Karachi, February 09, 2022 (PPI-OT): TPL Properties: A game changer

Multiple stable income streams from upcoming projects under new REIT Fund and continued robust demand for the construction sector make TPLP appear attractive at these levels.

TPLP is capitalizing its real estate investment and development through the launching of Pakistan’s first and largest Sharia compliant hybrid REIT fund with a target fund size of US$500mn through its wholly owned subsidiary TPL REIT Management Company. TPL REIT Fund I will have an initial fund size of Rs18.4bn for which Rs11.3bn will be contributed by local investors (85% committed as per management) while the rest will be contributed by TPLP. Management fee for REIT Management will be 1.5% of NAV and performance fee shall be 15% of the increase in NAV and profit on sale of the assets.

TPLP plans to own a significant portion of the REIT, based on the contribution of land and project developed to date, which will provide dividends to TPLP against its strategic unit holding of ~40%. TPLP will continue to develop the three projects and receive development advisory fees. As 100% owner of the RMC, it will receive dividends as the RMC receives management and performance fees for REIT from investors.

Key incentives by State Bank of Pakistan and FBR coupled with government’s keen focus on real estate development to boost the construction sector are expected to play an important role in bringing REITs into the limelight, while TPL’s successful execution of Centerpoint has helped establish the team as one of the better positioned players.