Odel scraps plans for luxury apartments at Ward Place mall

By Nishel Fernando
Odel PLC has scrapped plans for luxury apartments at its flagship Odel Mall project in Ward Place, pivoting instead to office space as part of a broader remedial strategy to address severe financial headwinds that have seen the retailer placed on the Colombo Stock Exchange’s Watch List. 
The strategic shift was disclosed alongside the company’s annual report for the 2024/25 financial year, where Odel reported a net loss of Rs.4.45 billion. Independent auditors Ernst & Young raised a red flag on the company’s financial health, citing a “material uncertainty” regarding its ability to continue as a going concern, due to the accumulated losses of Rs.12.7 billion and current liabilities exceeding the current assets by Rs.15.2 billion.
In a major strategic shift concerning its mixed development project in Ward Place, Odel announced that the originally planned residential apartment component of Odel Mall will no longer proceed. The management has decided to repurpose the space allocated for apartments into rentable office space. 
The decision reflects a move to “derisk” the project, with the company noting that office space offers a more predictable revenue stream and lower development risks compared to the volatile residential market. 
The revised scope is also expected to reduce the overall funding requirement for the project, which currently carries a capital work-in-progress value of Rs.17.8 billion. To complete the construction of Odel Mall under this revised design, the company plans to raise Rs.4.5 billion in new funding. The financing strategy for the project has been updated to rely on advances from office space sales supplemented by external equity.
This pivot is part of a wider remedial plan announced by Odel to address the negative working capital position that triggered its transfer to the Watch List. In addition to the mall completion, the plan includes adopting dynamic marketing strategies to boost footfall, closing the underperforming stores to reduce overheads and evaluating alternative financing sources. 
Crucially, the Softlogic group is actively seeking potential equity partners to infuse fresh capital into its retail sector, including the Odel group. On the debt front, the company is heavily leveraged, with total interest-bearing borrowings standing at Rs.20.77 billion as of March 31, 2025. A significant portion of this debt is tied to the Odel Mall project through a syndicated loan facility involving Hatton National Bank (HNB), Sampath Bank and Bank of Ceylon, with a balance of approximately Rs.8.2 billion. To manage this burden, Odel is actively renegotiating the debt repayment plans. 
The company revealed that the consortium of banks led by HNB has “responded positively” and is currently evaluating the restructuring options for the syndicated loan and accrued interest. This restructuring is intended to align debt service commitments with the updated timeline of the mall project.
Despite the financial strain, Odel’s operational performance has shown signs of resilience. In the six months ended September 30, 2025, the group revenue grew to Rs.3.3 billion, up from Rs.2.7 billion in the same period the previous year. 
The company has also been aggressively rationalising its footprint, closing 17 underperforming outlets during the last financial year while opening new value-focused ‘ODEL Brands Outlet Stores’ to cater to the price-sensitive consumers.