PACRA Maintains Debt Instrument Ratings of TPL Properties Limited | PPTFC | PKR 1.575bln | Dec 23

TPL Properties Ltd (TPL Properties or the Company) has significant presence in Real estate sector for more than a decade. The sponsors have sound understanding of the local real estate sector with notable presence after the successful delivery of their first project “Centrepoint”. Following the re-strategizing of the business model, TPL is now effectively a holding company. TPL Properties current structure consists of investments mainly held in TPL REIT Fund I, which is managed by TPL REIT Management Company limited and the projects are being developed by TPL Developments (Pvt) Limited. Both the companies are wholly owned subsidiaries of TPL Properties. The Company has previously realized substantial capital gains on property that were purchased and transferred to TPL REIT Fund I. Regarding the progress of the projects within TPL REIT Fund I, TPL Developments have initiated the construction on One Hoshang with major structural work under progress. Moreover, detailed master planning for Mangrove project is complete while detailed design of independent buildings is under progress. The management is committed towards meeting the construction deadlines of the projects as planned with high priority towards One Hoshang. Going forward, TPL Properties will receive income from various avenues including dividends from the REIT Fund I and the RMC. The local real estate sector is expected to witness some relief as political and economic uncertainty settles down during CY24. This will in turn be fruitful for the group as their projects will attract investment. The financial risk profile remains adequate with leveraging of the Company reported at 18.5% as on Mar 2024.
The construction progress of the projects as planned remains crucial. Furthermore, the ratings are dependent on the management’s ability and the sponsors support to assist the Company in managing its cashflows till income is received in the form of dividends from its strategic investments.

About the Entity
TPL Properties is the real estate arm of TPL Corp. The Company is engaged in real estate development and property management. The majority of the stake is held by sponsors through Associated Companies (50.76%) including TPL Corp (39.26%) and Alpha Beta Capital Markets Pvt Limited (7.65%) and TPL Insurance (2.93%). Individual Sponsors, Directors, CEO and their family cumulatively hold 9.48% while General Public and other institutions hold approx. 39.76%. The overall control of the company vests in seven-member board of directors (BoD) with Mr. Jameel Yusuf as the Chairman of the board. Mr. Ali Jameel is the CEO of the Company and is accompanied by an experienced team.

About the Instrument
TPLP issued a rated, secured, privately placed Term Finance Certificate on 29th Dec 2023 for a tenor of 1 year to finance the Company's working capital requirements and settlement of short term borrowings. The Company has timely paid the first two quarterly interest payments. The security structure is strengthened by i) Pledge of units of TPL REIT Fund I 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.