Odel revises mall project, targets Zone 1 completion within two years

• Zone 2 to remain earmarked for future development

Odel PLC on Tuesday said it had revised the development strategy for its Odel Mall project in Colombo 7, prioritising completion of Zone 1 within the next 1.5 to two years while deferring the second phase of the mixed-use development.

The company said the disclosure was being made “to ensure transparency and mitigate speculative and/or inaccurate representations” regarding the project.

Odel said construction of Zone 1 had recommenced and was progressing, with completion expected within the next 18 to 24 months. Zone 2, comprising a 100-perch block of land, will be retained for future development.

As of 31 March 2026, notes to the interim financial statements showed the Group’s capital commitments for the Odel Mall project remained substantial.

Odel Properties One Ltd., a wholly owned subsidiary of Odel PLC, had contracted Access Engineering PLC for Rs. 570 million to undertake diaphragm wall and piling work for the proposed Odel department store, of which work valued at Rs. 450 million had been completed by the reporting date.

The subsidiary had also entered into an agreement with China Construction Third Engineering Bureau Co., Ltd., valued at Rs. 9.81 billion for the commercial development at Ward Place. Work completed under the contract amounted to Rs. 7.5 billion as at 31 March 2026.

In addition, it disclosed estimated non-contracted capital commitments of Rs. 4.5 billion relating to the project.

The update follows disclosures made in the company’s 2024/25 Annual Report, which reflected the project’s position as at 31 March 2025, 15 months ago.

In the Annual Report, Odel said capital work in progress relating to the Odel Mall amounted to Rs. 17.79 billion and required an additional Rs. 6.3 billion to complete.

The company said it had revised the project’s long-term financing strategy following a reduction in construction scope. The removal of the apartment component and its conversion into rentable office space had significantly reduced the project’s funding requirement.

Under the revised funding plan, the company expects the project to be financed through advances from office space sales, supplemented by external equity. Odel also said it had sought to restructure its existing syndicated loan and accrued interest, with the banking consortium led by Hatton National Bank PLC responding positively and evaluating restructuring options. The company said the proposed restructuring is expected to ease near-term cash flow pressures while aligning debt servicing with the revised project timeline.

The Odel Mall project was identified as a key audit matter in the 2024/25 Annual Report, with other non-current assets relating to the development amounting to Rs. 17.79 billion as at 31 March 2025, representing 57% of the Group’s total assets.

The external auditors said the project warranted particular attention because of its materiality and the significant management judgement involved in determining its recoverable value, including assumptions relating to construction costs, forecast occupancy, profitability, discount rates, terminal growth rates, revised project timelines, and future funding.

As part of the audit, they reviewed project status reports and certifications issued by the project manager, tested whether capitalised costs met accounting recognition criteria, evaluated management’s discounted cash flow and value-in-use models, and performed sensitivity analyses on key assumptions used to assess the project’s recoverable amount.

Tuesday’s disclosure confirms the company has narrowed the development’s immediate focus to completing Zone 1 while preserving Zone 2 for future expansion.