PACRA maintain the entity ratings of TPL Properties Limited

April 30, 2025 (MLN): Pakistan Credit Rating Agency Limited (PACRA) has maintained the entity ratings of TPL Properties Limited (PSX: TPLP) at "A+" for the long term and "A1" for the short term, with the outlook revised to "Developing" from "Stable", according to the latest press release issued by PACRA.

TPLP has significant presence in Real estate sector for more than a decade.

The sponsors have sound understanding of the local real estate sector with notable presence after the successful delivery of their inaugural project, "Centrepoint."

The current structure of TPL Properties primarily comprises investments in TPL REIT Fund I, which is managed by TPL REIT Management Company Limited (TPLRMC), and project execution is undertaken by TPL Developments (Pvt.) Limited.

Both entities are wholly owned subsidiaries of TPL Properties. The Company derives income from multiple sources, including dividends from REIT Fund I and TPLRMC.

TPLRMC has launched its first hybrid Shariah-compliant REIT, “TPL REIT Fund I,” which encompasses three major projects: Mangrove a waterfront mid-rise community (NMC Pvt. Ltd.); One Hoshang luxury residential units (HKC Pvt. Ltd.); and Technology Park a commercial office and business hotel project (TTZ Pvt. Ltd.).

The REIT Fund follows an SPV-based structure, with each project held under a distinct SPV. In line with its portfolio optimization strategy, the management is considering the sale of one of the REIT’s assets TTZ to enhance returns.

As for project progress, construction activity on HKC has commenced, with major structural work underway.

Meanwhile, theNMC project has completed its detailed master planning phase, and design work for individual buildings is currently in progress.

The management has reaffirmed its commitment to meeting project timelines, prioritizing the timely completion of HKC.

However, the progress on these existing pipeline projects has been slower than anticipated, which raises concerns.

Nevertheless, the management remains confident in its ability to meet the revised completion timelines as planned.

The financial risk profile of the Company remains under stress, with leverage reported at 21% as of December 2024.

TPL Properties has raised a syndicated finance facility of Rs985m, which is due for repayment in December 2025.

Since the underlying projects within the REIT Fund are currently in the construction phase, the primary source of cash inflow for TPL Properties is limited to dividends distributed by the REIT Fund.

Therefore, the Company’s repayment capacity is closely tied to the timely execution and monetization of REIT assets particularly the sale of Technology Park.

The developing outlook signifies the currently stressed cash flow position, as the assigned ratings depend on management’s ability to efficiently manage cash flows until dividend income from strategic investments is realized.

The timely inflow of funds from REIT Fund I and RMC realized through the sale proceeds of TTZ to settle debt obligations remains important.

The rating also takes comfort from the demonstrated and expected continued support of the sponsor, which has played a key role in the past and is anticipated to remain available in times of need.

Furthermore, the successful completion of projects undertaken by REIT Fund I and the expected flow of dividend income to TPL Properties within projected timelines will be key determinants of future rating stability.

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