Phoenix renegotiates lease rentals with anchor tenants

Phoenix Mills Ltd (PML), a Mumbai-based retail centre developer, has achieved a significant success in renegotiating lease rental rates with its anchor tenants at High Street Phoenix (HSP) in Lower Parel.

Close to 150,000 square feet of retail space occupied by brands including Lifestyle, Big Bazaar and Pantaloons has come up for renewal this year. While the new rates for Lifestyle have been firmed up, negotiations for Pantaloons are expected to be completed by November.

Shishir Shrivastava, group CEO and joint managing director, PML, said in an analyst call, “This time the arrangement with Lifestyle for 50,000 sq ft is `91 per square foot (psf), or 7% of revenue share, whichever is higher.”

Big Bazaar has surrendered 16,000 sq ft from the 50,000 sq ft it was occupying at HSP. This surrendered area has now been converted into retail space branded as Grand Galeria Connect and is currently been leased out at an average price of `200- 250 psf.

The balance area with Big Bazaar has also seen an increase in the leasable area owing to loading (re-zoning and re-planning of retail space) being done by the asset owner. With this, the Big Bazaar area has effectively become 39,000 sq ft.

Also, the effective rate for the area occupied by Big Bazaar and GG Connect has now risen to average `134 psf from `68 psf earlier.
About 90% of the GG Connect area has been leased out and stores would start operations by September.

PML said it is identifying the best possible options for the third major anchor client, Pantaloons, whose contract would come up for renegotiations in November.

On the residential side, PML has already launched first phase of residential development in Chennai and is actively working on a
land parcel in Bangalore West.