CRISIL: Mall operators’ revenues to rise as COVID-19 restrictions ease

08 August 2022, Mumbai:

Revenues of mall operators in India are expected to rise amid rising footfalls following the withdrawal of COVID-19 restrictions, projects CRISIL.

The consequent healthy improvement in cash flows and steady debt levels are also likely to improve the average debt service coverage ratio (DSCR1) to 1.3 times this fiscal from 1 time last fiscal.

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Anand Kulkarni, Director, CRISIL India Ratings says, malls have seen swifter recovery with each passing COVID-19 wave. The third wave did not materially impact the sector, as malls were not completely shut.

Major mall operators trajectory has since remained strong, with retail sales already at 120-125 percent of the pre-pandemic mark in the first quarter of this fiscal. Business traction has helped malls roll back rental waivers offered to tenants.

That, and escalations based on contractual terms will drive rental income 10 percent above the pre-pandemic level this fiscal, adds Kulkarni

Shopping Mall operators had waived off rent during the pandemic, thereby ensuring healthy occupancies at 90 percent. Additionally, the expected increase in revenue share linked to healthy retail sales has strengthened the cash flow visibility of malls.

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