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

Sitara Heights (Pvt.) Limited ("Sitara Heights" or "the Company") is committed to developing a diverse portfolio of residential and commercial real estate projects. Currently, the Company is engaged in six projects, three of which are located in Lahore and three in Faisalabad. These projects include: (i) 3 Jays Tower, (ii) Sitara Icon Tower, (iii) Sitara Serene Tower, (iv) The Edge, (v) Gold Vista, and (vi) Sitara Enclave. The land for all these projects has already been acquired, providing a foundation for the Company’s operations and contributing positively to the assigned ratings. Of these six projects, four have already been launched. The Lahore-based projects, 3 Jays Tower and Sitara Serene Tower, are at more advanced stages, with a significant number of units already sold. In Faisalabad, sales have commenced for Sitara Icon Tower and The Edge, with foundation work nearing completion. Sitara Enclave, a newly added housing project, is scheduled to launch in February 2024, and marketing campaigns for the project have already begun. The launch of the sixth project, Gold Vista, has been delayed due to unfavorable macroeconomic conditions. The current inflationary environment, characterized by rising costs of raw materials such as steel and cement, has led to a slowdown in the real estate sector. Despite these challenges, the persistent shortfall in the housing sector and growing demand driven by population growth have resulted in an increase in property prices. However, the progress on the Company existing pipeline projects has been slower than anticipated, which raises concerns. Nevertheless, the management remains confident in its ability to meet the revised completion timelines as planned. In FY24, the Company achieved a revenue growth of approximately 19%, with total revenue reaching PKR 864 million, compared to PKR 724 million in FY23. Moving forward, the Company plans to meet the cash flow requirements for development and construction expenditures through advance booking receipts, the launch of the Gold Vista project, and available working capital lines from the financial institutions. As of September 2024, the Company’s leveraging stood at approximately 51%.
The Rating Watch and Negative outlook reflect the prevailing uncertainty surrounding the Company's ability to complete its projects on time and to service the debt associated with the Gold Vista project, including its eventual launch. However, the assigned ratings take into account the strong financial position of the Company’s parent group, which includes well-established players in the oil marketing and distribution sectors, such as Gas & Oil Pakistan Limited and Sitara Petroleum. Furthermore, the Company’s valuable land bank provides additional support to the ratings. The successful and timely completion of project milestones, without significant cost overruns, as well as the effective management of sales and collections, will be crucial to avoid any potential cash flow mismatches during the construction phase of the projects.

About the Entity
Sitara Heights (Pvt.) Limited ("Sitara Heights" or "the Company") is a private limited company incorporated in Pakistan in 2019, operating under the provisions of the Companies Act, 2017. The Company specializes in the development of a diverse range of residential and commercial properties. The Company’s projects include the construction of residential communities, apartments, and various commercial spaces such as markets, multi-story office buildings, shopping centers, and restaurants. Mr. Khalid Riaz is the majority shareholder, holding 88% of the Company’s shares. The Board of Directors consists of three members, all of whom are affiliated with the Company. Mr. Khalid Riaz serves as both the Chairman of the Board and the Chief Executive Officer of the Company. The organization has a lean structure with each department being headed by a competent resource.