The beginning of 2007 has been marked by some notable entries into the Turkish market: foreign investment into Turkish shopping centers. According to an article in the TDN in February quoting a WSJ article, "prime shopping centers offer yields of around 8 percent to 9 percent. Investors buying shopping centers before they are completed hope for yields of 10 percent to 11 percent." I would venture to guess that ROI’s are very much in the teens when it comes to Turkey’s current environment, hence the future demand. (Corio’s Real Estate Investment Fund expects a 5-year return of 20%!)
 In another example, Andrew Finkel writes in Today’s Zaman that, "the new Kanyon shopping mall designed by Venice Beach headquartered Jerde Associates is now estimated to be worth three times its $200 million ticket price." Aside from these numbers, the rush towards investment can be attributed to one important statistical comparison: Turkey has just 30.4 square meters of retail space per 1,000 people, a fraction of the European Union average of 171.1 square meters, according to advisory firm Cushman & Wakefield Inc.
In addition, the WSJ goes on to state that about 3 billion euros to 4 billion euros ($3.9 billion to $5.2 billion) of real estate deals are expected to be transacted in Turkey this year. This compares with about 1.1 billion euros in deals last year, which, in turn, represented a tenfold increase from 2004.
Recent entries, acquistions and investments are as follows:
- 14th, February 2007 - Citigroup Venture Capital is in talks to buy stakes in two of Turkey's leading retail chains, Boyner and Beyman, in a deal that highlights the growing interest of private equity groups in acquiring Turkish assets.
The Boyner family, an Istanbul-based business dynasty, said in February that its holding companies had entered into exclusive talks on selling stakes in Boyner Department Stores and Beymen, a luxury goods chain, to CVCI in a deal that could value them at $450m.
Boyner said the family believed it was the right time to sell. "It gives the holding company liquidity at a time when there are lots of opportunities in the market," she said.
Under the terms of the proposed deal, CVCI will buy 30 per cent of Boyner and 50 per cent of Beymen.
The largest private equity deal so far in Turkey was Texas Pacific Group's investment in Mey, a local beverage group. TPG purchased 90 per cent of the company last year in a transaction that valued Mey at $900m.
- 5th, October 2006 - Merrill Lynch in partnership with İstanbul-based Krea Real Estate made its first real estate investment with 50 percent share of the Neo Shopping Mall in Eskişehir.
Merrill Lynch is hoping to acquire 100%. According to Merrill Lynch Turkey Global Markets and Investment Banking head Kubilay Cinemre, "Here we have a business capacity of $1 billion," referencing both commercial and housing projects.
- 15th, November 2006 - Cevahir Mall, Europe’s largest shopping centre acquired by St. Martins Property.
St Martins Property, part of the Kuwait Investment Authority, has purchased Europe's largest shopping centre, Cevahir, in Istanbul for a sum in the region of $750 million from its joint owners, the İstanbul Municipality and the Cevahir family.
- 23rd, January 2007 - VastNed Retail buys Turkish shopping center.
Dutch based pan-European retail property investor VastNed Retail enters Turkey by acquiring a neighbourhood shopping centre in Istanbul at a price of €9.7 million. The shopping center is located on Kazim Orbay street, Sisli, Istanbul and is called Elysium Shops. This neighbourhood shopping centre is newly built and comprises 4,850 ²m of retail space and 200 parking spaces.
In the area of Contract Management firms and Consultants:
For Dutch property group, Corio, who paid a benchmark $192 million for an initial 46.9% stake in the nearby Akmerkez mall in a 2005 public offering, the shopping center boom of Turkey seems to have fit into their plans.
- 9th, February 2007 - Corio purchases 40% interest in Turkish shopping center.
Corio has announced the acquisition of a 40% interest in Teras Park shopping center currently under development in Denizli, in the south west of Turkey, for an amount of approximately €55 million.
- 2nd, March 2007 - Two more Acquisitions for Corio in Turkey
Corio, one of the largest listed property investment companies in Europe, said it would acquire the Adacenter shopping center currently under development in the northwestern city of Adapazarı, Turkey for about $65 million. In addition, the property developer said it will also take a 7 percent stake in "potentially large scale" project Acıbadem, to be developed in Istanbul.
- 21st, March 2007 - Corio has signed an agreement for the acquisition of a 50%-interest in Esenyurt shopping center currently under development in the Esenyurt district on the European side of Istanbul for a total amount of approx. €42 million (US$60m).
On a final note, I’ll leave you with some slides to ponder from Corio’s Andre Van den Berg’s presentation to Ak Yatirim in January 2007. His model of Turkey being in the center of the development cycle is very telling for what still is to come, and as you can see by the statistics of plans under development, it doesn’t look like it will be slowing down anytime soon. He also leaves a final concern: the need for strict planning policies in the public administrations. Istanbul does have the potential to overbuild without regulating infrastructure and legal framework and this can be worrisome. Very poignant indeed.
For further reading:
 Technorati Tags: Shopping Centers, Venture Capital, Private Equity, Acquisitions, Deal Flow, Turkey, emerging markets, Turkish, Corio, REIT, Citigroup, Boyner, Beymen, Merrill Lynch, KREA Real Estate, Kubilay Cinemre, St. Martins Property, Cevahir, VastNed Retail, VC, Donaldsons, Jones Lang LaSalle, Andre Van den Berg, Ak Yatirim, Akmerkez, KanyonLabels: acquisitions, deal flow, Emerging Markets, Private Equity, Shopping Centers, Turkey, Venture Capital
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Publisher: Jon H. Black
