The total value of CapitaLand's stakes being acquired by Prestige Retail Ventures Ltd (PRVL) and PEPL is pegged at Rs 342.5 crore
Realty firm Prestige Estates Projects Ltd (PEPL) is on a buying spree.
The BSE-listed company, which is part of the Prestige Group, is acquiring equity stakes held by Singapore-listed CapitaLand Ltd in six mall assets and a property management firm – CapitaLand Retail Prestige Mall Management Pvt Ltd (CRPMM) – in India.
The total value of CapitaLand's stakes being acquired by PEPL and its subsidiary Prestige Retail Ventures Ltd (PRVL) is pegged at Rs 342.5 crore. The acquisition is expected to be completed by March 31, 2018.
Irfan Razack, chairman and managing director, Prestige Group, said, “This accretive acquisition in various malls located in key growth markets is a logical and necessary step in the expansion of our earnings and strengthening of our annuity portfolio. It will also allow us to further leverage India’s consumption and urbanisation trends. Our long-term strategy to create value is to diversify our revenue streams, strengthen annuity base and selectively deploy capital to where its value is high.”
The acquisition, according to Prestige, will boost its annuity portfolio with an estimated incremental rental income of Rs 75 crore per annum. In addition, the acquisition includes a 143-keys operating Oakwood Serviced Residences at Whitefield in Bengaluru with a revenue of around Rs 19 crore and a residential project with a potential developable area of 0.6 million square feet (sq ft) at Kochi.
Venkat K Narayana, chief executive officer, Prestige Group, said, this move fits well with the company's strategy of expanding rental income base. “Our current estimated exit rental income for FY18 is around Rs 700 crore, annualised. With this transaction, it will grow by another Rs 75 crore annually. The portfolio under acquisition includes five ready and operating retail malls in Bengaluru, Hyderabad, Mangaluru, Mysuru and Udaipur; a mall management company; operating Oakwood Serviced Residences in Bengaluru and under construction properties in Kochi.”
Interestingly, just last week, the Bengaluru-headquartered realtor said that it will be acquiring 66.6% stake held by private equity investor (Red Fort Capital – 33.3%) and landowners (33.3%) in group company Prestige Projects Pvt Ltd (PPPL). The transaction value for this deal is being pegged at Rs 324 crore.
In a statement to the bourses, PEPL said that its management sub-committee has approved the acquisition of stakes held by CapitaLand in entities engaged in the business of retails malls.
Accordingly, PEPL will be acquiring 49% in Prestige Mysore Retail Ventures Pvt Ltd, thereby taking its shareholding to 100% in the company that owns Forum Centre City Mall, Mysore.
Acquisition of 49% in Prestige Mangalore Retail Ventures Pvt Ltd will take PEPL's stake to 100% in the company that owns Forum Fiza Mall in Mangalore. The realtor will also increase stake from earlier 50% to 100% post the transaction in Prestige Garden Constructions Pvt Ltd that owns Forum Neighbourhood Mall and Oakwood Serviced Residences, Bengaluru.
CapitaLand's 24.5% stake will be acquired by PEPL in Babji Realtors Pvt Ltd that owns Forum Sujana Mall in Hyderabad with a leasable area of around 0.81 million sq ft and annualised rental income of approximately Rs 77 crore. Accordingly, PEPL's ownership in the company will increase to 49% and the balance 51% stake is being held by landowners.
Thomsun Realtors Pvt Ltd (TRPL), which has a retail mall (with leasable area of around 0.68 million sq ft) and residential apartments under various stages of construction/approval in Kochi, will be allotting 3,144,900 equity shares representing 37% of its paid-up capital to PRVL, a wholly owned subsidiary of PEPL.
Additionally, PRVL is acquiring 100% equity shares and 6,589,990 CCDs held by TRPL's joint venture partner CMIDF Cochin Mall (Singapore) Pte Ltd -- CapitaLand Malls India Development Fund (CMIDF). Post the two deals, PRVL will have 50% equity stake in Thomsun, which is estimated to have annualised rental income of around Rs 73 crore from the mall in addition to income from residential development.
The last (of the six) transaction involves 100% stake in Flicker Projects Pvt Ltd held by CMIDF Udaipur Mall (Singapore) Pte Ltd (99.9999%) and another 0.0001% held by Capitaretail India Development Fund Mauritius Investments (Singapore) Pte Ltd.
CapitaLand will also be selling its 50% equity interest in CapitaLand Retail Prestige Mall Management Pvt Ltd (CRPMM), which is the property manager of the properties located in Bengaluru, Mangalore and Hyderabad to PEPL.
According to CapitaLand, the aggregate consideration of Rs 342.57 crore (approximately Singapore dollar 71.5 million), which will be fully satisfied in cash, was negotiated on a willing-buyer and willing-seller basis based on the aggregated net asset value of the special purpose vehicles (SPVs) and CRPMM.
“Based on CapitaLand’s effective equity interest in the SPVs and CRPMM, CapitaLand’s effective share of the aggregate consideration is Rs 156.5 crore (approximately Singapore dollar 32.7 million). Upon completion, the SPVs and CRPMM will cease to be subsidiaries or associates of CapitaLand,” the company said in a statement.
RETAIL THERAPY
- The acquisition will boost its annuity portfolio with an estimated incremental rental income of Rs 75 crore per annum
- Last week, the realtor said that it will be acquiring 66.6% stake held by private equity investor (Red Fort Capital – 33.3%) and landowners (33.3%) in group firm PPPL
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