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The Pakistan Credit Rating Agency Limited
Press Release

Date
23-Dec-21

Analyst
Muhammad Junaid
muhammad.junaid@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Assigns Initial REIT Manager Rating to TPL REIT Management Limited

Rating Type REIT Manager Rating
Current
(23-Dec-21 )
Action Initial
Long Term RM 3+
Short Term -
Outlook Stable
Rating Watch -

The assigned rating recognizes TPL REIT Management Limited's financial risk profile ("TPL RMC" or the "Company") which is supported by the adequate capital structure. The rating reflects the TPL-RMC's well-experienced management team and governance framework. The Board comprises seasoned professionals having vast experience in various sectors. TPL-RMC is de-risking the Fund’s projects in four major ways: i) Acquiring land and relevant NOCs before the initial fundraising ii) Drawing investors' commitments according to milestone-based schedule iii) Working with world-acclaimed international and local third-party partners iv) Getting its decisions vetted by the investment committee comprising of independent members. The Company is in process of launching its first hybrid Shariah Compliant REIT Fund "TPL REIT Fund I" which would be initially comprised of three projects i) Technology Park (commercial office & business hotel) ii) Mangrove (waterfront mid-rise community) and iii) One Hoshang (luxury residences). All projects are located at prime locations in Karachi. The funds targets to raise at least PKR 80bln, equivalent to ~USD 500mln in multiple rounds, with first close up to PKR 18.75 bn. TPL-RMC has a strong partner network, which includes Squire & Partners (UK) in the design team and Morgan Lewis as the international legal counsel. Going forward, the construction activity is picking up rapidly due to access to finance for both the developer and the buyer, and this is expected to grow exponentially over the next two years. The offering will allow investors to tap into Pakistan’s booming real estate. The PAT of the RMC has increased to PKR 6mln during FY21 on the back of gain in investment in mutual funds. Once the fund is launched, the income of the TPL-RMC will be diversified through management fee and performance fee. During FY21, sponsors have injected fresh equity in the Company amounting to PKR 350mln. Currently, the equity of the RMC stands at PKR 450mln which is well above the minimum regulatory requirement. The assigned rating reflects TPL RMC's association with a well-established real estate developer and operator ‘TPL Properties, which is also the developer adviser to the Fund.
The rating is dependent upon the Company’s ability to sustain its market share and uphold strong investment processes and control environment. Meanwhile, retention of key management, sound governance practices, and consistent performance of funds is critical. Any sustained downturn in fund performance and/or significant loss in market share will impact the 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 REITs. 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 with industry players who contribute 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 organization. He is CEO of TPL Corp Ltd, which has diversified investments in various sectors. The Company is in process of launching its first hybrid Shariah Compliant REIT Fund by end-CY21.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.