PACRA Assigns Initial Entity Ratings to Sitara Heights (Pvt.) Limited

Sitara Heights (Pvt.) Limited is committed towards the development of its real estate ventures including residential and commercial properties. Currently the Company is engaged in five projects, three in Lahore and two are in Faisalabad. Namely; 3 Jays Tower, Sitara Icon Tower, Sitara Serene Tower, The Edge and Gold Vista. Company has successfully launched four projects and eyeing to launch Gold Vista soon. 3 Jays tower project has been substantially sold and selling of Sitara Icon Tower along with Sitara Serene Tower has also commenced. Additionally, the Company has initiated the construction on these three projects. The sales growth is evidence of the market acceptability of the project which is in return beneficial for the Company in terms of creating their value in the real estate sector. All the projects are in the initial stages of development therefore, project execution risk is considered on the higher side. Major risk is mitigated through acquisition of land for all the projects which indicates the strong financial position of sponsors. Cash flows requirement for the development and construction expenditure of projects is mainly planned to be met through advance booking receipts and working capital lines availed from the bank, the leveraging of the company stood at 64% by end Dec-21. Given a marginal cushion available between cash inflows and outflows, timely completion of project milestone without any significant cost overruns and maintenance of sales and collection efficiency will remain critical to avoid cash flow mismatch over the construction period of the project.
Ratings assigned to the Company takes into account the comfort from the association of its sponsors who are amongst the well-established players in the oil marketing and distribution segments, namely Gas & Oil Petroleum and Sitara Petroleum. Other than real estate the group also has presence in oil logistics, and in organic farming segments of the economy. 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. Ratings takes comfort from the land bank available to the company and moving forward the company will launch two new projects for which the studies are in initial phase.

About the Entity
Sitara Heights (Pvt.) Limited (the company) was incorporated in Pakistan in 2019 as a private limited company under the companies Act 2017. The principal line of business of the company is development of residential and commercial properties including communities and apartments, Currently the company is engaged in five projects, three in Lahore and two in Faisalabad. Mr. Khalid Riaz holds majority shareholding of 97%. The BoD consists of three members from the sponsors family with Mr. Khalid Riaz is the Chairman. The organization has a lean structure with each department being headed by a competent resource.