PACRA Maintain Entity Rating of Packages Real Estate (Pvt.) Limited

Packages Real Estate (Pvt.) Limited ("the Company") has established a strong position in Pakistan's retail and commercial real estate sector through its flagship asset, Packages Mall, located on Walton Road, Lahore. The mall operates at nearly 100% occupancy, featuring approximately 200 retail outlets, a food court hosting 30 international and local restaurant chains, and a multiplex cinema. The Company is extending its retail offerings in the green parking area, covering approximately 100,000 sq. ft., which will house leading brands such as Sapphire, J., and others. The Company also leases premium office spaces to multinational tenants, including Nestlé Pakistan and British American Tobacco (BAT). Recently, the Company has signed a contract with a leading MNC for office space, which will be constructed on approximately 50,000 sq. ft. area. For the year ending December 31, 2025, the Company's revenue stood at PKR 6,413 million (CY24: PKR 6,018 million), reflecting consistent growth driven by full occupancy, rental escalations of approximately 10% per annum, and operational efficiencies. Gross profit margin improved to 53.0% in CY25 from 49.4% in CY24, while net profit margin increased to 13.4% from 10.6% over the same period. Free Cash Flows from Operations (FCFO) stood at PKR 2,447 million in CY25, with interest coverage improving to 3.6x from 2.0x in CY24, reflecting strengthened debt-servicing capacity. Short-term running finance facility of PKR 3,500 million is available to meet working capital requirements, with utilization of PKR 1,987 million as of year-end. Total borrowings stood at PKR 6,923 million as of December 31, 2025, compared to PKR 7,910 million in CY24. Shareholders’ equity increased to PKR 4,732 million from PKR 4,223 million, driven by better profits. As a result, the leveraging ratio improved to 59.4% (CY24: 65.2%), reflecting the strengthening of the Company’s equity base. Going forward, in line with the Company’s expansion plans, particularly the development of additional office space and the increase in lettable areas, new borrowings are anticipated. Consequently, the leveraging ratio is expected to rise in the near term as the Company continues to invest in growth initiatives. The assigned rating reflects the Company's strong institutional ownership through Packages Group, full occupancy with built-in rental escalations, a substantial land bank of approximately 19 acres for future expansion, a deleveraging balance sheet, and the recent addition of a leading MNC as an office tenant. The Stable Outlook incorporates expectations of continued operational stability, sustained occupancy levels, and prudent management of leverage and working capital.
The ratings remain sensitive to the evolving competitive landscape in Lahore's retail sector, including the recent entry of Dolmen Mall and the integrated hospitality offerings of Emporium Mall. The Company's ability to execute its expansion plans, manage competitive pressures, and maintain healthy coverage metrics will be important for the rating trajectory.

About the Entity
Packages Real Estate (Pvt.) Limited was incorporated as a private limited company on March 9, 2006. The Company is a subsidiary of Packages Limited (75.16% stake), with the remaining 24.84% owned by IGI Investments (Private) Limited. The Company's principal objective is to engage in all types of construction activities and to develop and manage real estate. Currently, the Company manages two developed real estate projects: Packages Mall and Corporate Offices, both located in Lahore at Shahrah-e-Roomi, P.O. Amer Sidhu. The registered office of the Company is situated at Suite No. 416–422, G-20, Block 9, Khayaban-e-Jami, Clifton, Karachi.