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Wednesday, May 22, 2024

TPL to raise $500mn via Pakistan’s biggest REIT

Following the government's push for the construction sector, Pakistan is to see its third REIT this year as the country's leading IoT company TPL Trakker Limited to list REIT in Pakistan, overseas within three years. Plans to raise $500 million from private investments, from domestic, international sources.

Pakistani company TPL Corporate plans to raise $500 million via a private real estate investment trust (REIT) making it one of the largest such fundraising in Pakistan’s history.

According to international media agency Bloomberg, the company’s REIT Management Company is going to seek 60 per cent of the targeted funds via foreign investors, 30 per cent from the domestic investors, and the rest of the 10 per cent from its parent TPL Properties limited.

Quoting the CEO of TPL Corp. the media agency reported that the hybrid real estate investment trust plans to achieve the goal by Jule 2022, and will offer an internal rate of return of greater than 30 per cent in the local currency.

It is worth mentioning that this is the third real estate investment trust to be announced in Pakistan in 2021, and fourth overall, as Prime Minister Imran Khan has incentivized the construction sector as an industry to lead the economic growth of the country.

This came after a gap of six years since 2015, due to regulatory changes led by the Securities and Exchange Commission of Pakistan and the State Bank of Pakistan made such investment attractive for issuers.

In an interview with national media outlet Dawn in July 2021, Arif Habib Dolmen REIT Management CEO Muhammad Ejaz said his company will soon launch four REITs in addition to the two schemes that the company announced earlier this month.

It is worth mentioning that Arif Habib Dolmen REIT was Pakistan’s first REIT in 2015, and has prominent projects like Dolmen mall, and a very famous office tower in Karachi.

REITs collect money from investors and deploy it in real estate projects. They operate like any other company but offer more transparency to investors as trustees control all assets and the entity must list on a stock exchange within three years. Small investors can then take exposure to an otherwise capital-intensive and illiquid real estate market by publicly trading REIT units just like ordinary shares.

Read More: Pakistan to see its first Sharia-compliant REIT in the coming weeks

The incumbent government is offering tax amnesty to investors incentivizing them to invest in the construction projects while offering subsidies in low-cost housing to increase demand.

On the other hand, the commercial banks of Pakistan have been asked to increase their credit exposure to 5 per cent of the loan exposure for the housing sector, Bloomberg reported.

Talking to Bloomberg, CEO TPL said that the company plans to list the REIT within three years in Pakistan and overseas. The funds will be used to finance three real estate projects, namely a tech park, a high-end residential building, and a gated seafront community in Karachi.

TPL Corp, a Pakistani group with businesses including vehicle tracking and insurance, is trying to scale up its realty business with its REIT.

Diyár Homes Limited investment

Another major development in the construction sector came to light as a United Arab Emirates-based real estate company Diyar Homes Limited has announced to invest $30 million in Pakistan’s second-largest city, Lahore.

With this project, the foreign company aimed to attract overseas Pakistanis to invest in their home country’s real estate sector, Pakistan Observer reported.

It comes days after PM Imran launched ‘Roshan Apna Ghar’ program for overseas Pakistanis, enabling them to acquire property in Pakistan through Roshan Digital Accounts.