Bengaluru: Pune-based developer Kolte-Patil Developers Ltd has sold a land parcel in the city’s Wakad suburb to Island Star Mall Developers Pvt. Ltd, an investment platform of Phoenix Mills Ltd and Canada Pension Plan Investment Board (CPPIB), for Rs160 crore, the companies said on Monday in separate BSE filings.

While Kolte-Patil has termed it as a “strategic divestment", Mumbai-based Phoenix Mills said that it is the platform’s first acquisition, which has a development potential of 1.6 million sq. ft and will allow premium retail development of a million sq. ft.

In April, a joint announcement was made saying Canada’s largest pension fund CPPIB will invest a total of $250 million in multiple tranches, to eventually own up to 49% in Island Star Mall Developers, a unit of Phoenix Mills.

Island Star Mall Developers currently owns Phoenix MarketCity in Bengaluru, a mall with gross leasable area of 1 million sq. ft. Going forward, the platform will develop, own and operate retail-led, mixed-use developments across India. It will acquire and develop both greenfield land parcels as well as operational retail assets.

“This acquisition helps deliver on our strategy of expanding our Indian retail portfolio with Phoenix Mills, an aligned, best-in-class partner. Pune’s attractive demographic and economic growth profile combined with an under-supplied retail market makes this an ideal location for a high-quality retail and entertainment destination, and is well suited to CPPIB’s long-term investment horizon. We look forward to expanding our platform with Phoenix Mills across other cities," Andrea Orlandi, managing director and head of real estate investments-Europe, CPPIB, said in a statement.

Phoenix Mills already has Phoenix MarketCity in east Pune, while the Wakad land will open another such retail address in the western part of the city.

Kolte-Patil said the strategic sale has been undertaken after evaluating the overall feasibility and is in line with the company’s strategy of maintaining a lean balance sheet.

“The company will continue to explore strategic partnerships under asset-light models to enhance its overall portfolio and position the company for sustained growth," the Pune developer said in a statement.

Many land transactions in the current scenario involve developers making strategic calls to divest land to other developers, who are often backed by large institutional investors.

In June, for instance, real estate firm BPTP Ltd sold a 14.8-acre land parcel along Dwarka Expressway to Mumbai-based Godrej Properties Ltd and is in the process of selling a second parcel around the same location to another developer. The sale of both will help BPTP raise around Rs500 crore.

The BPTP land is the fourth acquisition under the Godrej Residential Investment Program II (GRIP-II), a $275 million fund, which was raised from a clutch of investors with Dutch pension fund asset manager APG Asset Management NV as the lead investor.

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