The Pakistan Credit Rating Agency Limited
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Shazia Afzal

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PACRA Assigns Initial Entity Ratings to ISE Towers REIT Management Company Ltd

Rating Type Entity
(07-Jan-21 )
Action Initial
Long Term A
Short Term A1
Outlook Stable
Rating Watch -

ISE Towers REIT Management Company Ltd (or "The Company") is licensed as a Non-Banking Finance Company (NBFC) under Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003. The diversified share holding pattern of the Company comprises of 253 shareholders (Corporates, Banks, DFIs, Insurance Companies, Modarabas, pension funds and others). The assigned ratings incorporates the sound corporate governance, experienced management team, adequate control environment and structured investment processes. The compliance function ensures adherence with all applicable internal and external rules and regulations. The Company is deriving its core income from its dominating asset "ISE Towers" which is enjoying almost 100% occupancy level. The multistory building is situated in the prime location Blue Area, Islamabad. The Company is planning to convert the ISE Towers into REIT Scheme. The project has achieved significant progress, in shape of obtaining requisite approvals under REIT Regulation, 2015 and REIT scheme is likely to be launched in calendar year 2021. The funds generated from this scheme will be utilized to undertake new REIT projects. The profitability of the company is growing at a moderate pace and reported at PKR 338mln for FY20 (SPLY: PKR 191mln). Rental relief were given to the tenants due to economic slowdown amid COVID-19 pandemic. The business risk of the company is supported by high profile tenants, economic recoveries and improving COVID-19 situation in the country. The Company has zero leveraging and liquidity position remains comfortable. The equity stood at ~PKR 5.7bln at end Jun'20 (SPLY: ~PKR 5.3bln).
The ratings are dependent on the Company's aptness to uphold its business and financial risk profile under the prevailing volatile macroeconomic-environment. Sustenance of growth momentum is imperative.

About the Entity
ISE Towers REIT Management Company Ltd (or "The Company") was initially incorporated as Islamabad Stock Exchange (Guarantee) Limited (ISE).On January 11, 2016, consequent upon integration of stock exchange operation of the Company with Karachi Stock Exchange (KSE), the Company got converted from ISE to a REIT Management Company under the repealed Companies Ordinance, 1984. As a consequence of this approval of integration, the name and scope of the Company has been changed. The principal activities of the Company is to form, launch and manage Real Estate Investment Trust (REIT) under REIT Regulations, 2015. The overall control of the company vests with an eleven members Board. Board's Chairman, Mr. Zahid Latif Khan has a diversified experience of the capital market spanning over a period of twenty-five years. He is accompanied by a team of experienced management professionals. Mr Sagheer Mushtaq is the Acting Chief Executive Officer of the Company. He is member of Institute of Cost and Management Accountants of Pakistan and a commerce graduate and has over fifteen years of diversified experience in the field of finance, operation and regulatory compliance.

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.