The Indian real estate landscape has evolved significantly with the introduction of Real Estate Investment Trusts (REITs). While the initial wave of REITs focused predominantly on office spaces and corporate leasing, the entry of Nexus Select Trust marked a pivotal shift toward the retail sector. As India’s first retail-focused REIT, it offers a unique proposition built entirely around urban consumption centres. For investors, understanding the balance between its high-quality asset base and the inherent risks of a consumption-driven model is essential for making informed portfolio decisions.
All about Nexus Select Trust REIT
Nexus Select Trust is a premier consumption centre platform in India, managing a portfolio of institutional-grade retail assets. Unlike office REITs that depend on the expansion plans of multi-national corporations, this trust is anchored in the daily lives of consumers. Its assets are not merely buildings but established shopping destinations where people dine, shop, and seek entertainment.
The portfolio is strategically located across major urban hubs, ensuring that the properties are part of high-traffic ecosystems. These centers serve as critical infrastructure for India’s growing middle class, capturing a significant portion of discretionary retail spending. By focusing on “Grade A” urban consumption centres, the trust ensures that its properties remain the preferred choice for both premium brands and shoppers.
Also Read: Securing Your Legacy: Why Estate Planning is Essential for Everyone
Key performance highlights
The financial health of the trust reflects the resilience of the Indian retail market. Recent performance metrics show a robust upward trend, with revenue rising approximately 13.8% year-on-year to ₹630.9 crore. This growth is a testament to how stable, consumption-driven assets can generate consistent rental income even in a fluctuating economic environment.
Equally impressive is the Net Operating Income (NOI), which saw a 14% increase to ₹467.5 crore. With a Gross Asset Value (GAV) exceeding ₹29,000 crore, the scale of the operation provides a strong foundation for long-term capital appreciation. Since its listing in May 2023, the trust has distributed significant capital to its unitholders, delivering total returns of over 80%. These figures highlight the trust’s ability to convert footfalls into predictable cash flows.
Key strengths of Nexus Select Trust
One of the primary strengths of this REIT is its high-quality tenant base. The portfolio hosts prestigious international and domestic brands such as GUCCI Beauty, PRADA Beauty, and Zara. The presence of such premium “anchor” tenants ensures high occupancy rates, which currently stand at a remarkable 96.9%. These brands act as magnets, driving consistent footfall and providing a layer of security to rental income.
Geographic and sectoral diversification further bolsters the trust’s stability. The assets are spread across 15 cities, totaling over 10 million square feet of leasable area. By operating in diverse markets—ranging from metros like Delhi and Bengaluru to emerging urban centers—the trust avoids over-reliance on any single city’s economy. Furthermore, the tenant mix spans fashion, electronics, entertainment, and essential services, ensuring the revenue stream is not dependent on a single retail category.
Key concerns to keep in mind
While the performance is strong, investors must remain aware of consumption sensitivity. Since the REIT’s income is tied to retail activity, any slowdown in consumer spending can impact tenant sales and, eventually, rental growth. Approximately 16% of the rental income is derived from highly discretionary categories like jewellery, entertainment, and luxury fashion. These sectors are often the first to feel the pinch during an economic downturn.
Additionally, the Real Estate Investment Trust operates within a framework shaped by lease cycles and financial management. While 95.5% of leases include minimum guaranteed rentals, the long-term growth of the trust depends on “turnover rentals,” where the REIT earns a percentage of the tenant’s sales. If consumption patterns shift significantly—for instance, toward e-commerce—the physical malls must continuously adapt to remain relevant and maintain their high footfall levels.
Where Nexus Select Trust REIT fits in your portfolio
This REIT functions differently from traditional stocks or bonds. Its strength lies in its ability to convert daily retail activity into a steady stream of income. The cash flow from long-term leases behaves much like a fixed-income instrument, while the gradual escalation of rents and operational improvements provide a growth component.
For most investors, this trust is best viewed as a satellite allocation. It is particularly valuable for those seeking to diversify away from office-heavy REITs, as it reduces exposure to corporate leasing cycles and adds a layer of consumer-driven growth. By providing exposure to prime real estate with a lower capital requirement than direct property ownership, it offers a liquid and transparent way to participate in India’s retail boom.
Also Read: Understanding the Personal Goals of Financial Advisors