TPL REIT Fund I, managed by TPL REIT Management Company Limited, has released its financial statements for the fiscal year ending June 30, 2024. The Board of Directors convened on September 23, 2024, to review the fund’s performance and make recommendations for stakeholders.

Key Highlights

In its meeting, the Board decided against any payouts for the year, with no cash dividends, bonus shares, or right shares being announced. The details of the financial results include both consolidated and unconsolidated statements of profit or loss.

Unconsolidated Financial Performance

The unconsolidated statement reveals that TPL REIT Fund I earned a total income of PKR 1,039 million for the year 2024, a significant drop compared to the PKR 11,252 million earned in 2023. This steep decline in income can primarily be attributed to a drastic fall in unrealized gains from investments, down to PKR 564 million in 2024 from PKR 11,122 million in 2023.

Additionally, the fund earned PKR 445 million in dividend income for the year, while profit on bank deposits amounted to PKR 29 million.

On the expense side, total expenditures reached PKR 662 million, with the management fee accounting for the largest share, at PKR 528 million. The fund incurred other costs including performance fees, SECP monitoring fees, auditor’s remuneration, and legal and professional fees, resulting in a profit after taxation of PKR 376 million for the year, a sharp decline compared to the previous year’s PKR 9,213 million. Earnings per unit (basic and diluted) were recorded at PKR 0.23.

Consolidated Financial Performance

The consolidated financials paint a similar picture, with total income standing at PKR 997 million for the year, down from PKR 11,146 million in 2023. Unrealized gains on revaluation of investment properties stood at PKR 503 million, and the fund reported a PKR 3.8 million unrealized loss on investments at fair value.

The fund also earned income from bank deposits (PKR 337 million) and GOP Ijarah sukuks (PKR 122 million), with a small amount of PKR 37 million earned in dividend income.

Total consolidated expenses were PKR 679 million, leading to a profit after taxation of PKR 318 million, compared to PKR 9,096 million in 2023. For 2024, the fund reported earnings per unit (basic and diluted) of PKR 0.19.

Analysis

TPL REIT Fund I’s financial results for 2024 show a challenging year, with significant reductions in income and profitability compared to the previous year. The drastic reduction in unrealized gains on remeasurement of investments is the primary factor behind the steep fall in income and profits.

Despite this, the fund managed to generate positive returns, though far less than the previous year, and maintained control over its expenses. Management fees and other administrative costs remained substantial but in line with the fund’s operational requirements.

The board’s decision to not issue dividends or bonus shares signals a cautious approach to capital retention, likely in response to the volatility in the fund’s investment performance.

Conclusion

TPL REIT Fund I faced a tough financial year in 2024, with reduced income and profits. While the fund remains operationally sound, the sharp decline in investment gains highlights the challenging environment for REITs in the current market. Stakeholders will need to closely monitor the fund’s performance in the upcoming year as it navigates these financial headwinds.

Source: PSX

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