PACRA Maintains the rating of ISE Towers REIT Management Company Limited.

The assigned rating emanates from ISE Towers REIT Management Company Limited's (or the "Company") sound corporate governance, an experienced management team, an adequate control environment, and the Company's pioneer status in the capital markets. The assigned rating of the Company incorporates its business profile characterized by stable operating revenue and strong customer base. The diversified shareholding pattern of the Company comprises 215 shareholders (Corporates, Banks, DFIs, Insurance Companies, Modarabas, pension funds, and others). The compliance function ensures adherence to all applicable internal and external rules and regulations. The Company is deriving its core income from its dominating asset "ISE Towers" which is enjoying an almost 100% occupancy level. The Company is planning to convert the ISE Towers into REIT Fund. The project has achieved significant progress and obtained requisite approvals under REIT Regulation, 2022. According to management's representation, the property transfer to the REIT scheme is expected to be completed by the end of June 2025 after the issuance of NOC from the Capital Development Authority (CDA), with the REIT Fund anticipated to be launched by the end of September 2025. The initial REIT fund size would be PKR ~2.8bln as per management representation. As of FY24, the operating income of the Company shows an improvement of 6% and stood at PKR 378mln (FY23: PKR 355mln) primarily due to rental income from investment property. Whereas, it stood at PKR 98mln at the end of 1QFY25 (1QFY24: PKR 93mln). The profitability of the Company declined to PKR ~645mln as of FY24 (FY23: PKR 1,333mln) on account of the decrease in fair value gain on investment property. Whereas, it stood at PKR 111mln at the end of 1QFY25 (1QFY24: PKR 122mln). The Company's business risk is supported by high-profile tenants. The Company has zero leveraging and its liquidity position remains comfortable. The equity stood at ~PKR 7,740mln at the end of FY24 (FY23: PKR 7,534mln). Whereas, it stood at PKR 7,852mln at the end of 1QFY25.
The ratings are dependent upon the Company’s ability to sustain its healthy business profile amidst strong competition, herein, effective and prudent management of financial risk indicators remain important. Meanwhile, retention of key management, sound governance practices, and consistent performance of funds is critical. Any significant loss in market share will impact the rating.

About the Entity
ISE Towers REIT Management Company Limited was incorporated initially as Islamabad Stock Exchange (Guarantee) Limited. On January 11, 2016, ISE changed its name and scope of business and got converted from ISE to a REIT Management Company under the repealed Companies Ordinance, 1984, as a consequence of Securities and Exchange Commission of Pakistan's approval of scheme of integration under the Companies Act, 2017. Consequently, the name and scope of the Company have been changed. The principal activities of the Company are to form, launch and manage Real Estate Investment Trust (REIT) under REIT Regulations, 2022. The overall control of the Company vests with an eleven members Board. Board's Chairperson, Mr. Zahid Latif Khan has a diversified experience in the capital market spanning over twenty-five years. He is accompanied by a team of experienced management professionals. Mr. Sagheer Mushtaq is the Chief Executive Officer of the Company. He is a member of the Institute of Cost and Management Accountants of Pakistan and a commerce graduate and has over fifteen years of diversified experience in the field of finance, operation, and regulatory compliance.