PSX to list second REIT in seven years

Arif Habib Dolmen REIT Management Limited applies for listing of Globe Residency REIT

KARACHI:

The Pakistan Stock Exchange (PSX) is set to list a second REIT (Real Estate Investment Trust) after a gap of seven years and will help facilitate investors in trading their units by the end of November 2022.

Arif Habib Dolmen REIT Management Limited (AHDRML) has applied for the listing of Globe Residency REIT (GRR) at PSX, according to the company announcement made through a statement on Thursday.

This will be the second REIT listing in seven years. The company, however, stated that this would be the first ‘Developmental’ REIT (construction project); the other REIT, already listed at the bourse since 2015, is a ‘rental’ REIT.

Speaking to the Express Tribune AHDRML CEO Muhammad Ejaz said, “Our target is to raise equity worth Rs140 million through the listing”.

“We are offering 10% units (14 million units) at Rs10/each to the public through the PSX,”
he added.

The creation of REITs helps document and regulate real-estate projects, making the projects more transparent – a must in order to cleanse real-estate projects from black money in the country.

GRR is only one of a dozen REITs to get listed over the next couple of years at PSX. These include seven newly created development REITs with an estimated project cost of Rs450 billion. Besides, it was recently learnt that two of the rental REITs have asset values of Rs60 billion.

The REITs will get listed as the rules in place demand their management companies to get their units publicly traded within three years from the time of creation of the trusts. The Central Depository Company (CDC) remains the trustee of all the REITs in Pakistan.

GRR is constructing nine towers in a locality in Karachi and the project cost is estimated at Rs20 billion. The towers were launched in November 2021 and will be ready for possession within three years.

“The REIT fund size is Rs2.8 billion, of which Rs1.4 billion each is of debt and equity, and the project cost is estimated at Rs20 billion,” said the AHDRML CEO.

“A large part of the project cost is achieved via selling apartments in advance,” added Ejaz.

The towers carry as many as 1,344 two-and three-bedroom apartments. The company has already sold 1,098 apartments, including 408 apartments to Meezan Musharakah.

“Construction work is progressing at full swing and the grey structure is targeted for completion by September, 2023,” said the announcement.

“Once PSX approves our application, 85% of the equity units are proposed to be offered to 2,900 shareholders of Javedan Corporation Limited. 10% units will be offered to the public, whereas the remaining 5% will be offered to real-estate consultants,” commented Ejaz.

In June 2021, the concerned authorities had made three to four major changes in the REIT regulations. The federal and provincial governments, as well as the Federal Board of Revenue (FBR) and State Bank of Pakistan (SBP), removed anomalies and rationalised the regulatory and taxation issues faced earlier.

Published in The Express Tribune, October 21^st, 2022.

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