TPL Properties to launch first hybrid REIT fund of US$500mn in Pakistan

According to Mr. Jamil Akbar, COO TPL Properties, the Company is planning to launch the largest and first hybrid REIT fund of US$500mn in Pakistan under which three major projects are, 1) One Hoshang, 2) TPL Technology Park, and 3) Mangrove.

TPLP will hold 40% in REIT fund with initial the fund size would be Rs18bn out of which Rs7.1bn will be contributed from TPLP and the rest would be financed through equity.

TPLP foresees fee income of REITs to likely grow as the NAV of the project increases.

To recall, TPLP sold Centrepoint to Bank Al-Habib for Rs7.75bn in May 2021, generating an IRR of 22% including the capital gains and rental income as per the management. TPL REIT Management Company (RMC) management fee would be 1.5% of Net Asset Value (NAV) and performance fee would be 15% of gains above the threshold level.

In order to attract the international investors TPLP is also incorporating TPL Investment Management firm in Abu Dhabi which would allow the foreign investors to pour the investment into TPL REIT fund.

Listing timeline of TPL REIT fund is expected to be within three years from the initial close.

TPL Technology Park – TPLP is planning to develop a tech park (offices + business hotel) in Karachi aiming to generate revenue from sale and rental income. The project completion timeline is 4Q2024 with project IRR of 27%+. TPL REIT will own the project with part sale and lease of offices. It will also own and operate hotels in the project.

Mangrove – It would be a mid-rise waterfront mixed use development, multiple towers with a built-up area of 10+ Mn square feet located in Korangi. TPLP plans to sell the plots and units. IRR of the project is anticipated at 30%+. The company has already completed the acquisition of 40 acres of land in Korangi Cantonment. The company have an aim to have off-plan sales of the developed units and plots.

One Hoshang – This project is a luxury residential tower that TPL is going to develop on one of the prime locations in Karachi at Hoshang Road, Civil Lines. Expected IRR of the project is 20%+ and is expected to complete by 4Q2024.

The future rental agreements on the properties have not been yet firmed up as per the management but as far the commercial agreements are concerned in respect to Technology Park or any other property, the company will be seeking to go with the market practice.

On a question on how TPL REIT fund will differentiate with Dolmen City REIT (DCR), which is the other listed REIT fund, the management stated that DCR is a single project/property based fund (Dolmen City) whereas TPL REIT fund will have multiple projects under its umbrella with developmental and rental projects.

TPLP is a real estate property developer that invests, purchase, develop and build real estate to sell, rent out commercial and residential buildings, houses, shops, plots or other premises. Key business lines include 1) Real estate development of owned projects, 2) Development management which provides services to clients related to real estate projects, 3) Asset management of investment portfolio under REIT, and 4) Property management services for developed real estate owned/operated by TPLP.

Courtesy – Pakistan Mid Cap Conference 2022 of Topline

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