PACRA Maintains Entity Ratings of Nishat Hotels and Properties Ltd

Nishat Group, through NHPL, has set up a commercial complex named Nishat Emporium, comprising a mega shopping mall (including food court, kids area and cinemas), a luxury hotel, and banquet halls. The ratings reflects the successful launch of the mall segment in Nov16. Certain modifications and expansion in original design led to some completion delays in the banquet & hotel segment, which were eventually inaugurated in Apr17. Emporium, while primarily catering to the demand of sprawling population in the neighborhood, is also attracting footfall from other parts of the Lahore being the first such facility. With the mall segment being 100% occupied along with an increasing footfall, the major chunk of revenue is expected to emanate through lease rentals during FY17. As the brand develops and occupancy rate increase, revenue from hotel and banquet segment will grow. The project is being funded with a mix of debt (60%) and equity (40%); the absolute amount of debt has increased. The volumes of secured rentals along with the management’s plans to acquire further debt would cover the upcoming debt repayments, resulting in a maintained leveraging for the project. The debt levels are projected to decline beginning FY19. Sustained flow of rentals from the mall segment along with incremental flow from banquet and hotel segment would provide support to the NHPL’s cashflows, in turn, its coverages.

Going forward, given sizeable leveraging, the financial risk profile of the company must be effectively managed. However, sponsor’s substantial equity position provides solace to the ratings. While the group has the advantage of managing hotel business, the company needs to develop & maintain requisite HR skill-set for managing such complex.

About the Entity
NHPL is a venture of Nishat Group - the country's leading business group having strong credentials of managing ventures in the textile, cement, energy, hospitality and financial sectors. NHPL is majority owned by Mansha family (90%), the sponsors of Nishat Group. The other shareholder is Allied Bank Limited (10%). NHPL's seven members board of directors comprises four representatives of the sponsoring family alongwith three executives from group companies. Mr. Hassan Mansha, the CEO, is leading power and hospitality ventures of the group.

Emporium mall - Biggest Mall of the country - sprawled across an area of 15 acres, comprises a twelve storey five star hotel with ~200 rooms, a shopping mall of 140 shops, a food court catering 30 international and local chains, a multiplex cinema of 9 screens, 6 banquet halls with a combined capacity of 5,000 people and a parking space of 2,000 cars. Mall was constructed with total cost of PKR 25.2bln.