TPL Properties : PACRA Maintains Rating of TPL Properties Limited - TFC 'Series A' - Press Release issued by The Pakistan Credit Rating Agency Limited

May 11, 2020 (PPI-OT)

Following is the text of press release issued by The Pakistan Credit Rating Agency Limited (PACRA)

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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 improve as 'Centrepoint' has almost full occupancy coupled with relatively long-term agreements. The agreements also incorporate annual rent escalation clause. TPL Group is pursuing its second project in real estate - One Hoshang. One Hoshang will comprise luxury residential apartments and advance sale model will be followed for this project.

The project previously faced delays owing to ban on high rise constructions in Karachi. The management is expecting to receive handsome developer's margin in upcoming year. Earlier, 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 One Hoshang. The financial risk profile remain adequate; will be supported by additional cashflows expected from new projects and curtailed key policy rate. Some of the related projects (REIT and Development Projects) are on the cards which might alleviate concerns pertaining to cash flows.

Any further increase in leveraging may put stress on cushion available if upcoming investments are unable to contribute healthy cashflows. Furthermore, there exists guarantee from ultimate parent of 'TPL Properties Limited' in case of any payment constraint, they will service interest and principal instalment of 'TFC Series A'. The comfort is drawn from sponsor's willingness to cut any of the current transactions, in which TPL Properties is currently dealing, to hold and/ or generate cash flows, if need be.

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:AnalystThe Pakistan Credit Rating Agency Limited (PACRA)Awami Complex, FB1, Usman Block New Garden Town,Lahore - PakistanTel: [phone]Fax: [phone]Email: [e-mail]: www.pacra.com

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