KARACHI: Pakistan Stock Exchange (PSX) is set to witness the offer for sale of TPL REIT Fund-I, with public subscription scheduled for May 2-3, 2024.

The offer consists of a base offer of 22.94 million units, which is 1.25 percent of the total units of the REIT scheme, having a face value of Rs 10/unit. This also accompanied by green shoe option of up to 22.39 million units representing a further 1.22 percent of REIT scheme.

The offer is being made through the fixed price method at Rs 17.59/unit which is equivalent to the NAV of the REIT. This will help offerers to raise Rs 403-797 million depending upon the green shoe option utilization.

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“The purpose of offer for sales is compliance with REIT regulations, interest of foreign investors, and price discovery,” Topline Securities research report said.

Compliance with REIT Regulations: This offer will ensure compliance with Regulation 7 of the REIT Regulations which require a REIT scheme to be listed within a maximum period of 3 years from the date of Transfer of Real Estate or Financial Close, whichever is later. Financial close of the fund was announced/ declared on Jun 24, 2022.

Interest of Foreign Investors: Listing will help REIT scheme to accommodate interest of foreign investor as according to their prospectus, TPL RMC has been receiving queries from multiple foreign investors regarding participation in TPL REIT.

Price Discovery: A NAV on account of continuing progress on the three projects of TPL REIT will be quarterly disseminated through PSX providing potential investors with periodic updates giving impetus to the listed Units price. A quoted price will be beneficial to all investor portfolios that are marked to market.

TPL REIT Management Company Limited (TPL RMC), is a 100 percent owned subsidiary of TPL Properties Limited, has launched Pakistan’s first and largest hybrid Shariah compliant REIT of Pakistan namely TPL REIT Fund I.

TPL REIT is created under Master-Feeder Fund Structure, and is formed as a trust under REIT Regulations in Pakistan

TPL REIT Fund I has currently invested in three projects, namely Mangrove, One Hoshang, and Technology Park (details of these projects are on next slide).

The initial REIT size is Rs18.35bn, out of which 61 percent is held by the Anchor Investors and 39 percent by TPL Properties.

To highlight, TPL properties is the Strategic Investor in the TPL REIT scheme, and eight commercial banks are the Anchor Investors.

The strategic investor made non-cash contribution of real estate assets into the REIT scheme, valued at Rs7.1bn. The Anchor Investors made a collective cash equity contribution of Rs11.25bn into the REIT scheme.

“TPL Properties is a reputable and corporatized Real Estate company in Pakistan, listed on the stock exchange, providing a one stop solution for real estate development, facility management, and investment,” the report said.

Currently unit holders of REIT scheme consist of TPL Properties and eight commercial banks. Post IPO as per the base offer 1.25% of shareholding will be transferred to General Public with existing unit holders’ holding reducing on a pro rata basis.

Price Comparison: Company is launching offer for sale equal to its NAV value of Rs17.59/share. As per the prospectus, there are no direct competitors of TPL REIT because it’s a perpetual and Hybrid REIT, having substantial developmental component. However, this is highlighted that a finite-life developmental REIT called Globe Residency (GRR) is trading at a premium of 13 percent of its NAV value.

Copyright Business Recorder, 2024