VIS reaffirms REIT ratings of DCR

December 02, 2024 (MLN): VIS Credit Rating Company Limited (VIS) has reaffirmed the Rental REIT rating of Dolmen City REIT (DCR) at ‘AAA (rr)’, according to the press release issued.

The Rental REIT rating of ‘AAA (rr)’ indicates highest capacity to maintain stable rental income.

Risk factors impacting value of REIT assets are negligible over the foreseeable future.

Outlook on the assigned ratings remains ‘Stable.’ Previous Rating action was announced on November 29, 2023.

DCR is a perpetual, listed, closed-end, Shariah-compliant rental REIT scheme launched by Arif Habib Dolmen REIT Management Limited (AHDRML).

Located in the Clifton area of Karachi, the Scheme comprises Harbour Front (office space), Dolmen Mall (retail mall), and an associated parking facility.

The assigned rating incorporates DCR's unleveraged capital structure, as it carries no debt on its books.

Additionally, the rating also considers the profiles of the Dolmen and Arif Habib Groups, both of which are financially sound and possess significant experience in the real estate sector.

The rating reflects sustained high occupancy rates. Since its inception in 2015, DCR’s real estate has maintained high occupancy levels, standing close to 97.5%.

Key factors driving the property’s competitiveness include its quality of services, amenities, facility maintenance, and geographic location.

During the review period, DCR reported a rental income increase of over 12%, driven by higher occupancy levels and new tenant onboarding, which collectively improved revenues.

The press release further noted that the rating also factors in the diversified income streams from the shopping mall and office space.

During the review period, the onboarding of new tenants in the shopping mall has further added to its already diverse consumer offering.

Moreover, in FY24, customer-focused marketing and branding efforts effectively sustained strong footfall at the mall.

The real estate portfolio continues to benefit from credible tenants, with Dolmen Mall Clifton featuring a mix of local and international brands that sustain consistent customer traffic.

This is further supported by multi year lease commitments, supporting predictable rental income streams. The office building, housing multinational corporations, reflects lower counterparty credit risk.

Going forward, maintaining financial and operational stability will remain important from the ratings perspective.

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