PACRA Maintains the Entity Ratings of Sitara Heights (Pvt.) Limited

Sitara Heights (Pvt.) Limited (“Sitara Heights” or “the Company”) 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. The land for the projects has already been acquired, indicating a major comfort to the assigned ratings. The Company has successfully launched four projects. The Lahore based projects including 3 Jays tower and Sitara Serene are at more advanced stages and substantial numbers of units are already sold. Faisalabad projects including Sitara Icon Tower and The Edge sales have just commenced. The launch of its 5th project, namely gold vista, has been delayed owing to the unfavorable macroeconomic indicators. The current inflationary environment with higher interest rates and rising cost of raw materials including steel and cement have led to a slowdown in the real estate sector. Furthermore, the ongoing political uncertainty and unstable economic environment has adversely affected the sector. Resultantly, the progress on the existing pipeline projects has been stalled and is concerning. However, management is confident of meeting the revised completion benchmarks as planned. During FY23 the Company reported revenues of PKR 724mln. Going forward, cash flows requirement for the development and construction expenditure of projects are mainly planned to be met through advance booking receipts, launch of gold vista project and working capital lines available from the bank. The leveraging of the Company as of FY23 stood at 59%.
Rating Watch and negative outlook signifies the prevailing uncertainty pertinent to the Company’s ability for timely debt servicing. However, the assigned ratings incorporate the sound financial strength of the group who are amongst the well-established players in the oil marketing and distribution segments, namely Gas & Oil Petroleum and Sitara Petroleum. Ratings further take comfort from the land bank available to the Company. Timely completion of projects milestones without significant cost overruns and maintenance of sales and collection efficiency will remain critical to avoid cash flow mismatch over the project's construction period.

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.