The Phoenix Mills Limited (NSE: PHOENIXLTD) Q4 2025 Earnings Call dated May. 01, 2025
Corporate Participants:
Unidentified Speaker
Shishir Shrivastava — Managing Director
Kailash Gupta — Chief Financial Officer
Varun Parwal — Group President, Strategy, Audit and Head – Corporate Finance
Kailash B. Gupta — Chief Financial Officer
Shishir Ashok Shrivastava — Managing Director
Shishir Shrivastava — Managing Director
Shishir Shrivastava — Joint Managing Director
Kailash Gupta — Group Chief Financial Officer
Anuraag Srivastava — Chief Financial Officer
Analysts:
Unidentified Participant
Varun Parwal — Group President – Strategy & Corporate Finance
Puneet Gulati — Analyst
Saksham Mongia — Analyst
Varun Thakkar — Analyst
Parikshit Kandpal — Analyst
Murtuza Arsiwalla — Analyst
Parvez Qazi — Analyst
Presentation:
operator
Ladies and Gentlemen, good day and welcome to the Q4 in FY25 results conference call of the Phoenix Mills Limited. As a reminder, all participant line will be in listen only mode and there will be an opportunity for you to ask question after the presentation concludes. Management of the company is being represented by Mr. Shishi Srivastava, Managing Director, Mr. Kailash Gupta Group Chief Financial Officer and Mr. Varun Parwal Group President. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchtone phone. Please note that this conference is being recorded at this time. I would like to hand the conference over to Mr. Shishi Srivastava. Thank you and over to you sir.
Shishir Shrivastava — Managing Director
Good evening everyone. We welcome you all to discuss the operating and financial performance for the fourth quarter and full year ended March 2025. FY25 was a strong year across our core businesses of retail offices and hotels which together delivered revenue of 3,507 crore up 16% year on year and EBITDA of 2,111 crore. This performance reflects the continued strength and cash generating capacity of our core portfolio. Residential sales moderated compared to the previous year and as a result consolidated revenue from operations was down 4% year on year to rupees 3814 crore and EBITDA was flat at rupees 21.
61 crore compared to FY24. Retailer sales across our malls reached 13750 crore which is a 21% increase over FY24. This impressive growth was driven by the ramp up of our new malls, particularly Phoenix Mall of the Millennium and Phoenix Mall of Asia, both of which saw strong improvements in trading, occupancy and consumption. Palladium Ahmedabad also stood out with a 65% increase in consumption. Reflecting this momentum in consumption, retail income for FY25 rose 18% to rupees 1,951 crore and EBITDA grew by 20% to over 2,000 crores for the year. We also made substantial progress in our commercial office portfolio with our offices Phoenix Asia Towers in Bangalore and Tower 3 of Millennium Towers at Pune receiving occupation certificates between January and April of this year and pre leasing pipelines building up strongly across Pune, Bangalore and Chennai.
We are excited about the high quality future ready office products being developed which are now attracting interest from reputed domestic and global occupiers for their regional headquarters. Our hotel portfolio delivered a strong performance with EBITDA up at 11% and the Saint Regis Mumbai crossed 500 crore in revenue for the first time in FY25, the strong financial performance of our core annuity portfolio has translated to strong operating cash flows of nearly 2,100 crore. These cash flows have been prudently deployed into strategic land acquisitions across Coimbatore, Chandigarh and Bengaluru and ongoing construction across several projects. Pan India densification across our existing assets continues to be an important value creation strategy for us.
We are forging ahead at Phoenix Market City Bengaluru with the Grand Hyatt expansion of the retail plus addition of approximately 1.2 million square feet of offices. Continuing with this theme, we have secured additional development potential at Lower Parel during the quarter. We have secured FSI of approximately 136,000 square meters for a premium payment of approximately 586 crore during quarter four. Varun, may I request you to take this forward?
Varun Parwal — Group President – Strategy & Corporate Finance
Sure, Shashar. While Shashar has taken you through the annual performance, I like to focus on quarter four and share some highlights from our detailed.
Shishir Shrivastava — Managing Director
Sorry Varun. Sorry Prince, can you just take forward the discussion on the FSI for a moment?
Varun Parwal — Group President – Strategy & Corporate Finance
Sure, sure. So, as Shishan mentioned, we have secured additional FSI of approximate 336,000 square meters at our road Parade development for a premium payment of approximate 3 rupees 586 crores during quarter 4. We have funded this through internal accruals and available liquidity on our balance sheet. Development planning for the additional FSI is currently underway and we will share further updates once the asset mix is finalized and as we progress towards securing the requisite government permissions. Let me also take this forward and share highlights on our quarter four performance and some highlights specifically from our retail business including consumption trends, leasing updates and how we are shaping the portfolio for future growth.
During quarter four, our retail portfolio recorded consumption of Rupees 3248 crores reflecting a 15% year on year growth. Importantly, even excluding the newly launched more in FY24 like for like, consumption growth across the portfolio stood in excess of 8%, underscoring the sustained strength of our discretionary retail ecosystem. Retail income for the quarter was 482 crores which is up 8% year on year, while EBITDA stood at about 499 crores reflecting 11% growth. We have received a few questions regarding the gap between our consumption growth and rental growth in quarter four. This gap, in my view, is largely attributable to the ramp up phase of our newly launched moss, particularly Phoenix Mall of the Millennium and Phoenix Mall of Asia where consumption is scaling up sharply.
Now typically our lease structure typically provides for the higher or fixed rent or revenue share offering the on site protection. From day one. However, renter income begins to reflect the upside only once store level sales exceed the minimum guarantee threshold, at which point revenue share component also kicks in. As more stores mature and scale up in these malls, we expect this to translate into stronger rental growth over the coming quarters as well. Additionally, at Phoenix Palladium we are also in the process of revamping part of the Courtyard retail zone which led to the temporary shutdown of about 100,000 square feet of leaseable area in quarter four.
This zone historically has contributed about 200 crores in annual consumption and about 40 crores in rental revenues. The impact attributable to the shutdown of this store during quarter four was approximately 40 crores on consumption, about 7 crores of rental income. Moving on to Within Phoenix Palladium, one of the highlights of the quarter was the strong performance of the west zone at Phoenix Palladium which we launched in late 2024 with the launch of the biggest Uniqlo store in South Mumbai and the addition of new age anchors such as Lifestyle. For quarter four, a remarkable standout moment was the launch of Barushka’s first store in India which incidentally also achieved the highest single day sales globally for this brand on opening day.
We also welcome flagship stores across categories including Nyka Luxe, Tira, Gap, Levise, sealeo, Navyasa, Masaba, etc. And we are also set to further enhance this zone with the upcoming launch of our Gourmet Village concept which is a two level curated FNB and entertainment experience. We are also actively executing our premiumization and repositioning strategy across Phoenix Market City centers in Mumbai, Pune, Chennai and Bangalore. At Phoenix Market City Bangalore, trading occupancy declined in quarter four due to the planned closure of hypermarket spike spanning about 65,000 square feet in chargeable area. Further, about 30,000 square feet of the mall also underwent fit outs for new brands.
Both of these plan changes have in aggregate resulted in a 10% occupancy drop in Bangalore, but they also enable us to create a space for a better tenant mix going forward. Further, at Phoenix Market City Pune we saw a 2% dip in occupancy. This was following the planned exit of couple of anchor stores in the home furnishing and fashion category along with the plan churn of a few restaurants. Also during the quarter at Phoenix Market City Mumbai we have about 5% of the reizable area which is currently undergoing renovation and densification and it’s part of an ongoing brand churn for the repositioning effort.
All our Phoenix Market City malls are being revamped deliberately to improve brand mix, shopper experience and long term renter profile. While this has resulted in short term dips in trading occupancy, we expect these interventions to unlock meaningful consumption and renter upside over the next 12 to 18 months. Let me also give you a quick update on April 25th and our outlook for FY26. April is typically a lean month, but we have continued to see strong momentum in retail sales with retailer sales expected to cross 1130 crores for this month. This reflects a 14% year on year growth and to our minds it confirms the depth and consistency of consumer demand across our portfolio.
Looking ahead to FY26, a key focus will be on strategic leasing and brand elevation. Across our portfolio we are prioritizing rightsizing relocations and churns aimed at bringing in new age anchors while also creating space for premium categories across jewelry, watches, cosmetics and accessories as well as new fine dining experiences. Overall, we remain confident of delivering strong double digit growth across our retail portfolio in FY26 underpinned by sustained demand, proactive planning and the continuing evolution of our brand and experience proposition. Moving on to our commercial offices, I am pleased to share that our under construction office assets have also made minimal progress in FY25.
For the year ended March 25, income from our operational offices in Mumbai and Pune stood at 210 crores up 10% year on year and EBITDA grew 19% year on year 231 crores. Our office strategy is built on three pillars, the first pillar being strong regional leasing teams with deep tenant relationships, the second pillar being product designed at product prioritizes collaboration, wellness and sustainability and the third pillar being differentiated experiences from arrival areas to integrated lifestyle offerings through our retail ecosystem. Millennium Towers, our prime office space In Pune has three towers in total aggregating to 1.3 million square feet of chargeable area.
As Shishin mentioned earlier in the call, we have received the aquasian certificate for one of the towers and occupational certificates for the remaining two towers are expected later in 2025. Pre leasing activity is underway with an active pipeline of over 500,000 square feet. In discussions at this moment, Phoenix Asia Towers in Bangalore also received occupation certificate for 800,000 square feet of chargeable area and we are seeing very encouraging leasing discussions here as well with a significant pipeline. Our next major Delivery Plan for 2025 is one National park in Chennai aggregate into chargeable area of 600,000 square feet.
Between Bangalore and Chennai we have pre leasing conversations ongoing for almost 800,000 square feet when world class creative offices offering features that seamlessly amalgamate productivity. With lifestyle now in place and institutional leasing efforts gaining momentum, we are confident of a stronger leasing outcome in FY26 moving on to our Quota portfolio. The quota portfolio has delivered a strong performance once again this year with income rising to 580 crores up 6% year on year and EBITDA growing by 11% to 166 crores reflecting an overall healthy margin of 40. The Saint Regis Mumbai continues to set the benchmark for experience and luxury in Lower Parade crossing 500 crores in income to reach 523 crores overall in revenue.
This was driven by a 13% increase in revenue per available room and an impressive occupancy rate of 86% up 3 percentage points over FY24. Courtyard by Marriott Agra had also a good year with EBITDA coming in at about 18 crores and a margin of about 32%. I would now like to invite Kailash to take you through the rest of the highlights.
Kailash Gupta — Chief Financial Officer
Thank you Varun. Let me start with the residential segment coming to Regi segment. So grosses during the year was rupees 212 crore with the collections of around 290 odd crore. So more or less same. And in Q4 we have recognized the revenue of 96 crore. This is primarily coming from one Bangalore west and Kesapur which are ready towers available now and the average realization was around 26,000. Very strong reflection, sustained demand for premium product. You know this is something which is proved by this year’s number and realization. Especially we continue to vouch the timing and approach for future residential launches including Tower 8 and 9 at One Bangalore west and our Alipur project in Kolkata.
And both of these projects are scheduled to launch in during the FY26 maybe in the Q3, Q2 and Q3, you know around that time. Quick recap on the CONSO and the standalone numbers. On the financial performance side, revenue from operations across our core businesses which is retail, office and hotel was at rupees 3507 crore up by 16% versus 24. EBITDA also reflects a similar growth and stood at 2111 crore. At the group level revenue from operations was at rupees 3814 crore down by 4% and EBITDA at 21,61 crore which is flat as compared to the FY24 consolidated net profit for FY25 was at rupees 1302 crore down by around 2%.
However, after adjusting for share of associates and minority interest, profit after tax for Finix mill came at rupees 984 crore rupees which was down by 24 around 10%. On a cash flow CAPEX side cash flow remain strong at 2084 crore rupees from the operations during this year our aggregate capex in FY25 was around 2,600 crore. Out of this, around 1600 crore has been invested in the Greenland parcels namely Coimbatore, Chandigarh and the Bangalore. The Bitterland and the FSI which we have bought recently in the Lower Parel area and around 1000 crore we have incurred toward the construction at various places across the country and to densify the, you know the our growth in the existing assets.
Importantly, despite these deployments, gross debt at the group level is remain at the same level as compared to the last year. So we earned 4000 for 100 crore lower than FY20 levels which is pre Covid level. So we are still fully in control in terms of debt and our net debt to EBITDA ratio is around 1.2 times I think one of the strongest in the industry. We have, you know we are, we are putting a lot of offers to reduce the cost of the debt which has come down from 9.2% to 8.5% in last few years.
Overall we have continued to maintain a prudent balance sheet and a disciplined capital deployment which gives us a significant handroom to continue investing in high quality assets while maintaining financial flexibility. Let me take you toward the, you know some of the highlights for FINCS Vision 2030. Over the past two years we have secured key land parcels and commenced construction activities across our multiple sites laying a strong foundation and visibility for our portfolio additions over the next five years. I’ll take you slightly in the past. So our first wave of expansion came between 2011 and 202013 when we launched the Phoenix Market City malls in four cities.
Then the next wave started in 2020-2025 where we have launched the five new malls again. These malls are now, you know able to see the, you know strong consumption across and also establish the premiumness of our brand. We are also expanding retail at Phoenix Palladium which led to retail leasable area grown from 6 million to 11.5 million. So this is what the current situation in terms of the retail space and in the next today with new Retail mixed use development underway. Kolkata, Surat, Coimbatore, Chandigarh and Thane as well as the further expansion at Phoenix, Palladium, Lower Parade, Mumbai and Bangalore.
We are looking to add around 7 million square feet of leasable area to our operational retail portfolio by 2030. So this will take us from 11.5 million to around over 18 million square feet in the retail side. In parallel we are also exploring opportunities to integrate complementary assets class such as offices, residential and hotels within some of our core retail sites to further densify our developments. Our focus remains consistent to build a high quality destination and offer shopping experience, work environment, residential and venues for leisure backed by the strong governance through design and disciplined capital allocation. This brings me to the end of Q4 and FY updates from the management side. We can now open the floor for the question and answers.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch tone telephone. If you wish to remove yourself from the question queue, you may press star and two participants are requested to use handsip while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Puneet from hsbc. Please go ahead.
Puneet Gulati
Yeah, thank you so much and some decent performance. My first question is on the multiple interventions that you’re doing on your mall portfolio. How long do you should we think the impact to last for those and what kind of capex will that entail?
Varun Parwal
Hi Puneet Varun, this side. When you are asking about the impact are you so you know, are you asking about the time it takes to reopen and reopen the new spaces?
Puneet Gulati
Yeah, so. Yeah, correct. So some spaces are gone. For example in, in High Street Phoenix, Bangalore also you alluded, you know, some stabilization, Pune as well, some I think change in occupancy is what you indicated. So how long will that reject exercise take before we start seeing again, you know, decent growth there?
Varun Parwal
Okay, so I would take the, I would take that question, Puneet. I think in terms of some of these spaces coming back, Bangalore and Pune, you will see the spaces coming back with new formats and new brands within the next six to nine months. Some of them are already actively under fit out and some are kept ready and we are just finalizing the lease agreements for new tenants to move in and commence their fit out at the same time when you know, when we are talking about Bangalore, we are also adding and operating, operationalizing the third floor in Bangalore during this Year second half of this year which is new retail area of about 170,000 square feet which will house an exciting mix of FNB and some new age anchors, you know, opening their first time stores within our mall portfolio and that will also enhance the overall area.
And together with the planned churn and revamp that we have, I think FY27 should prove to be a very strong year for Bangalore in terms of consumption both on account of new brands as well as additional area. In Phoenix market city Pune at this point we are not adding any new area but in Phoenix market city Mumbai for example we are adding about 50,000 square feet of new area which again is being added within the current, you know, development of the mall. So the time to make it operational is very quick and you should see the impact of it, you know, by the end of this financial year.
Now when we come to Palladium Mumbai there is the new June that we have added which is rise 2 which is about 250,000 square feet and which should become fully operational by June of of this year. Currently the retail stores are operational which are on the ground first and the second floor and the FNB and entertainment floors are under fit outs which should, you know, you would see a staggered opening between now and you know, June July for the various, you know, FNB villages and entertainment destination there and the OTR retail which is undergoing, you know, revamp. That together with what we are doing in Rise 1 in terms of retail and revamp of the lifestyle block, I think we were in aggregate at about 450,000 square feet of new retail area.
Puneet Gulati
Okay.
Varun Parwal
Again I don’t want to put a very, you know, we would give more updates on it as in the coming quarters but I think you should see the new retail pay is coming through in the next two years. So eight to nine quarters from now.
Puneet Gulati
So. So you said 100,000 square feet down and plus 450 or is it 450 in addition to the thousand which has come back.
Varun Parwal
So rise one punit is about 200,000 square feet as we have disclosed previously.
Puneet Gulati
Yeah.
Varun Parwal
And between the revamp of Kotia retail and lifestyle we were at about another 250,000 square feet. So it is in aggregate you would have another 350,000 square feet of additional retail area in Phoenix Palladium.
Puneet Gulati
Understood that’s, that’s very helpful.
Varun Parwal
And I, I would just add that new area as well as new age brands actually drive a significant upside in training densities and consumption profiles across our moss and we are already seeing that in, you know, with the addition of these new anchors in Rise 2 in the. Sorry in invest zone at Phoenix palladium.
Puneet Gulati
When does Rise 1 come with this458,000 area timeline for that?
Varun Parwal
Only two years from now. Okay, two years.
Puneet Gulati
Great. That’s very helpful. Secondly also if you can comment on, you know, Citadel and you know, Palladium Ahmedabad which have you know, done some bit of tenure and you know, have they achieved peak there in terms of near term trading density or is there a significant initiative being taken out to you know, further push up the momentum.
Varun Parwal
So I think, I think Paragri Ahmedabad has done extremely well and the ramp up has been quite exciting to see in Palladium and above. And during the coming year we in fact expect occupancies to further increase from the current 95%. You know, the entire area is leased up now and we have also, you know, given space to some exciting new brands. So in the four year impact, I think you should continue to see double digit growth in Palladium Ahmedabad. It’s Palladium Ahmedabad has established itself as a new modern premium destination for the city. And with our brand meds and marketing programs, I think this should perform quite well in the coming year as well.
Indoor as well. While the growth has been a bit muted during this year, it has grown, it has grown in double digits and you know, but we would have expected, expected the growth to be much stronger. But I think there are some very exciting infrastructure developments in Indore with the authorities constructing multiple highways on all sides of the mall. There is a bit of a constraint in access to the mall at this point in time. But with the highway activities scheduled to be completed in the next 12 months, we believe that access to the mall will improve multifold and we should see very strong growth in consumption going forward in Indoor, in FY27 and beyond.
Puneet Gulati
Understood. That’s very helpful. And just last question then I’ll come back in the queue if you can also talk a bit more on the commercial office space leasing. Should we expect material leasing to happen in FY26 or does it look like more an FY27 pickup event?
Varun Parwal
I think in terms of leasing, Puneet, you will see material leasing happening in FY26. Especially I think if I add the pipeline that are under active discussions between Pune, Bangalore and Chennai. We are talking about 1.2 to 1.4 million square feet of leasing discussions going on across these three new offices and we should see significant conversions during this year.
Puneet Gulati
Understood. That’s great. Thank you so much and all the best.
Varun Parwal
Thank you.
operator
Thank you. Before we take the next question, a reminder to all the participants that you may press Star and one to ask a question. The next question is from the line of Saksham Mongai from Diamond Asia. Please go ahead.
Saksham Mongia
Thank you for the opportunity. I have two questions. First is related to with the consumer demand moderation and rising competition in real estate, are you seeing increased instances of rental negotiations or brand exits? How does this compare to the past cycles that you have seen? And what actions are you taking to predict trading density and intervenes going forward? Second, with the global supply chain disruptions and macro risk, how are you managing exposure across international brands and domestic brands? And which categories or tenants appear to be most vulnerable in the current environment? These two questions from iim.
Varun Parwal
Hi Saksham, thank you for your questions. Adding to your first question, Saksham, I would say that our malls have established a very strong and a credible performance track record over the last several years. And we just don’t create great malls. We actually create destinations where we engage deeply with tenants and consumers to drive a differentiated experience. We continue to invest in future proofing our retail destinations by adding complementary asset classes such as offices and hotels and with improving infrastructure and brand profile. We remain confident that, you know, our malls will continue to do well going forward as well.
Saksham Mongia
Thank you. And on the macro, I think on.
Varun Parwal
The macro Saksham, at any point in time we retain a very balanced approach. You know, we don’t have over exposure to any one particular category or group or and we maintain a, you know, balance between both exposure to domestic brands as well as international brands. My view is that India is luxury market of is a retail market of significant size and scale and it remains quite under penetrated. So it is a market which is going to remain in focus for all tenants, both global as well as domestic and impact if any, you know there are better place people to comment on it than us.
But impact if any, I think it’s going to be, you know, limited and restricted for a short term. We also believe that the consumer catchment across our MOD portfolio has a significantly densifying and with improving infrastructure, governments are increasing the development of vertical residential and commercial buildings which actually increase the addressable population within the very immediate, you know, catchment for us. And this is a strong story that’s playing out across cities in India. So from that perspective, you know, if the cashmere provider is strong and India macro story remains intact, we believe that consumption impact, if any would be transitory in nature.
Saksham Mongia
Understood. Thank you for the detailed answer.
operator
Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Varun Thakkar from Fire Asset Management. Please go ahead.
Varun Thakkar
Hi sir. So I just wanted to better understand the leasing agreement structures you have in your retail portfolio. I mean specifically how the revenue share component is, you know, structured and at what threshold it typically kicks in. So that will be my first question.
Murtuza Arsiwalla
Sure.
Varun Parwal
Varun. Our leasing agreements are typically structured as higher off its rent or revenue share, whichever is higher. Revenue share for any particular retail brand is at driven by the margin economics for that particular category. And it could vary across, you know, fashion categories as well as say gold or jewelry or watches which tend to be high trading categories but they have a lower margin profile. You can, you can connect offline with car and matrimah for you know, better clarity and granularity on this topic. They would be very, you know, they are in a great position to explain this to you.
Varun Thakkar
All right. I just like had a follow up. Like, I mean when does this typically kick in? You know, like is it when the total sales threshold is crossed or is like you have like escalated, you know, thresholds and like what proportion of your tenants are currently paying like you know, revenue over the minimum guarantee in your top performing models.
Varun Parwal
So Varun Typically about 70%, 70 to 75% of the tenant mix hit the revenue share threshold. Now revenue share is payable when the revenue share component crosses the fixed rent component. So from that perspective I would say that you know, about 75% of the tenants are right now hitting the revenue share threshold. Threshold at this point in time and how operationally it works is that on a monthly basis you test based on the audited sales figures given by the retailers whether revenue share is paper or not. And if any is paper over and out the footstep, then there is a separate billing that happens for that.
Varun Thakkar
Okay, thank you sir. I’ll just join back the queue.
Varun Parwal
Thank you sir. Thank you.
operator
Thank you. The next question is from the line of Parikshit Kandapal from HDFC Securities. Please go ahead.
Parikshit Kandpal
Hi team. Congratulations on a decent quarter. My first question is on consumption. So now if I see a matured mall, so Phoenix Palladium, Mumbai, consumption is almost flat. Trading the cities negative. Bengaluru again we are seeing mall consumption is again negative minus 1% for the year there has been some growth about 7%. So the malls are not even delivering inflation. So what is happening in these malls and what are we doing to improve the consumption here.
Varun Parwal
Hi Parishit Varun this side. I think in the opening remarks, Parishit, we had outlined reasons for some of the impact that we saw in Phoenix, Palladium, Bangalore and Pune. So Bangalore in particular for example had a trading occupancy dip of about 10%. And that is because strategically we have taken over the area from the hypermarket and we are creating a new anchor zone in here. Now as you are aware, hypermarket typically have a low trading density and fashion stores typically will end up doing a trading density which is three to four times higher than that of a hypermarket.
So the revamp of this space along with some other areas that are under fit out overall should help us revive and demonstrate very strong consumption and rental growths FY27 onwards. I also spoke about, you know, Bangalore getting a new area in the form of an expansion of the third floor which would add about 170,000 square feet of the leasable area which again should become operational by the end of this coming financial year. Similarly in Pune we have, you know, taken space from our home furnishing anchor as well as a fashion anchor and we have replaced a few of the older restaurants.
This is all with the perspective of revamping and elevating the brand experience and the consumer experience at these centers. They remain flagship centers and they are catering to the best city center locations in each of the cities that they are present in. So with the introduction of new age modern anchors and densification of brand stores across high performance categories such as gold jewelry, watches, cosmetics and accessories, we will remain confident of delivering strong growth from these locations going forward. Yeah, sorry if I just complete Palladium as concerned Parachit. We have also, you know, undertaken some revamp of the retail area in the courtyard section of the mall.
This includes the Hamley store, Nike and some other prominent retailers. So about 100,000 square feet of the, you know, area is currently being redeveloped and revamped into a modern new age retail destination that had a negative impact of about 40 crores directly in consumption and about 7 crores in rental income for the quarter. Annualized impact would be about 200 crores in consumption and about 40 crores in rental.
Parikshit Kandpal
The only question here is that the traditional consumption format somehow has slowed down and which is the reason you are revamping towards more new age consumption formats. But do you think you have enough to fill in? Because you’ll have to keep re engineering this and then there will be a.
Varun Parwal
Period of yes, sure.
Shishir Shrivastava
If you just look at historically any mall which has been operating any of our malls which have been operating for the last 15 years. You will see that it is very routine in our business to go through a significant change where we have, where we have enhanced these assets. Right? So the addition of retail space, taking back older formats, these malls are evolving. Customer aspirations are evolving. Varun touched upon in the opening statement about the performance of some of our fantastic stores. Bershka. Highest performance in the country, I mean globally, ever in any store since they’ve launched.
So the customer aspiration is changing. We have to keep enhancing the asset to accommodate for these newer brands which are more relevant in today’s time. So you go through these cycles and that is exactly what’s happening at Phoenix Palladium Mumbai. That’s exactly what’s happening at Bangalore and also has happened in Pune. So this is very routine in our business. And because we do these things, these, you know, because we. It’s like a. It’s like a machine, right? You have to keep. Keep making, optimizing it. And that’s exactly what we’re doing. And because we do this, we continue to see consumption growth high for a relevantly long period of time.
And then again you undergo this churn, you go this, undergo the asset enhancement again for a little while you will see for maybe a period of 2/4 you’ll see a decline or flattish consumption. Then again you will see growth. This is very routine in the small business.
Parikshit Kandpal
Got it?
Varun Parwal
Okay.
Parikshit Kandpal
My second question is on. As we are ramping up and renewing the format or the pattern of consumption towards new age, there are also increasing competition in the vicinity with at least two new malls, large malls coming in by Prestige and Oberoi. It’ll take three, four years for them to come. But so how do you read into the competition? And do you think that that micro market is enough consumption pull that will continue to grow at sustainable basis of high single digitization?
Shishir Shrivastava
So I would like to address this by. In two parts as you identify. One is the market. There is substantial demand and with the improving infrastructure in that area, I think, you know, a lot more people will come to this part of the city even from places like Bandra and beyond. Right. So it’s becoming very, very convenient. We have always taken the same approach or we’ve taken the same approach that we’ve always executed in the past. And that has worked for us where we want to have a great variety and we want to compete with size and scale.
And hence we have undertaken with significant asset enhancement at Phoenix Palladium lower what we are building there. What the kind of brands that are likely to come there are going to be one of a kind and we hope to be in pole position with all of these actions that we’re taking in that market.
Parikshit Kandpal
Okay. And just lastly on the Thani assets. So what are the plans now? I think you’ve put a slide out there, but when does the work start and when do you expect them all to become operational?
Varun Parwal
Sure. Sorry, Parachute, may I just ask you to repeat the question? What are you asking about? Thane on the.
Parikshit Kandpal
Thane. Yeah, Thane. So what do you want to do then, Thane? And when do you really break the ground on that?
Varun Parwal
So it’s going to be a retail at misused government with a retail mode in a size of about 1.2 to 1.4 million square feet. We have secured most of our approval permissions at this point in time. And in fact, you know, the demolition of the old factory structures is currently underway and we will start preparing grounds for, you know, commencing excavation very soon. In terms of operations at this point in time, I would say that, you know, a launch should be somewhere towards end of FY29 keeping, you know, enough safeguards in terms of both approval timelines and construction timelines.
operator
Thank you. Sorry to interrupt, sir, I would request you to rejoin the queue for your follow up question. Ladies and gentlemen, please limit your question to two per participant. If you have a follow up question, I would request you to rejoin the queue. The next question is from the line of Martiza from Kotak securities. Please go ahead.
Murtuza Arsiwalla
Yeah. Hi Varun. Hi Sushir. Just a question on the commercial piece. You know, in the more near term you’ve got a lot of commercial real estate which is getting its oc. You talked about the leasing pipeline, but is there any agreements which have been signed which could start contributing to rentals this year or, you know, a lot of that pipeline still needs to convert to formalized agreements and so the rental contribution from the commercial piece would only start more FY27. This is a clarification on that.
Varun Parwal
Sure. If I may take that question, Mutuza, maybe I should have mentioned it in my remarks. We have done leasing of about 120,000 square feet and those spaces are currently under fit outs with a couple of the smaller spaces commencing their rent payments in quarter four. It’s a smaller contribution at this point in time, but from second half of this year you should start seeing a more meaningful contribution both from the area that we have released as well as the new discussions that are underway. Right Now.
Murtuza Arsiwalla
Okay. Okay. So it’s going to be more towards the end of the fiscal. In terms of the office spaces the incremental office space is contributing to rentals and a full year benefit should be more FY27. Is that fair?
Varun Parwal
Yes, I think considering the both the agreement timelines and the fit out timelines I would presume that you should see a more meaningful contribution from quarter three of this financial year. Okay.
Shishir Shrivastava
Okay.
Murtuza Arsiwalla
Thank you.
operator
Thank you. The next question is from the line of Parve Kasi from Novama Group. Please go ahead.
Parvez Qazi
Good afternoon Varun and Shishar. So two questions. First would be great to get some more details on the additional FSI purchase that we have done in Lower Parade. And second, I mean excluding this FSI purchase if we total up all your other plans over the next five years I mean by FY30 what is the total capex which will need to develop all those assets? Thank you.
Varun Parwal
Sure. What? On this side I will take the question on the FSIR Lower Parade and then I will hand it over to Kailash to comment on the CAPEX part. I think overall as we mentioned we have acquired about FF development rights of about 136,000 square meters which is at a consideration of about 585 crores at this point in time. We are currently in our design development stage and finalizing the asset mix that we intend to add to the Lower Parade development. We are still in early stages so as we progress on our designs and plans we will share more details in the coming quarters.
I would now ask Kailash to come in and comment on the K Ben’s part.
Kailash Gupta
As you have seen in the past for last three years on an we are doing around 1000 crore to 1200 crore rupees annual capex. I think this, this will be maintained even for next five years for sure. I mean of course this will, I mean any other acquisition or a bigger FSI purchase will be over and above that. But on a construction side the number should be restricted along 1200 crore every year for next 5 years.
Parvez Qazi
Thanks and all the rest.
operator
Thank you ladies and gentlemen. That was the last question for today. With that we concludes today’s conference call on behalf of Phoenix Mills Ltd. That concludes this conference. Thank you for joining us and you may now disconnect your lines.