Trent Ltd Considers Sale Leaseback of Retail Portfolio in India to Fund Expansion

mydigitalfc.com - November 16, 2008

Trent Ltd, the fashion retailer headed by Noel Naval Tata, is considering sale of some of its prime properties to raise cash for expansion. Because the retail business needs physical space, Trent will take the properties back on lease.

Senior Trent officials told Financial Chronicle that, at current realty prices, up to Rs 700 crore ($9 Billion) could be raised by selling its properties across India, the combined space of which is almost 300,000 sq ft.

The properties include an office building in Mumbai’s suburban business district of Bandra Kurla complex, Spencer’s Plaza in Chennai and a property each in Delhi and Ahmedabad.

“We could enter into a sale and leaseback agreement, thus freeing up a considerable amount of cash for our expansion without having to raise fresh equity through a rights issue,” a top Trent official said.

The money along with internal accruals is expected to help Trent fund its Rs 2,000 crore investment in the Star India Bazaar hypermarket chain and Westside retail stores. The company also needs money to expand its Landmark book and music stores and for its new value-retail format and investments in setting up or expanding its upmarket Sisley, Topman and Topshop retail stores.

Among listed retailers in India, Trent has the highest gross margins in terms of percentages of sales and per sq ft of space used, according to a recent study by the brokerage, CLSA. Sphere: Related Content