Naya Nazimabad REIT Profit Crashes 28% Despite Rs17.89 Billion Asset Surge

KARACHI: Naya Nazimabad Apartment REIT had sold apartments and shops worth Rs15.5 billion by March. Its FY2026 income statement shows revenue of Rs164.7 million, and cost of sales swallowed nearly all of it. A single accounting line kept the scheme in profit.

Arif Habib Dolmen REIT Management Limited, which manages the scheme, sent the accounts for the year ended June 30, 2026 to the Pakistan Stock Exchange on Thursday. The board recommended no cash dividend, no bonus and no right units.

Profit after tax fell 27.5 percent to Rs881.7m from Rs1.22bn. Earnings per unit dropped to Rs3.00 from Rs4.14.

The full-year number hides a sharp swing. The scheme’s offer document, published in August, showed a loss of Rs506m for the nine months to March. That means the scheme earned about Rs1.39bn between April and June.

Sales did not drive it. The scheme recorded no revenue from its 2022 launch through FY25. Its nine-month revenue of Rs109.5m matched the Rs109m value of nine Lahore residential plots, the only sales on which it had recognised revenue by March. For the full year, cost of sales left a gross profit of just Rs2.39m.

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Finance cost came to Rs707.4m. Combined operating, financing and other expenses reached Rs816.3m, even as administrative costs fell by roughly two-thirds to Rs62.5m. Excluding other income, the scheme’s reported revenue and expenses would have produced a loss of about Rs814m.

Other income supplied Rs1.70bn. The cash flow statement removes Rs1.62bn of profit as a non-cash “change in estimates” adjustment and links it to the Musharaka financing note. The offer document traced last year’s Rs2.0bn in other income to a change in estimates on the carrying value of the same liability. It put total financing at Rs8.95bn in March. The June balance sheet shows Rs7.79bn, and the cash flow statement records no repayment.

Bank of Punjab provided the Rs7.78bn Musharaka facility, which settles on the project’s actual profit or loss. The offer document says the scheme will reclassify the arrangement as debt in its FY27 accounts.

Before working-capital movements, operating cash ran negative at Rs28m. After them, operations generated Rs1.45bn, because buyers kept paying.

Bookings run far ahead of revenue

By March 31, the scheme had sold 726 of 1,292 apartments and shops in three Naya Nazimabad towers. It had collected Rs3.9bn of their Rs15.47bn booking value. Construction stood at 12–14pc, with completion targets between June 2029 and January 2030. Work has not started on the other four Karachi plots, which still await construction permits.

The offer document defines contract liabilities as advances received against apartment bookings. They rose more than fourfold to Rs5.52bn. Bank balances nearly tripled to Rs2.21bn.

Book NAV rose 25pc to Rs14.99 a unit at June 30. Book-building investors paid Rs23 in early September, 53pc above that figure.

The offer document cites a NAV of Rs30.03 per unit, based on KGT Private Limited’s valuation report dated April 28, 2026. On that measure, investors bought at about 23pc below value. KGT valued the portfolio at Rs20.46bn using the sales comparison approach. The accounts carry inventory property at Rs14.79bn.

Javedan Corporation holds 59pc of the Shariah-compliant developmental REIT, and Arif Habib Corporation holds 26pc. NNAR became Pakistan’s seventh listed REIT, according to the SECP.

The bookings and the buyers’ cash are real. The open question is whether delivering those towers produces margins that can carry earnings without help from the estimates note.