Press Release

VIS Upgrades Management Quality Rating (RMC) of Arif Habib Dolmen REIT Management Limited

Karachi, October 18, 2019: VIS Credit Rating Company Limited has upgraded the Management Quality Rating (RMC) of Arif Habib Dolmen REIT Management Limited (AHDRML) from ‘AM2 (RMC)’ (AM-Two (RMC)) to ‘AM2+ (RMC)’ (AM-Two Plus (RMC)). The rating of ‘AM2+ (RMC)’ (AM-Two Plus (RMC)) indicates that the asset manager exhibits very good management characteristics. Outlook on the assigned rating is Stable. The previous rating action was announced on September 17, 2018.

The assigned rating reflects improvement in corporate governance framework and diversification in revenue base of the company with growth in advisory fees and investment income. Rating continues to factor in sponsor profile of Arif Habib and Dolmen Groups. AHDRML benefits from both their operational experience and financial support in developing and managing real estate projects. Research and investment functions of the company are considered adequate. Despite increase in non-core income, revenue base remains concentrated with majority topline represented by management fees. Moreover, with only a single fund under management, fund-wise concentration in assets under management remains on the higher side.

In the backdrop of rising benchmark rate, fund performance (in terms of dividend yield on par) of Dolmen City REIT (DCR) depicted weakening; the same would be continuously monitored by VIS and improvement in the same is considered imperative for maintaining the assigned rating. In order to maintain the REIT property in desirable conditions, AHDRML had appointed Dolmen Real Estate Management (Private) Limited (DREM) as a property manager. Property management is monitored through quarterly performance reviews. Given significant occupancy levels, performance of DCR continues to remain in line with projections and will continue to drive topline growth for AHDRML.

Financial profile of the company is expected to improve over the medium term on the back of growth in advisory and investment income, while fund management fees will continue to support revenues. Launch of new funds is under consideration. Along with revenue diversification, materialization of planned fund launches is considered important and will be a key rating driver going forward.

For further information on this rating announcement, please contact Mr. Talha Iqbal (Ext: 213) at 021-35311861-70 or fax to 021-35311873.

Jamal Abbas Zaidi

Applicable Rating Criteria: Management Quality Rating of RMC (December 2018)

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