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PACRA Maintains Rating of TPL Properties Limited | TFC ‘Series A’

May 10, 2019

Lahore, May 10, 2019 (PPI-OT): The ratings incorporate sustained fundamentals of the company. TPL Properties owns a high-end office building (Centrepoint) in Karachi. The company is following BOMR (build, own, maintain and rent-out) for Centrepoint. The business profile of TPL Properties is expected to remain healthy as ‘Centrepoint’ enjoys full occupancy coupled with relatively long-term agreements engendering low business risk. The agreements also incorporate annual rent escalation clause. TPL Group is pursuing its second project in real estate – HKC Tower. HKC tower will comprise luxury residential apartments and advance sale model will be followed for this project.

The project was facing delay due to ban on high rise constructions in Karachi. Last year, the company raised debt through TFC (Series A) to swap long term finance present on book which was previously obtained at higher spread and finance pre-construction expenses of HKC Tower. The lower spread on the TFC was due to improved risk profile of the Company – a factor considered positive while assigning rating.

The remaining amount of TFC (Series B) will be used for equity investment in projects. The financial risk profile is adequate and current financial commitments are manageable from existing cashflows of the company. Any further increase in leveraging beyond ‘Tranche A’ may have negative implications if upcoming investments are unable to contribute positive cashflows. Comfort can be drawn from financial strength of ultimate parent of TPL Properties Limited in case of any payment constraint, they will service interest and principal installment.

The ratings are dependent on management’s ability to ensure adequacy of cashflows against debt repayment commitments. Any material deviation in strategy impacting risk profile of the company will be negative.

For more information, contact:
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425

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