The Pakistan Credit Rating Agency Limited
28-Apr-23
Analyst
Ahsan Zahid
ahsan.zahid@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
- Methodology | Corporate Rating | Jun-22
- Methodology | Correlation Between Long-term & Short-term Rating Scales | Jun-22
- Methodology | Rating Modifiers | Jun-22
Related Research
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PACRA Maintains the Entity Ratings of TPL Properties Limited
| Rating Type | Entity | |
|
Current (28-Apr-23 ) |
Previous (29-Apr-22 ) |
|
| Action | Maintain | Maintain |
| Long Term | A+ | A+ |
| Short Term | A1 | A1 |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
TPL Properties Ltd (TPL Properties or the Company) has significant presence in Real estate sector for more than a decade. The sponsors have a very good understanding of the business. 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 in REIT Management, Real Estate Development, Property management and substantial investment in TPL REIT Fund I. In addition, 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. I) REIT will provide dividends to the Company. II) it will continue to develop the projects and will receive development fees. III) as the owner of the RMC, it will receive dividends as the RMC receives management and performance fees for REIT. The financial risk profile remains adequate; will be supported by additional cashflows expected from new business lines. Moreover, leveraging of the company stands at 4.2% as company repaid its debt and decreased its reliance on short-term borrowings. Furthermore, with stability in macroeconomic indicators company expects a rise in the real estate market demand in near future.
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. Two members, including one executive and one non-executive members, represent TPL Corp while three members are independent from sponsoring group. Mr. Ali Jameel, the CEO, is supported by an experienced team.