Nexus Select Trust REIT plans to significantly expand its retail portfolio to 18–20 million sq ft across 30–35 malls by FY30, up from 10.6 million sq ft across 19 malls. The REIT has completed two acquisitions in the past six months and expects two more by the end of FY26, with a healthy pipeline for FY27–28.
The expansion will require capital expenditure of ₹5,000–6,000 crore over the next five to six years, which will be funded through a mix of debt and equity, aided by softer interest rates. The REIT’s portfolio metrics remain robust, with 98% occupancy, ~20% re-leasing spreads, contracted rent escalations of 15% every three years, and annual rental income growth of 9–10%, driven by revenue share and ~2% mark-to-market gains as leases roll over. Tier-II cities account for 45–50% of the portfolio, offering strong growth potential due to land availability and catchment advantages.
India currently has around 110 operational Grade-A malls, far fewer than major global cities, reflecting the dominance of the unorganised retail sector, which still accounts for 85–90% of distribution. Organised retail—both offline and online—is expected to grow steadily, with 4–5 million sq ft of new Grade-A mall space being developed annually. Projects stalled during the COVID-19 pandemic have largely been completed, and the next construction cycle is expected to add institutional-quality retail assets, supporting the growth of retail-focused REITs.
Nexus Select Trust’s expansion strategy focuses on scaling retail assets while maintaining high occupancy and rental growth. Re-leasing spreads are currently around 20%, and rents include a guaranteed escalation of 15% every three years, along with a revenue-share component, resulting in annual rental growth of approximately 7%. Combined with operational efficiencies and mark-to-market gains on expiring leases, total rental income is growing at 9–10% per year.
The REIT has distributed ₹17 per unit since its listing two years ago at ₹100 per unit, with the current price at around ₹150, delivering an internal rate of return (IRR) of roughly 28% for investors. Current distribution yields are 6–7%, with expectations of around 10% annual growth in distributions, supported by robust rental growth.
The REIT maintains a conservative balance sheet, with a current loan-to-value ratio of 18%, planned to rise to 28–30% as new acquisitions are added. With high occupancy, strong demand for retail space, and active tenant optimisation, Nexus Select Trust expects rental growth to continue steadily over the next five years.
India’s organised retail sector is entering a period of sustained growth, underpinned by rising consumption, increasing formalisation, and investor interest. Nexus Select Trust aims to capitalise on this trend by expanding its retail portfolio responsibly while delivering consistent yields and enhanced shopping experiences for both retailers and consumers.
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