PACRA assigns Initial rating to Zameen Five REIT

The assigned rating takes into account the Group's notable competence in strategic project selection and its thorough approach to risk management practices. Zameen REIT Management Company Limited ("Zameen RMC") is wholly-owned subsidiary of Zameen Developments (Private) Limited which is the associated company of Zameen Media (Pvt) Ltd. Zameen Media (Pvt) Ltd was initially engaged in only online classifieds business however, later in 2017 the Group expanded into developmental activity through its associated company, namely Zameen Developments (Private) Limited. The successful backward integration from online classifieds to developmental bodes well for the assigned rating. Zameen REIT Management Company Limited is in the process of launching the Zameen Five REIT (the "Fund"). The Fund is a closed-end, Shariah-compliant scheme. The fund aims to provide consistent and reliable returns by investing in a variety of sustainable and income-generating real estate assets in Pakistan. The REIT Fund size is proposed to be ~ PKR 2bln out of which PKR 1.5bln has been invested by Dubizzle Group Holdings Limited, the ultimate controlling parent company of Zameen RMC, through its subsidiary while ~PKR 500mln is targeted to be invested by a Private Investor. The funds raised will be utilized for the construction and development of the projects. Within three years of its financial launch, the fund plans to be listed on the stock exchange. The investment in Real Estate Development Assets would be through the SPV structure. The dedicated special purpose vehicles (SPVs) structure will enhance transparency and delineate responsibilities. The Fund is comprised of five projects each with its unique features namely; i) Zameen Aurum, ii) Zameen Quadrangle iii) Zameen Neo iv) Zameen Jade, and v) Zameen Phoenix. All projects are strategically located in prime locations in Lahore. The land of all the projects has been successfully acquired by the SPVs and due diligence of the project lands has been duly conducted. Bank borrowing is expected to be raised. The construction of the projects would be funded by a mix of advances received against sales from customers over the life of the scheme and bank borrowings. A brief description of the real estate projects is as follows: Zameen Aurum: The project includes a 15-storey building with three basements, a ground floor, and 11 upper floors, to date 89% of customer advances have been received while the project is ~ 65% complete ii) Zameen Quadrangle: The project spans over ground plus 11 stories and includes 148 apartments along with four convenience shops, to date 66% of customer advances have been received while the project is ~ 64% complete iii) Zameen Neo: A ground-plus-six-floor building includes 42 Residential units along with four convenience shops iv) Zameen Jade: This project comprises of 417 apartments and features amenities like an indoor pool, gym, private facilities v) Zameen Phoenix: This project offers 67 well-designed apartments, along with access to four convenience shops and secure underground parking. Sale of Zameen Jade, Zameen Phoenix, and Zameen Neo have also been started against the advance payments from customers. Going forward, successful completion of the REIT Projects will remain imperative to the rating. Ratings are dependent upon the successful timely completion of projects.

About the Entity
Zameen REIT Management Company Limited (the “Company”) was incorporated on 1st Mar 2023 as a public limited company under the Companies Act, 2017. The Company is a wholly owned subsidiary of Zameen Developments (Private) Limited. The board of directors of Zameen REIT Management Company Limited comprises of eight experienced professionals, namely: Adil Ahmad Kamal (CEO), Zeeshan Ali Khan, Mariam Saleem, Maryam Haq and Tanzain Shafqat as the Nominee Directors and Faiza Iftikhar, Sadiq Ali and Kamran Nasir as the Independent Directors.