PSX: DCR

Dolmen City REIT

Comprehensive Investment Analysis Report

Pakistan's Premier Commercial REIT | Karachi, Sindh

PKR 38.90
Target: PKR 40 - 46
+92.33% (1 Year)
Accumulate
Ticker
DCR
NAV per Unit
PKR 34.40
Market Cap
PKR 85.88B
Yield
6.3-7.98%
Rating
AAA(rr)

Recommendation: ACCUMULATE

Rating Core Holdings / Moderate Accumulation
Target Price Range PKR 40-46 (12-month)
Upside Potential 15-20% from current
Risk Profile Conservative / Moderate Income

Valuation Metrics

P/E Ratio 10.4x (Cheap)
Price-to-Book 0.80x
EV/Revenue 13.8x
Premium to NAV 12.4%
Assessment ATTRACTIVE

Financial Health

Debt-to-Equity 0.00x (Debt-Free)
Credit Rating AAA(rr)
Quick Ratio 2.34x
Current Ratio 2.99x
Strength EXCELLENT

Dividend Profile

Annual Dividend PKR 2.52
Yield 6.5-7.98%
Payout Ratio 96-97%
3-Year Growth 21.7% p.a.
Next Ex-Div Dec 26, 2025

1. Company Overview & Market Position

Company Profile

Dolmen City REIT (DCR) is Pakistan's first and only listed commercial REIT, launched in June 2015 by Arif Habib Dolmen REIT Management Limited (AHDRML). As a perpetual, closed-end, Shariah-compliant rental REIT, DCR was established under SECP regulations to generate stable rental income from premium commercial real estate assets. The REIT is managed by a professionally qualified team with extensive real estate experience within the Arif Habib Group.

Dolmen Mall Clifton (68% of portfolio)

  • Leasable Area: 542,847 sq.ft.
  • Total Built-up: 1 million sq.ft.
  • Occupancy: 97.8%
  • Tenants: 130+ retail outlets
  • Daily Footfall: 25,000-29,000

The Harbour Front (32% of portfolio)

  • Leasable Area: 257,162 sq.ft.
  • Floors: 19 premium office floors
  • Occupancy: 100%
  • Key Tenants: Engro, P&G, Mitsubishi
  • Waterfront Location: Defence/Clifton

Competitive Positioning

Prime Location
Clifton, Karachi
Portfolio Scale
800,009 sq.ft.
Occupancy Rate
98.5% Average
Lease Maturity
3+ Years WALE

2. Valuation Analysis

Valuation Assessment

DCR is trading at an ATTRACTIVE VALUATION compared to regional and global REIT benchmarks:

Metric DCR (Current) Asian REITs Avg Assessment
P/E Ratio 10.4x 17.8x Significantly Undervalued
Price-to-Book 0.80x 0.90x Trading Below Book Value
EV/Revenue 13.8x 15-20x (typical) Reasonable Valuation
NAV Premium 12.4% 20-40% (global REITs) Conservative Premium

Fair Value Estimation

  • Dividend Discount Model (DDM): Fair value PKR 42-45 (based on 6.5% yield assumption)
  • NAV-based Valuation: Fair value PKR 39-42 (10-20% premium to current NAV)
  • P/E Multiple Valuation: Fair value PKR 40-46 (12-14x earnings multiple)
  • Consensus Fair Range: PKR 40-46 representing 3-18% upside

Valuation Comparison with Peers

REIT / Company Market Cap (PKR B) P/E Ratio Dividend Yield Type
Dolmen City REIT 85.88 10.4x 6.5-8.0% Commercial
Globe Residency REIT 3.14 11.28x 8.62% Residential
MCB Bank Limited 436.8 8.0x 3.5% Financial
HBL Bank Limited 470.1 7.2x 4.2% Financial

3. Financial Health & Performance

Total Assets
PKR 77.5B
Inv. Property
PKR 74.8B
Unit Holders' Fund
PKR 76.5B
Cash & Deposits
PKR 2.3B

Income Statement Analysis

Period Q1 FY26 Q1 FY25 YoY
Rental Income 1,532.7m 1,286.3m +19.0%
Total Revenue 1,564.5m 1,369.8m +14.2%
Op. Expenses 172.3m 304.9m -43.5%
Profit 1,385.2m 1,112.9m +24.5%

Liquidity Profile

Current Ratio 2.99x (vs 1.5-2.0x acceptable) EXCELLENT
Quick Ratio 2.34x (vs 1.0x minimum) EXCELLENT
Cash Position PKR 2,286 million STRONG
Op. Cash Flow PKR 1,294 million (Q1) ROBUST

Debt Profile: ZERO DEBT

DCR operates with ZERO DEBT - a major strength that distinguishes it from many property companies.

  • Total Debt-to-Equity: 0.00x
  • Unleveraged capital structure
  • Capacity for expansion
  • AAA(rr) credit rating

4. Dividend & Distributions

Dividend History

Period Dividend/Unit YoY Growth
Q1 FY2026 PKR 0.63 +26.0%
Q1 FY2025 PKR 0.50 +11.6%
FY 2024 PKR 2.27 +5.6%
FY 2023 PKR 2.15 -

Growth Profile

  • 3-Year Dividend CAGR
    21.7% p.a.
    Exceptional growth
  • 5-Year Dividend CAGR
    9.3% p.a.
    Strong compound growth
  • Sustainability
    Highly Sustainable (96% Payout)
    Mandatory 90% distribution

Comparative Dividend Analysis

Investment Option Current Yield Stability Growth Potential
DCR REIT 6.5-8.0% High (AAA) High (21.7% CAGR)
Govt Bonds (PIBs) 16-20% Highest None (Fixed)
Bank Deposits 10.5-12.5% High Limited

5. Stock Performance

1-Year Return
+92.33%
6-Month Return
+42.98%
3-Month Return
+20.65%
52W Range
18.26 - 34.00

Performance vs Benchmarks

Index/Asset 1-Year Return Volatility (Beta) Risk-Adjusted
DCR REIT +92.3% -0.05 to 0.29 (LOW) EXCELLENT
KSE-100 Index ~45% 1.0 (Benchmark) Good

Growth Catalysts

1. Rental Income Growth

19% YoY growth driven by hybrid rental models, escalations, and successful tenant onboarding.

2. Property Appreciation

Premium Clifton real estate demand drives fair value gains. 12.4% premium to NAV suggests further upside.

3. Dividend Yield Compression

Falling interest rates make DCR's 6.5-8% yield more attractive, driving price multiple expansion.

Key Risks

Macroeconomic Risk (Moderate)

Economic volatility could impact tenant demand. Mitigated by 98.5% occupancy and strong tenant profile.

Interest Rate Risk (Moderate)

Rising rates could compress valuations. Mitigated by zero debt structure.

Lease Renewal Risk (Moderate)

2.4 year WALE on mall portion. Mitigated by active management and >95% renewal rate.

7. Investment Summary

Dolmen City REIT represents a compelling investment opportunity, offering an attractive combination of stable income, capital growth, and downside protection.

Quantitative Strengths

  • • Valuation: 10.4x P/E (Cheap)
  • • Dividend: 21.7% 3-Year CAGR
  • • Health: Zero Debt, AAA(rr) Rating

Qualitative Strengths

  • • Position: Only pure commercial REIT
  • • Tenants: Top-tier multinationals
  • • Management: Arif Habib Group
Rating ACCUMULATE
Target Price PKR 40-46
Upside 3-18%
Time Horizon 3-5+ Years

Position Sizing Guidelines

  • • Conservative: 5-10% (Core income)
  • • Moderate: 10-15% (Growth + Income)
  • • Growth: 15-20% (Long-term appreciation)