PACRA Maintains Entity Ratings of TPL Properties Limited
TPL Properties Ltd (TPL properties or the Company) has significant presence in Real estate sector for more than a decade. The sponsors have a very good understanding of the business. TPL properties after the sale of its first and flagship project “Centrepoint” is re – strategizing its business model from single revenue stream of rental income. In the new model TPL properties will operate as an investment holding company and will benefit from dividends derived from subsidiaries. There will be four core pillars to the revised business model of TPL properties. I) it will own a portion (approx.38%) of the REIT Fund based on the contribution of land and project developed to date, REIT will provide dividends and capital gains to the Company. II) it will continue to develop the projects and will receive development fees. III) as the owner of the RMC, it will receive dividends as the RMC receives management fees for REIT. It also owns a company - TPL Property management which manages the commercial buildings, currently they are maintaining Centrepoint building and going forward has plans to add in more projects/buildings. The Company has approved the transfer of its projects namely “One Hoshang”, “Technology Park” and “Mangrove” to the TPL REIT Fund I where company will also realize substantial Capital Gains. The financial risk profile remains adequate; will be supported by additional cashflows expected from new business lines. Furthermore, company arranged substantial working capital financing to bridge the gap for the acquisition of Mangrove project. Thus, soaring leveraging to 41%. However, management has planned to completely pay off the debt upon transfer of assets in REIT Fund. Furthermore, with appreciation in the real estate market, the company expects a rise in the market demand in near future and plans on taking advantage of it.
The ratings are dependent on management's ability to ensure adequacy of cashflows through the timely execution of the transfer of the SPVs to the REIT Fund. Any material deviation in strategy impacting risk profile of the company will be negative.
TPL Properties is the real estate arm of TPL Corp. TPL Corp has investments in Life & Non- Life Insurance, Real Estate, Security Services, Asset Tracking and Technology sector. The Group consists of seven main companies. The Company is engaged in real estate development and property management. TPL Properties is majority (52%) owned by TPL Group. TPL Properties has eight-member board of directors. Four members, including one executive and three non-executive members, represent TPL Corp while three members are independent from sponsoring group. Mr. Ali Jameel, the CEO, is supported by an experienced team.