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Monday, June 17, 2024

Launch Partners

TPL REIT plans US$200 million international funding round for sustainable fund

Karachi-based TPL REIT Management Company (TPL REIT)’s Shariah compliant impact investment fund, TPL REIT Fund I, is seeking to raise up to US$200 million from global investors in 2024, Ali Asgher, CEO of TPL REIT, told ISFI.

“[TPL REIT Fund I] plans to have a second round of funding of US$150 million to US$200 million from international investors, development finance institutions and multilateral development banks,” Ali shared.

Established under a ‘master-feeder fund’ structure, TPL REIT was formed in 2022 as a trust under Pakistan’s REIT regulations, which enables domestic investors to invest in the fund directly while international investors are able to invest through off-shore feeder funds.

The fund achieved a financial close of PKR18.35 billion (US$65.84 million) in June 2022 consisting of a fresh raise of PKR11.25 billion (US$40.3 million) from eight local banks including Bank Alfalah, Habib Bank and National Bank of Pakistan with seed assets worth PKR7.1 billion (US$25.43 million) from TPL Properties, which fully owns TPL REIT. The perpetual fund will continue to add more sustainable and environmentally friendly development and yielding assets to its portfolio.

Investing in Leadership in Energy and Environmental Design-certified projects, the fund aims to, among others, bridge the housing shortfall, build sustainable developments and improve employment and living standards in Pakistan.

According to Sitvat Jamal, TPL Corp’s group head of communications and sustainability, projects under the fund will contribute to five SDGs including SDG 8 of decent work and economic growth, SDG 11 of sustainable cities and communities and SDG 13 of climate action by reducing the carbon footprint through the development of climate-resilient real estate assets.

Ali noted that TPL REIT is also working with various land bank owners to structure their real estate assets into a REIT fund. In the pipeline as well is what it claims will be the country’s first infrastructure REIT.

“TPL [REIT] has recently collaborated with TASC Towers to acquire a telecom infrastructure asset…, which is also planned to be acquired under the REIT structure, making it the first infrastructure REIT in Pakistan,” Ali detailed.

Although the regulatory framework for REITs in Pakistan was introduced in 2008 by the Securities and Exchange Commission of Pakistan, there has yet to be substantial uptake. The regulations were amended in 2015, 2021 and 2022.

“These amendments have brought the regulatory landscape for REITs in Pakistan on par with international benchmarks, encouraging investors and real estate owners to invest through a regulated, transparent and formal REIT structure,” Ali commented.

While the regulatory landscape has been steadily improving, Ali attributes a lack of investor awareness regarding the instrument to why very few players have successfully established REIT funds, with only two listed REITs in the country.

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