All you need to know before investing in TPL REIT Fund

The upcoming TPL REIT fund is not only the first hybrid REIT in PSX, but it is also the largest.

The management of the fund is handled by TPL REIT Management Company (TPL RMC), which is a subsidiary of TPL Properties Limited (TPLP).

What projects is TPL REIT working on?

The TPL REIT is working on three projects.

1. One Hoshang

One Hoshand is spread over 250k square feet and is Pakistan’s first Gold Leed luxury residential tower.

The grey structure of this project is expected to be completed by July 2025.

The phase 1 inventory sale is expected to be completed by 3QFY24.

2. Mangrove

Mangrove is a community spread over 40 acre of land. It will include residential apartments, offices, and retail space. However, the major portion of this project will be covered by the residential portion.

The development of this project is expected to begin in 2025 and completion is expected by 2034.

3. TPL Technology Park

This project comprises a business hotel and offices. It is spread over 647k square feet.

As of now, the development of this project is on hold. It is expected to resume by the end of 2024 when the economy starts showing signs of recovery.

What is the IPO Price?

The IPO price is set at Rs. 17.59, a premium of Rs. 7.59 above par value(Rs. 10).

The first offering of 22.94mn units represents 1.25% of the issued, subscribed and paid-up units.

What are the risks associated with this IPO?

Since the IPO is related to the Real Estate sector, it carries risks similar to that sector.

If the economic recovery is slow, it will be hard to get the projects up and running. Even if that was achieved, it would be difficult to get to near 100% tenancy. This is primarily a residential project and with the public’s purchasing power already down, tenancy may not be so straightforward.

There is also the risk of increasing construction costs, in which case the assumptions about the expected RoE may no more stand true.

Either way, there haven’t been many IPOs in the PSX lately and investors would want to get their hands on this one hoping to make some quick gains at least.