TPL is up to raise $500mn through REIT

August 31, 2021 (MLN): Development of construction sector is the utmost priority of the present government as the sector has been provided by all the possible facilities. This sector coupled with the rapid economic growth offers huge investment opportunities to the local and foreign investors.

Taking advantage of the ongoing scenario, TPL Corp. is planning to raise $500 million through a private real estate investment trust, marking one of the largest such fundraisings in the nation’s history, a report by Bloomberg noted.

According to Ali Jameel, CEO of the company, “TPL REIT Management Co. is seeking to raise 60% of the targeted funds from foreign investors, 30% from domestic investors and the rest from its parent TPL Properties Ltd.”, The hybrid real estate investment trust plans to close the deal by June, and will offer an internal rate of return of more than 30% in local currency, he added.

The South Asian nation is giving tax evaders a free pass to invest in construction projects and offering subsidies for low-cost houses, while banks have been asked to increase credit exposure to 5% of the loan portfolio for the industry, the report said.

To note, this REIT is the third to be announced this year in the country after a hiatus since the nation’s first such in 2015, as regulatory changes led by the Securities and Exchange Commission of Pakistan and the State Bank of Pakistan made it attractive for issuers.

The CEO of the Company further said that Construction activity is picking up rapidly due to access to finance for both the developer and the buyer, and this is expected to grow exponentially over the next two years.

He also noted that the offering will give investors an opportunity to tap into Pakistan’s booming real estate.

In addition, the company is up to list the REIT within three years in Pakistan and overseas. The funds will be used to finance three real estate projects, a tech park, a high-end residential building and a gated seafront community, he informed.

The report also noted that Pakistan’s first REIT holds rental assets including Karachi’s most prominent mall and an office tower, offering a dividend yield of around 12% a year. REITs for a housing project in Karachi were announced in July to raise 8 billion rupees ($48 million) with an expected internal rate of return of more than 30%.

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