The Pakistan Credit Rating Agency Limited
Press Release


Sehar Fatima

Applicable Criteria

Related Research

This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Rating of TPL Properties Limited | TFC

Rating Type Debt Instrument
Action Maintain Initial
Long Term AA- AA-
Short Term - -
Outlook Stable Stable
Rating Watch - -

The ratings incorporate strong fundamentals of the company. TPL Properties owns a high-end office building (Centrepoint) in Karachi. The company is following BOMR (build, own, maintain and rent-out) model. The business profile of TPL Properties is expected to remain strong as Centrepoint enjoys full occupancy coupled with relatively long-term agreements engendering low business risk. The agreements also incorporate annual rent escalation clause. Furthermore, TPL Group is also pursuing its second project in real estate - HKC Tower. The company is planning to launch green building concept in the country through this project comprising luxury residential apartments. TPLP will follow sale model for HKC Tower apartments. The company has raised debt through TFC. A substantial portion of amount raised has been utilized to swap existing debt, which was previously obtained at higher spread. The lower spread on the TFC is due to improved risk profile of the Company – a factor considered positive while assigning rating. The remaining amount of TFC will be used for the equity investment in projects. The financial risk of the company will be managed by limiting additional borrowing. In connection with the leveraging, the group is launching a REIT based on its own assets and other assets. This will generate liquidity, which will be utilized in settling the debt. Moreover, comfort can be drawn from financial strength of ultimate parent of TPL Properties Limited in case of any payment constraint, they will service interest and principal installment.

The ratings are dependent on management's ability to ensure adequacy of cashflows against debt repayment commitments. Any material deviation in strategy impacting risk profile of the company will be negative.

About the Entity
TPL Properties is the real estate arm of TPL Group. The company is engaged in real estate development and property management. 'Centrepoint' is the company's first project. It is a 28 storey commercial building including 17 office floors (rentable space). TPL Properties is majority (45%) owned by TPL Group. Centrepoint Management Services (CMS) - 100% subsidiary of TPL Properties - is responsible for providing maintenance services to 'Centrepoint'. TPL Properties has eight-member board of directors. Five members, including one executive and four non-executive members, represent TPL Group while three independent from sponsoring group. Mr. Ali Jameel, the CEO, is supported by an experienced team.

About the Instrument
TPL Properties has issued ‘Tranche A’ of privately placed and Secured Term Finance Certificates (TFC) of amount PKR 2.2bln. The tenor of TFC is 10 years and will follow step-up repayments. The company has repaid amount of PKR 1.7bln - existing debt facility by funds received from ‘tranche A’. ‘Tranche B’ of amount PKR 1.3bln will be utilized for acquisition of land for the second project.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.