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Pune mall to become operational in Q1FY12, fit-outs in full swing
We recently visited Phoenix Mills’ (PML) Market City project at Pune (PML has
58.5% stake in the project), and expect the mall to become operational in
Q1FY12 (management had earlier guided March 2011). We observed that
majority of interiors/common area are in finishing phase and façade work is also
at an advanced stage. Currently, ~80% of the mall (~1.2 msf leasable area) is
pre-leased at ~INR 60/sf, with over 150 retailers having commenced fit-outs
including key anchor tenants such as Star Bazaar, PVR, Zara, and Westside.
Also, construction activity at the adjacent Bazaar Mall (0.3 msf of saleable area:
50% retail and 50% commercial) is at an advanced stage and is expected to
complete in CY11.
Kurla mall likely to be operational in Q2FY12, fit-outs have commenced
We also visited PML’s Market City project at Kurla, Mumbai (PML has 24.3%
stake in the project), and expect the mall to become operational in Q2FY12
(management had earlier guided Q1FY12) with ~80% of work complete. We
observed that mall interiors are in finishing stage and façade work is likely to get
over by June 2011. Currently, ~60% of the mall (~1.3 msf of leasable area) is
pre-leased. Key tenants such as Reliance Retail, Zara, and Esbeda have already
commenced fit-outs, and Lifestyle and Big Cinemas are to start fit-outs shortly.
Also, construction of the commercial office space (~0.25 msf of leasable area) is
at an advanced stage and is expected to get over in FY12.
Outlook and valuation: Attractive at current levels; reiterate ‘BUY’
With the Pune and Kurla Market City malls set to become operational H1FY12,
PML’s total operational retail area is poised to grow from 0.9 msf (High Street
Phoenix) as of March 2011 to ~3.4 msf, with PML’s economic interest at ~2 msf.
Additional positives for PML are expected rental re-negotiations at HSP for ~0.15
msf in FY12 and Shangri-La hotel becoming operational in FY12. We believe the
stock offers an attractive entry point at current levels where it trades at 30%
discount to our FY12 NAV of INR 260/share. We reiterate ‘BUY/Sector
Performer’ recommendation/rating on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Pune mall to become operational in Q1FY12, fit-outs in full swing
We recently visited Phoenix Mills’ (PML) Market City project at Pune (PML has
58.5% stake in the project), and expect the mall to become operational in
Q1FY12 (management had earlier guided March 2011). We observed that
majority of interiors/common area are in finishing phase and façade work is also
at an advanced stage. Currently, ~80% of the mall (~1.2 msf leasable area) is
pre-leased at ~INR 60/sf, with over 150 retailers having commenced fit-outs
including key anchor tenants such as Star Bazaar, PVR, Zara, and Westside.
Also, construction activity at the adjacent Bazaar Mall (0.3 msf of saleable area:
50% retail and 50% commercial) is at an advanced stage and is expected to
complete in CY11.
Kurla mall likely to be operational in Q2FY12, fit-outs have commenced
We also visited PML’s Market City project at Kurla, Mumbai (PML has 24.3%
stake in the project), and expect the mall to become operational in Q2FY12
(management had earlier guided Q1FY12) with ~80% of work complete. We
observed that mall interiors are in finishing stage and façade work is likely to get
over by June 2011. Currently, ~60% of the mall (~1.3 msf of leasable area) is
pre-leased. Key tenants such as Reliance Retail, Zara, and Esbeda have already
commenced fit-outs, and Lifestyle and Big Cinemas are to start fit-outs shortly.
Also, construction of the commercial office space (~0.25 msf of leasable area) is
at an advanced stage and is expected to get over in FY12.
Outlook and valuation: Attractive at current levels; reiterate ‘BUY’
With the Pune and Kurla Market City malls set to become operational H1FY12,
PML’s total operational retail area is poised to grow from 0.9 msf (High Street
Phoenix) as of March 2011 to ~3.4 msf, with PML’s economic interest at ~2 msf.
Additional positives for PML are expected rental re-negotiations at HSP for ~0.15
msf in FY12 and Shangri-La hotel becoming operational in FY12. We believe the
stock offers an attractive entry point at current levels where it trades at 30%
discount to our FY12 NAV of INR 260/share. We reiterate ‘BUY/Sector
Performer’ recommendation/rating on the stock.
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