The Pakistan Credit Rating Agency Limited
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Anam Waqas Ghayour

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PACRA Assigns Preliminary Rating to TPL Properties Limited | PPTFC | PKR 2bln | TBI

Rating Type Debt Instrument
(23-Oct-23 )
Action Preliminary
Long Term A+
Short Term A1
Outlook Stable
Rating Watch -

TPL Properties Ltd (TPL Properties or the Company) has significant presence in Real estate sector for more than a decade. TPL Properties after the sale of its first and flagship project “Centrepoint” is re – strategizing its business model from single revenue stream of rental income. Following the materialization of their plan TPL Properties is now effectively a holding company, having subsidiaries namely REIT Management Company, TPL Developments (Pvt.) Limited, TPL Property Management and substantial investment in TPL REIT Fund I. The Company has successfully transferred its projects namely “One Hoshang”, “Technology Park” and “Mangrove” to the TPL REIT Fund I where company has also realized substantial Capital Gains. As of FY23 the progress of the projects under TPL REIT Fund I is, construction on “One Hoshang” has been commenced by TPL developments and project launch is expected in 2QFY24. Master plan approval for the “Mangrove project” has been secured, while considering the macro-economic factors and lack of investors’ interest management is considering to shelve the third project “Technology Park” and is aiming to earn the capital gain from the sale of land. Topline of the Company in FY23, clocked to PKR 5.3bln (FY22: PKR 5.9bln) representing a revaluation gain on transfer of property to REIT FUND I. During FY23, leveraging of the company stood at 18%, as company has obtained short term borrowings to meet the working capital requirements and for the equity injection in TPL Investment Management Limited based in Abu Dhabi. The equity base of the Company improved to PKR 13.7bln, (FY22: PKR 10.5bln).
The ratings are dependent on management's ability to ensure adequacy of cashflows through the timely execution of the construction plans of the said projects. Any material deviation in strategy impacting risk profile of the company can have detrimental effect on Ratings.

About the Entity
TPL Properties is the real estate arm of TPL Corp. TPL Corp has investments in Life & Non- Life Insurance, Real Estate, Security Services, Asset Tracking and Technology sector. The Group consists of seven main companies. The Company is engaged in real estate development and property management. TPL Properties is majority (51.4%) owned by TPL Group. TPL Properties has seven-member board of directors. Mr. Ali Jameel, the CEO, is supported by an experienced team.

About the Instrument
TPLP is in the process of issuing a rated, secured, privately placed, Medium Term, Term Finance Certificate, amounting PKR 2,000mln including a green shoe option of PKR 500mln, to finance the Company’s working capital requirements and settlement of short-term borrowing of the Company. The tenor is 12 months and carrying a profit rate of 3MK+200bps. Profit will be paid on quarterly basis and TFC will be redeemed in bullet at the expiry of Tenor. The security structure is strengthened by i) Pledge of units of TPL REIT Fund I (unlisted) held by the Company with 30% margin; ii) Assignment of all Dividends from TPL RMC and TPL REIT Fund I; iii) Pari passu hypothecation charge over current assets of TPL Properties Limited and TPL RMC Limited covering the issue amount.

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.