Lahore December 15 2022: Globe Residency REIT offer consist of 14,000,00 Units, which is 10 percent of the total units of the REIT Scheme, having a face value of PKR 10/- each offered by Javedan Corporation Limited as an Offer for Sale to the General Public.
The date of public subscription are from December 14, 2022 to December 15, 2022 from 9:00 AM to 5:00 PM.
The ‘Globe Residency Apartments’ or the REIT Project site is situated inside one of Karachi’s largest gated, masterplanned, residential housing project, Naya Nazimabad (NN) which was launched by Javedan Corporation Limited (JVDC) in the year 2011. Currently, 1,150 houses are occupied and 500 houses are under construction in Naya Nazimabad.
Javedan Corporation Limited introduced the ‘Globe Residency Apartments’ to the general public for sale on November 20, 2021. A Close-end Development REIT Scheme having a limited life of 48 months (spanning over 5 fiscal years) named Globe Residency REIT, with total Fund size of PKR 2.8 Billion comprising of PKR 1.4 Billion Equity and PKR 1.4 Billion Debt, was established on December 24, 2021 under a Trust Deed executed between Arif Habib Dolmen REIT Management Limited (“AHDRML” or the “REIT Management Company”), as the REIT Management Company (RMC) and Central Depository Company of Pakistan Limited (CDCPL), as the Trustee.
The REIT Scheme shall continue to exist until the entire REIT Project is developed and completed, and all the flats/apartments are allotted, sold and delivered to the end-buyers against full payments of purchase price to the Trustee on account of the REIT Scheme. After the sale of all apartments, the REIT Scheme will be dissolved/wind up and the proceeds will be distributed amongst Unit Holders after settlement of all expenses and liabilities.
The Project has been acquired from Javedan Corporation Limited and has been transferred on ‘as-is-where-is’ basis to Globe Residency REIT i.e. including the real estate plus Customer Advances (PKR 1,410 Million) and Obligations (PKR 379.6 Million).
The effective date of the transfer of the Project from the structure of Javedan Corporation Limited to the REIT structure was April 01, 2022. Real Estate comprising of 5 FL Sites (FL 3, 4, 5, 7 and 8) with an aggregate land size of 40,500 square yards has been transferred in the name of the Trustee, Central Depositary Company of Pakistan Limited, and hence acquired by Globe Residency REIT via Conveyance Deed dated March 30, 2022 at a consideration of PKR 3.24 Billion (PKR 80,000/- per square yard). FL 3, 4 and 5 are freehold while FL 7 and 8 are lease hold.
Land consideration of PKR 2.54 Billion has already been paid to Javedan Corporation Limited out of the REIT Fund. This constitutes: PKR 1.4 Billion paid through equity via issuance of 140,000,000 REIT Units of face value PKR 10.00/- per unit and PKR 1.14 Billion paid using proceeds from a finance facility of PKR 1.4 Billion from Bank Alfalah Limited for a period of 4 years, inclusive of one-year grace period, at 6 months KIBOR plus spread of 1.25%.
The outstanding payment of PKR 700 Million will be paid from future Customer Advances or project cash flows by June 30, 2023. Out of the remaining outstanding amount, PKR 450 Million have been paid by the REIT Scheme to JVDC. The REIT Scheme has also entered into a Musharaka Arrangement (i.e. profit or loss sharing basis) with Meezan Bank Limited on September 26, 2022 for three towers (Tower 2, Tower 3 & Tower 4) on FL-05 comprising of 408 apartments. Meezan Bank Limited and the REIT Scheme shall contribute 50%:50% in land and construction cost and other direct cost related to the Project. The profit derived from the said three towers shall be distributed between the REIT Scheme and Meezan Bank Limited in the profit sharing ratio i.e., 50%:50%. Given below are the key terms of the Musharakah Arrangement:
The parties, Globe Residency REIT and Meezan Bank Limited, have agreed to launch three towers (Tower 2, Tower 3 & Tower 4) of FL-05 for sale to public after completion of grey structure. And preference will be given to buyers intending to obtain long term mortgage financing from Meezan Bank Limited for the purchase of subject apartments.
The objective of the REIT Scheme includes construction of 9 towers with a total of 1,344 (2 Beds and 3 Beds) residential units under the project named ‘Globe Residency Apartments’ for generating income for Unit Holders. As of September 30, 2022, 1,084 units have been booked, comprising 676 units booked directly by customers, and 408 apartments have been booked/committed under Meezan Bank Musharaka.
The vision of the Scheme is to develop the finest residential accommodation that is environmentally sustainable, economically viable, financially rewarding and overall conducive for business development. The total cost of the Project is expected to be PKR 20.64 Billion and is proposed to be financed as follows:
As of September 30, 2022, Customer Advances amounting to PKR 2,177 Million have been received and remaining
Customer Advance amounting to PKR 14,323 Million are anticipated/forecasted to be received during the life of the
REIT Scheme
Sponsor of the Scheme
Javedan Corporation Limited (“JVDC”) holds 100% units of the REIT Scheme, i.e., 140 Mn REIT Units. The Board of Directors of Javedan Corporation Limited, in their meeting held on 27 August 2022 and the shareholders of Javedan Corporation Limited in the Extra Ordinary General Meeting held on 21 September 2022, have approved the divestment of their entire investment stake in the REIT Scheme as follows:
- 10% units i.e., 14,000,000 Units of the REIT Scheme to the general public through this offer for sale at an Offer Price of PKR 10/- Unit.
- 85% units i.e., 118,999,997 Units of the REIT Scheme to the existing 2,793 ordinary shareholders of JVDC as at 14 September 2022 at an Offer Price of PKR 10/- Unit in proportion to their existing shareholding in the following manner:
a. 93,533,444 Units (“Majority Units”) have already been offered and subscribed by the following major shareholders (holding more than 5% of the shares of JVDC) (“Major Shareholders”) pursuant to a Unit Purchase Agreement dated November 17, 2022 entered into by JVDC with the following major shareholders and the RMC. These Units were offered to them based on their proportionate shareholding in JVDC. Out of these Majority Units, 35,000,000 (thirty five million) Units are kept in JVDC’s CDS account marked as blocked pursuant to the requirements of the Real Estate Investment Trust Regulations, 2015 (“Blocked Units”), and, therefore, only the beneficial interest of the Blocked Units will be transferred to the following Major Shareholders in the following proportions. The legal title of the Blocked Units shall be transferred to the respective Major Shareholders of JVDC with the approval of Securities and Exchange Commission of Pakistan. Remaining units will be transferred to majority shareholders of JVDC on or before the date of transfer of units to general public.
b. Subject to the contents of paragraph (c) below, the remaining 25,466,553 Units will be offered to the remaining ordinary shareholders of JVDC (that is those ordinary shareholders of JVDC who are not Major Shareholders of JVDC) (the “Other Shareholders”) at an Offer Price of PKR 10/- Unit pro rata to their shareholding in JVDC as at 14 September 2022. The offer letters to these Other Shareholders will be dispatched to their registered address simultaneously with the publication of this Offer for Sale Document. The date of acceptance of the offer to these Other Shareholders of JVDC will be the same as the date of general public subscription through this Offer for Sale Document. These Other Shareholders of JVDC will be required to send confirmation of their acceptance of the Units offered to them along with the payment instrument (Pay Order, Demand Draft in favor of Javedan Corporation Limited) by the last date of acceptance as set out in their offer letters which will coincide with the last date of public subscription in the Offer for Sale Document. Units to minority shareholders of JVDC will be transferred on date of transfer of units to general public.
c. However, some of the Other Shareholders have already provided their consent for subscribing units and their details are as follows
- 3. 5% units i.e., 7,000,000 Units of the REIT Scheme will be offered to Real Estate Consultants (RECs) engaged in sales and marketing of the REIT Project on equal basis. The offer letter to RECs will be dispatched to their registered address simultaneously with the publication of this Offer for Sale Document. The date of acceptance of the offer to these RECs will be the same as the date of general public subscription through this Offer for Sale Document. RECs will be required to send confirmation of their acceptance of the offer along with the payment instrument (Pay Order, Demand Draft in favor of Javedan Corporation Limited) by the last date of acceptance. Units to RECs will be transferred on date of transfer of units to general public
- In case any portion of the Units offered by JVDC to the Other Shareholders and/or the RECs remains unsubscribed and in case of any fractional entitlement of Units, JVDC shall continue to hold such unsubscribed Units as sponsor of GRR.
ABOUT THE OFFER
The Offer comprises of 14,000,000 Units of the REIT Scheme having a face value of PKR 10.00/- per unit offered by Javedan Corporation Limited, which is the existing sponsor of the Globe Residency REIT. The entire Offer of 14,000,000 Units will be through the Fixed Price Method at an Offer Price of PKR 10.00/- per unit to the General Public.
Land Area and Utilization Plan
