Press Release

JCR-VIS Reaffirms Rating of Facility acquired by Avari Hotels (Pvt.) Limited

Karachi, March 28, 2018: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the bank loan rating assigned to the facility acquired by Avari Hotels (Pvt.) Limited (AHL), amounting to Rs. 1.5b (Rs. 1b of Islamic Musharaka facility and Rs. 500m of conventional financing facility), at ‘A(blr)’ (Single A (blr)). Outlook on the assigned rating is ‘Stable’. Previous rating action was announced on August 31, 2016.

The assigned rating to Avari Hotels (Pvt.) Limited (AHL) incorporates the renowned profile of ‘The Avari Group’ in the hospitality sector. AHL owns and manages two five star hotel properties in Pakistan, namely ‘Avari Towers Karachi’ (AT) and ‘Avari Lahore’ (AL) along with separate commercial complexes used as rental office spaces.

AHL’s occupancy levels and room rentals buoyed on the back of higher demand. Increasing presence in main cities of Pakistan facilitated business volumes emanating from corporate clients; this also offset the impact of shut down of Avari Xpress facilities in Islamabad.

Revenue base is largely contributed by room rentals; core revenues of the company also include proceeds from food and beverages on a timeline basis. Gross margins of AHL have remained intact; as a result, bottom-line of the company also improved and was supported by growth in top-line along with better control over expenses during FY17.

Given a high leveraged capital structure, repayment capacity is expected to be supported by revenues from additional rooms to be brought online from March 2018 onwards. Rating also draws comfort from assignment of office rent receivable from one of the largest client of AT which provides a liquidity cushion.

For further information on this rating announcement, please contact the undersigned (Ext: 201) or Mr. Jamal Abbas Zaidi (Ext: 201) at 35311861-70 or fax to 35311872-3.

Javed Callea

Applicable Rating Criteria: Industrial Corporates (May 2016)

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited VIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS, the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2018 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.

JCR-VIS Credit Rating Company Limited