase a trio of Indian warehouses developed by Logos Property. The firm had been selected as the preferred bidder for the sheds located in southern India’s Tamil Nadu state and in Haryana, north of Delhi, after offering in excess of INR 17 billion ($202 million) for the portfolio, which spans more than 500,000 square metres (5.4 million square feet).

Last month, Blackstone’s Horizon Industrial Parks unit was selected by the Indian government last month as the lead partner to manage a portfolio of 13 of its last-mile logistics assets, with that deal coming after Horizon announced in April that it had broken ground on its second logistics park in the city of Pune, near Mumbai.

Outside of logistics, Ventive Hospitality, an Indian hotel developer, owner, and manager backed by Blackstone and local builder Panchshil Realty, is preparing to list its 2,036-key portfolio of hotels across India and the Maldives in an IPO that could raise up to INR 20 billion ($238 million).