KARACHI: TPL Properties Ltd said on Wednesday its wholly owned subsidiary, TPL REIT Management Company Ltd, has signed unit subscription agreements with “initial investors” in its first funding round of Rs18.35 billion for TPL REIT Fund I.

TPL REIT Management will spend the raised funds for buying and developing three commercial and residential properties in Karachi which — upon completion in three years — will generate returns for investors.

TPL REIT Fund I will now start the acquisition of the three assets — currently held through special purpose vehicles — from TPL Properties against a cash consideration and the issuance of REIT units.

The money is being generated via a real estate investment trust or REIT, which operates like any other company but offers more transparency to investors. All assets under a REIT are controlled by a trustee instead of its majority shareholder. The entity must list on the stock exchange within three years of its financial close, thus letting small investors take exposure to an otherwise capital-intensive real estate market.

Speaking to Dawn, TPL Properties Ltd CEO Ali Asgher said the fund has nine shareholders, including TPL Properties, which contributed 38 per cent of Rs18.35bn as strategic investor. The other investors are Habib Bank Ltd, Bank Al Habib Ltd, Bank Alfalah Ltd, Bank of Punjab Ltd, National Bank of Pakistan Ltd, Habib Metropolitan Bank Ltd, Soneri Bank Ltd and Askari Bank Ltd. The seven banks collectively hold 62pc shareholding, with Habib Bank Ltd contributing the second-largest chunk of funds (12.25pc), said Mr Asgher.

“Our gestation period is two to three years. We expect the first dividend in the third year. That’s when at least one of the three properties is completed and sold. Dividends will be recurring afterwards,” he said.

The first of the three assets that’s likely to be ready is a two-acre piece of land in Korangi. The REIT will develop it into a technology park. The second property is located at the intersection of the upscale Hoshang Road and Abdullah Haroon Road. The third property to be acquired and developed by the company is a gated residential community on 40 acres of land in Korangi Creek.

Published in Dawn, May 12th, 2022