India Ratings & Research (Ind-Ra) has assigned The Phoenix Mills (TPML) a long-term issuer rating of 'A'. The outlook is stable.
Ind-Ra has taken a standalone view of TPML while factoring into the ratings cash flow from/to its various subsidiaries. The key subsidiaries are SPVs with debt having no-recourse to the holding company, TPML. Ind-Ra believes that TPML will continue to fund some key subsidiaries at least in the next two years ending FY16 (year end March).
TPML's flagship asset High Street Phoenix Complex (HSP) is built on a 17.3 acre legacy land in a posh locality of Lower Parel in South Mumbai. HSP's occupancy levels averaged over 95% in FY14. The agency believes the mixed-use asset strategy with residential, commercial and or hospitality assets in the same premises to continue to sustain footfalls. Consumption and trading density, which have registered strong growth in recent years, continued to grow at 10%-12% yoy in 1QFY15. In FY14, total foot fall increased 9% yoy to 19.5 million and trading density grew 12% yoy to Rs 2,256.
The scarcity of large-sized land parcels in and around Lower Parel, regulatory risks involved due to changes in development rules and long development period limit competition for HSP, enabling strong pricing power. HSP has a broad based clientele with over 230 tenants including strong brand names in the retail industry. In FY14, the top 10 tenants contributed about 22% to the lease revenue.
Shares of the company declined Rs 3.6, or 0.99%, to settle at Rs 358.25. The total volume of shares traded was 2,161 at the BSE (Tuesday).