The Pakistan Credit Rating Agency Limited
Press Release


Usama Zubair

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PACRA Maintains Rating of TPL Properties Limited | TFC 'Series A'

Rating Type Debt Instrument
Action Maintain Downgrade
Long Term A+ A+
Short Term - -
Outlook Stable Stable
Rating Watch - -

The ratings incorporate sustained 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) for Centrepoint. The business profile of TPL Properties is expected to improve as ‘Centrepoint’ has almost full occupancy coupled with relatively long-term agreements. The agreements also incorporate annual rent escalation clause. TPL Group is pursuing its second project in real estate – One Hoshang. One Hoshang will comprise luxury residential apartments and advance sale model will be followed for this project. The project previously faced delays owing to ban on high rise constructions in Karachi. The management is expecting to receive handsome developer's margin in upcoming year. Earlier, the company raised debt through TFC (Series A) to swap long term finance present on book which was previously obtained at higher spread and finance pre-construction expenses of One Hoshang. The financial risk profile remain adequate; will be supported by additional cashflows expected from new projects and curtailed key policy rate. Some of the related projects (REIT & Development Projects) are on the cards which might alleviate concerns pertaining to cash flows. Any further increase in leveraging may put stress on cushion available if upcoming investments are unable to contribute healthy cashflows. Furthermore, there exists guarantee from ultimate parent of 'TPL Properties Limited' in case of any payment constraint, they will service interest and principal installment of 'TFC Series A'. The comfort is drawn from sponsor's willingness to cut any of the current transactions, in which TPL Properties is currently dealing, to hold and/ or generate cash flows, if need be.
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 story commercial building including 17 office floors (rentable space). TPL Properties is majority (45.8%) owned by TPL Group. TPL Properties has eight-member board of directors. Four members, including one executive and three non-executive members, represent TPL Group while three members are independent from sponsoring group. Mr. Ali Jameel, the CEO, is supported by an experienced team. During the year Mr. Mr. Abdul Wahab Al Halabi joined the board as an independent director. Mr. Abdul Wahab Al Halabi has over 23 years of experience in the field of executive management. He was previously on several boards including Emirates REIT Management which managed Emirates REIT, a NASDAQ Dubai listed entity, Plant Pharmacy LLC and several other private enterprises.

About the Instrument
TPL Properties has issued ‘Series 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 - previous debt facility by funds received from ‘Series A’ of TFC.

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.