FLASHNEWS:

PACRA Maintains Entity Ratings of BRB Properties Builders and Developers

Lahore, January 17, 2023 (PPI-OT):BRB Properties Builders and Developers is committed towards the construction of their first real estate venture Oasis Park Residencia. The company has shown progress towards the construction of bungalows which are expected to be completed by June’2025 as per agreed terms with Sindh Building Control Authority (SBCA). Additionally, the company has been successful in selling out 90% units with the aid of Zameen.com and through internal sales force. Revenue from the sale of bungalows is recognized to the stage of completion of the units at the end of the reporting period. As a result, during FY22 the Company reported revenue of PKR 1,263mln (FY21: PKR 990mln).

The sales growth is evidence of the market acceptability of the project which is in return beneficial for the company in terms of creating their value in the real estate sector. The current inflationary environment with higher interest rates and rising cost of raw materials including steel and cement have led to a slowdown in the real estate sector. Furthermore, the ongoing political uncertainty and unstable economic environment has adversely affected the sector. However, the shortfall of houses in the residential sector and increasing demand with growth in population has led to continuous rise in the prices of property.

The Company has received approximately 60% of the booked amount under its consumer-friendly installment plan from its customers against the sale of bungalows. The remaining amount will be received over the time, thus adding to the cash flow stream that will be utilized towards the construction. The Company has fully utilized its facility of PKR 500mln from Meezan Bank towards the construction. The financial risk of the company is low but remains subject to further borrowings in order to support future projects.

Payment of tax liability related to assets declared under Tax amnesty scheme remains important for the ratings of the Company. Regarding future plans, the company has finalized architectural designs and obtained approvals for the construction of Hexagon Tower for commercial and residential use on the same land. The Company plans on formally launching the project in mid of CY23 considering the real estate market and economic conditions.

The timely completion of the project and the adequacy of cashflows remain crucial for the company. The ratings are dependent on the future projects that the company plans on undertaking along with timely collection from customers against sale of bungalows and any further borrowings that would affect the financial risk profile of the company.

For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com