Muhammad Atif Chaudhry
PACRA assigns Initial rating to JS Rental REIT
|Rating Type||Rental REIT Fund|
JS Rental REIT Fund (or the "Fund") is a perpetual, closed-end, conventional rental Scheme launched by JS Investment Limited. The Fund’s objective is to achieve regular and stable returns through investments in a fully developed portfolio of sustainable developments and yielding assets in the real estate sector in Pakistan. The Fund shall be listed on the stock exchange within three years of financial close. The building “The Centre” has been targeted for the REIT scheme which is situated at Abdullah Haroon Road, Saddar, Karachi. The site has a land area of 3,988 sq. yds. The building is relatively new and completed in 2013. The building is a state of the art with branded lifts installed, an HVAC plant, and the latest security structure along with ample car parking space, a cafeteria, and a gym. Out of the total 22 floors with the ground and mezzanine floor dedicated to the shopping mall, six floors are parking floors, 8th floor is amenity/utility and the 9th-14th floors are currently vacant. Initially, two floors i.e. 19th and 20th occupied by JS Investments as tenant, is converted into Rental REIT and the initial size of the fund is PKR 700mln. The total cost of the scheme is financed by a mix of equity and a pool of funds.
The rating would remain dependent on the sustainability of the RMC, successful fundraising, achievement of milestones, and listing of the Fund. Successful completion of each project falling under the REIT scheme and generation of expected return would remain critical for rating.
JS Investments Limited was established in 1995 and is listed on the Pakistan Stock Exchange. The Company is part of the Jahangir Siddiqui (JS) Group. JS Bank Limited holds ~85% shareholding in the Company. JS Group has strong presence in the financial sector with entities operating in banking, insurance, brokerage, and asset management sectors. The group has recently ventured into energy infrastructure and OMC segments. JS Investments possesses licenses for Asset Management, Investment Advisory, Private Equity, Venture Capital and REIT management. JSILAMC is currently managing fourteen open-ended funds and two Pension funds with AUMs base of PKR 36bln. JSIL’s control vests in eight-member board of directors including the CEO. There are two independent directors while all other directors except the CEO are non-executive.