Mr. Serik Tolbassy Transfers Assets to REIT TSPG

A Kazakhstan entrepreneur forms new standards for investments in commercial real estate

In April 2024, AIFC registered REIT TSPG, the first real estate investment fund in Kazakhstan, which specializes in retail facilities. The fund includes large commercial assets: Dostyk Plaza Shopping Center (Almaty) and Shymkent Plaza (Shymkent) of the entrepreneur Mr. Serik Tolbassy. The Provident Fiduciary Fund is managed by a private fund management company at AIFC. REITs allow investors to make joint investments in large real estate such as office buildings, shopping malls, warehouses, infrastructure facilities, hotels, apartment buildings, etc. Joint or collective investment reduces the risks of investors. The main source of income for REITs is income from leased real estate.

The REIT TSPG establishment is a landmark event. As noted by Mr. Asset Abdygapparov, a General Director of Provident Fiduciary, this is the first real estate fund in the regulatory environment of the AIFC, which owns Class A shopping malls that are significant for its cities and forms a high-quality asset portfolio to maximize value for consumers, tenants and investors. «In the future, we plan that TSPG will own and manage other properties of a comparable class and will become the largest REIT in Central Asia,» Mr. Abdygapparov says. He explains that a REIT provides an opportunity to invest in stable and highly competitive assets, and most of the income of any REIT is rent payments, which provide stable cash flow and the opportunity to regularly pay dividends to investors.

Dostyk Plaza Shopping Center is the largest project of the TS Development group from a financial point of view, more than $200 million has been invested in its construction. Based on the experience, TS Development has always sought to create unique properties. The famous British company Benoy, known for Ferrari World projects in Abu Dhabi, Westfield shopping center in London and many others, was engaged in the development of the architectural concept of Dostyk Plaza. 2023 for Dostyk Plaza and the consulting company TSPM, which manages it, is marked by record-breaking achievements. The mall was visited by 14 million people, and the turnover amounted to $272 million. Operating income (EBITDA) increased to $28 million with a 19% over-fulfillment of the plan. The indicators were achieved by improving business processes, which made it possible to systematize the management of large facilities, identify development points in time and make effective decisions promptly.

Shymkent Plaza Shopping Center is the largest shopping and entertainment center in Shymkent. The architectural project and design were also carried out by the Benoy Architectural Company. In 2023, Shymkent Plaza was visited by 5.6 million people, and the turnover amounted to $62.6 million. Operating income (EBITDA) increased to $6.6 million, with over-fulfillment of the plan by 6%. Detailed financial and economic indicators of the Fund’s objects are presented on the website

The first REITs appeared in the 1960s in the USA. According to the National Association of Real Estate Investment Trusts (NAREIT), there are about 1,100 REITs operating in the USA today, with a total asset value of more than $4 trillion. Of these, the shares of 225 funds are publicly traded on major exchanges, the market capitalization of such REITs exceeds $1.3 trillion. The NAREIT report on the development of the global REIT market notes that shares of more than 890 REITs are traded worldwide, with a market capitalization of $1.9 trillion. The REIT investment model has spread around the world, covering countries and regions with economies of more than 83% of global GDP.

Source: NAREIT

Due to the popularity of using REITs in developed financial markets, the choice of an AIFC platform is not at all accidental. Mr. Abdygapparov emphasizes that the AIFC unites the best world practices and modern capabilities of financial centers from New York to Singapore. The main goal of the AIFC is to develop a liquid and balanced capital market with a wide range of financial instruments provided. The key advantages of the AIFC are a transparent legal regime and a high-quality set of rules and regulations that are attractive to investors; advantages of creating a company, such as ease of registration, asset protection, flexible corporate governance structure, tax preferences and benefits. «All this allows companies and investors to build effective business strategies and develop, including at the international level,» Mr. Abdygapparov sums up.

Mr. Serik Tolbasy
Mr. Serik Tolbassy

An entrepreneur and anchor investor of the TSPG fund Mr. Serik Tolbassy says that the creation of a REIT in the jurisdiction of the AIFC is a natural continuation of business development. «The history of my company began with engineering consulting services, which was logical, since I am a Civil Engineer. In 1997, I created the TS Development Investment and Construction Company Group. From 2002 to 2020, the Company Group built more than 500 thousand m2 of commercial and residential real estate. The total investment in the projects amounted to more than $600 million. Among the major projects, Ken Dala Business Centers, Fidelity Fitness Center, Bukhar Zhyrau Towers residential complexes, Aelita, Crystal Air Village Cottage Town, Sputnik Mall, Dostyk Plaza and Shymkent Plaza shopping centers can be noted,» the entrepreneur says.

According to him, in the last few years the Group has focused on the construction, management and development of commercial real estate facilities. Over the years of development, all business processes have been systematized and automated. We have developed our own IT products and programs for the effective management of our shopping malls. The ts-online SAS platform, a multifunctional smart management system, was created.

«Having gone all this way, we are entering a new stage of development, scaling up and trying ourselves on an international platform, offering the market the opportunity to invest in commercial real estate. Based on our experience and ahead of time, we are setting new investment trends in the Kazakhstan real estate market, focusing on healthy competition and the best international practices,» Mr. Tolbassy notes. «It's time to invest in real estate in Kazakhstan and Central Asia using financial instruments provided by the TSPG Fund.»

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