PACRA Assigns Initial REIT Fund Rating to TPL REIT Fund I

TPL REIT Fund I (or the "Fund") is a perpetual, closed-end, shariah-compliant hybrid Scheme proposed to be launched by TPL REIT Management Company Limited. The REIT Scheme has been registered with SECP. The Fund is being set up to achieve regular and stable returns through investments in a diversified portfolio of sustainable developments and yielding assets in the real estate sector in Pakistan. The Fund would be listed on the stock exchange within three years of financial close. The REIT Fund size is proposed to be PKR 80bln (USD 500mln), of which the initial fund size would be up to PKR 18.75bln. The RMC is seeking to raise 60% of the targeted fund from foreign investors, 30% from domestic investors and the rest from its strategic investor, TPL Properties Ltd. Foreign funds would be routed in Pakistan through one or more feeder funds established in acceptable off shore jurisdictions which will allow foreign investors to invest in REIT through a regulated tax-efficient vehicle. The land has already been acquired for the projects and all relevant NOCs of Technology Park and One Hoshang have been obtained. The assigned rating captures the risk profile of the three projects which will be financed through the initial fundraising. The rating may be impacted by the risk characteristics of future projects. The investments raised under the Fund in the first round will be used to finance three real estate projects; i) Technology Park: This would be the first kind of technology park in Pakistan with high-end technology infrastructure, accompanied by a 42 key business hotel ii) Mangrove: Master planned community including mid-rise residential apartment towers, retail space, offices and hospitality asset located at the waterfront and iii) One Hoshang: Pakistan's one of a kind premium end residential apartment tower and showrooms with world-class amenities. All projects will be located at prime locations in Karachi and will be developed by following international safety, sustainability, and environmental standards and shall be Gold LEED Certified. The total area that would be covered under the scheme is 13,375,000 sq. ft. The total cost of three projects would be financed by a mix of equity, debt, pool of funds, and customer advances against the sale of developed inventory.
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 and generation of expected return would remain critical for rating.

About the Entity
TPL REIT Management Company Limited was incorporated on 12th October 2018 as a public limited company. It is licensed by the Securities and Exchange Commission of Pakistan to carry out REIT management services under the Non-Banking Finance Companies Regulations, 2008 and REIT Regulations, 2015. The Company is engaged in the launch and management of REAL Estate Investment Schemes. The Company is a wholly-owned subsidiary of TPL Properties Limited which is the real estate arm of TPL Corp. TPL Group aims to establish new ventures centered on building partnerships with industry players who contribute core-business acumen and best practices.

The company’s Board of Directors comprises six members including three independent directors. The Chairman, Mr. Ali Jameel, besides holding this office also serves at the board of several prestigious organization. He is CEO of TPL Corp Ltd, which was founded in 2000 and has diversified investments in various sectors. The Company is in process of launching its first hybrid Shariah Compliant TPL REIT Fund I by end of CY21.