TPL plans Pakistan's biggest Reit to gain from construction push

Islamabad

A UNIT of Pakistan's TPL Corp plans to raise as much as US$500 million through a private real estate investment trust (Reit), marking one of the largest such fundraisings in the nation's history.

TPL Reit Management is seeking to raise 60 per cent of the targeted funds from foreign investors, 30 per cent from domestic investors and the rest from its parent TPL Properties, according to Ali Jameel, CEO of TPL Corp. The hybrid Reit plans to close the deal by June, and will offer an internal rate of return of more than 30 per cent in local currency, he said.

The Reit is the third to be announced in the country this year - and fourth overall - as Prime Minister Imran Khan looks at the construction industry as a catalyst to boost economic growth. The South Asian nation is giving tax evaders a free pass to invest in construction projects and offering subsidies for low-cost houses, while banks have been asked to increase credit exposure to 5 per cent of the loan portfolio for the industry.

"Construction activity is picking up rapidly due to access to finance for both the developer and the buyer, and this is expected to grow exponentially over the next two years," Mr Jameel said in an interview at his office in Karachi. "The offering will give investors an opportunity to tap into Pakistan's booming real estate."

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 - a tech park, a high-end residential building and a gated seafront community - in Karachi, he said.

TPL Corp, a Pakistani group with businesses including vehicle tracking and insurance, is trying to scale up its realty business. TPL's Reit is the third to be announced this year in the country after a hiatus since the nation's first such in 2015, as regulatory changes led by the Securities and Exchange Commission of Pakistan and the State Bank of Pakistan made it attractive for issuers.

Pakistan's first Reit, which holds rental assets including Karachi's most prominent mall and an office tower, offers a dividend yield of around 12 per cent a year. Reits for a housing project in Karachi were announced in July to raise 8 billion rupees (S$64.7 million) with an expected internal rate of return of more than 30 per cent. BLOOMBERG