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November 2010
T O R U N L A R R E I C
Presentation
ST
RI
CT
LY
PR
IV
AT
EA
ND
CO
NF
ID
EN
TI
AL
3
Introduction to Torunlar REIC 3
The Turkish opportunity 9
Portfolio overview 11
Financials 18
Corporate structure 24
Conclusion 27
Appendix 29
TO
RU
NL
AR
RE
IC
Torunlar REIC: Turkish pure play primarily focused on shopping malls
Torunlar REIC is an internally managed shopping mall developer and investor present in attractive
regions of Turkey
73% of assets are Shopping Malls (will hold and manage) – 7 Shopping Malls of which 4 are
operational; 15% residential (will sell)
Sizeable property portfolio: TL2.6bn of GAV and TL2.0bn of NAV
Operational portfolio: 62% including Torium shopping mall and NishIstanbul
Investment pipeline: c.TL862mm that is secured
Sept. 2010 performance: TL151mm of revenues, TL47.5mm of EBITDA
Sales breakdown: 69% residential sales; 31% rental income and others
Conservative capital structure – 19.6% LTV with weighted average cost of debt of 5.35%
Pipeline breakdown (post Torium and Nishistanbul become operational)Shopping mall focused
Total GAV = TL 2.6bn (US$1,640mm)
Shopping
malls
73%
Residential 15%
Office 6%
Hotel 2%
Marina 2%Others 3%
1
¹ Inlcudes NishIstanbul
Source: DTZ appraisal report (Based on the RICS standards as of June 30,2010)
Note: (i) Provided information is as of June 30, 2010; (ii) Exchange rate US$/TL=1.5845 as of June 30, 2010
Already spent in H1 2010Participations
8%
Buildings
50%
Build for sale¹
4%
Projects in
the pipeline
39%
Torun Tower
22%
Korupark
Residences III 5%
Kemankes hotel 1%
Samsun 1%
Antalya extension 8%
Landbank
2%
MOI
60%
2
3
4
Sales revenue (2009): TL120.2mm
4IN
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Istanbul
Ankara
Antalya
Izmir
Bursa
Mugla
Samsun
Mediterranean Region
(Akdeniz Bölgesi)
Southeastern Anatolia Region
(Güneydoğu Anadolu Bölgesi)
Eastern Analtolia Region
(Doğu Anadolu Bölgesi)
Black Sea Region
(Karadeniz Bölgesi)
Aegean Region
(Ege Region)
Central Anatolia Region
(Iç Anadolu Bölgesi)
Kutahya
Torunlar REIC: Turkish real estate company concentrated in major urban areas in
Turkey
NishIstanbul (Res)
Korupark (SM)Netsel marina
Kayabaşı (Res)
Zafer Plaza (SM)
Korupark Ph. I/II
(Res)
Deepo Outlet Centre
(SM)
Ankamall+ Crowne
Plaza (SM+Hotel)
Occupancy 98% Occupancy 99%Occupancy 100%
Key portfolio information
Number GLA(m²)
Operational Shopping Malls 4 119,417
Pipeline Shopping Malls 3 267,027
Total Shopping Malls 7 386,444
Assets
in
th
e p
ipe
lin
e
O
pera
tio
na
l assets
Kemankes (hotel)
Torium Istanbul (SM)
Mall of Istanbul (SM) Torun Tower (Off) Samsun (SM)Korupark Ph.III (Res)
Occupancy 98% % sales²: 79%
% sales²: 86%
Comp. date: Oct. 2010
Comp. date: H2 2013 Comp. date: 2013 Comp. date: 2012 Comp. date: 2012 Comp. date: H1 2012 Comp. date: 2014
Occupancy¹ 98%
¹ Occupancy (%) (year contract/yacht capacity)
² Residential sales
Note: Res (Residential); SM (Shopping Mall), Off (Office)
Becomes operational on October 30, 2010
Construction completes end of September, 2010
Torunlar REIC‟s presence
Additional target cities
Marmara Region
(Maramara Bölgesi)
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A mix of operational assets providing stable cash flows and committed development
pipeline providing exposure to significant growth
Strong pipeline delivering growth (by GAV)Operational assets providing stable cash flows (by GAV)
Operational assets represent 43% of total GAV
Targeted investments (US$mm) as of June 30, 2010
81
133
218
153
5
2010E 2011E 2012E 2013E 2014E
Source: Company
454
Already spent in H1 2010
Note: Please go to page 100 for the investment breakdownsSource: Company
Korupark–social
and retail area
1%
Netsel marina
4%
Korupark residences
5%
Ankamall
13%
Deepo Outlet
17%
Zafer Plaza
13%
Korupark
Shopping Mall
46%
Landbank 2%
NishIstanbul 2%
Antalya 5%
Torun Tower
15%
Torium
Shopping Mall
30%
Mall of Istanbul
41%
Total pipeline = TL1.5bn (US$937mm)Total operational GAV= TL1.1bn(US$703mm)
Others 11%
Shopping malls
89%
Operational in
October 2010
Source: DTZ appraisal report (based on the RICS standards as of June 30, 2010) Source: DTZ appraisal report (based on the RICS standards as of June 30, 2010)
Crowne Plaza Hotel
1%
Kemankes Hotel 1%
Samsun 1%
Korupark phase III 3%
Shopping mall GLA (‘000m²)
Current Extensions Pipeline Future pipeline Total
Korupark SC
Zafer Plaza Antalya Deepo
Antalya Deepo
Torium
Samsun
71.3
16.918.113.2 26.6
95.3
139.5
119.526.6
5.6
Ankamall
386.5
MOI
113.5 500.0
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History of Torunlar REIC–key milestones
1996 1999 2004 2005 2007 2008 2009 20101977
Construction for the company‟s
needs and third party use (small-
scale residential units)
Active in the Turkish
construction and real estate
market since 1977
Foundation of Toray
Construction
Acquisition of the
Netsel Marina in
Marmaris
Torunlar bought
the land to be
used for Torun
Tower
Delivery of
Korupark
Residences
phases I&II
Torunlar REIC expected to
go public, emerging as one
of the biggest listed Turkish
real estate companies
Delivery of Nish İstanbul residences and offices
Opening of one of the biggest
shopping malls in Turkey, Korupark
The residential compound at Korupark
was Bursa‟s first gated community
Opening of the
biggest mall in
Turkey in 1999,
Ankamall
Opening of Zafer
Plaza; the first
shopping mall of
Bursa
Opening of the
biggest outlet of
Antalya, Deepo
Outlet
Expected opening of Torium
Shopping Mall
Torium Shopping Mall is
expected to be 3rd largest
shopping mall in Istanbul
Torunlar bought the land for the
Mall of Istanbul project, which
will be one of Turkey‟s largest
mixed use projects including a
shopping mall, residences,
offices and a hotel
Conversion to
Torunlar REIC
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Torunlar REIC has a well defined investment strategy
Korupark: Development of new neighbourhood area
Zafer Plaza: Shopping mall development at city centre
Successful track record in development
Ankamall: Multi-stage multi-partner project
Antalya Deepo: Outlet type shopping mall development
Development portfolio
Successful track record of liaising with local
municipalities in contributing to and working
on urban transformation projects
Leverage the development platform
for performing value-adding
tasks such as land development, funding and
identify potential growth areas of development
Opportunistic development of other
asset classes
Leverage track-record of JV development
Access to attractive development
opportunities
Diversification of risk
Strategy focus
Primary focus on development of
shopping malls
Increased focus on mixed-use
projects
Creating „life centres‟ with extensive
leisure and entertainment avenues
Focus investments in urban centres
with limited supply
Developing residential
neighbourhoods in cities with good
connectivity to metro etc.
Opportunistic investments in non
shopping mall related projects
Asset management
Active asset management targeting
occupancy optimisation and rent increase
Active refurbishment and extensions in-line
with increased demand and evolving
consumers and market trends
Tenant rationalisation opportunities
Ensure appropriate shop and tenant mix
Leveraging Torunlar Group‟s reputation and
network of contacts to attract known
Turkish/international
tenants
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9
The Turkish opportunity 9
Introduction to Torunlar REIC 3
Portfolio overview 11
Financials 18
Corporate structure 24
Conclusion 27
Appendix 29
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Robust recovery combined with strong demographics makes Turkey an attractive
investment destination
Real GDP comparison of CEE countries
Population growth CAGR 10E–12E Demographics (mm)–young population in Turkey
0.7%
0.3%
1.0%
(0.4)%(0.3)%
(0.2)%(0.2)%(0.2)%
0.1%0.1%
1.1%
Turk
ey
Czech
Repblic
Slo
vakia
Pola
nd
Hungary
Cro
atia
Russia
Rom
ania
US
UK
Euro
zone
24%
13%
22%
18%
9%9%
40%
18%
24%
13%
36%
11%15%
13%
35%
17%13%
35%
14%
20%
8%
12%
16%
20%
24%
28%
32%
36%
40%
0-14 15-24 24-49 49-60 60-+
Age groupFor reference
Source: Global Insight Source: EIU
¹ Eurozone excluding Slovenia, Cyprus, Luxembourg and Malta
TurkeyUSUKEurozone¹
Strong macroeconomic performance by Turkey
GDP growth has rebounded strongly in Q1
and Q2 2010
GDP growth expected to outperform other
major European and global economies
Favourable demographics
Growing population
Sizeable young and working population
Population growth CAGR 10E–12E
Comments
Source: EIU, Global insight
4.4
%
4.3
%
3.8
%
3.6
%
3.1
%
3.0
%
0.1
%
1.6
%
2.1
%
2.4
%
4.0
%
4.3
%
(0.2
%)
11.7
%
0.5
%2.5
%
1.1
%
2.9
%4.8
%
3.0
%
(2.6
%)
(2.5
%)
10.3
%T
urk
ey
Pola
nd
Slo
vakia
Rom
ania
Russia
Czech R
ep.
Cro
atia
Hungary US
UK
Euro
zone
Real GDP grow th CAGR (10E–12E)Real GDP grow th (YoY) 1Q2010Real GDP grow th (YoY) 2Q2010
For reference
10TH
ET
UR
KI
SH
OP
PO
RT
UN
IT
Y
11
Portfolio overview 11
Introduction to Torunlar REIC 3
The Turkish opportunity 9
Financials 18
Corporate structure 24
Conclusion 27
Appendix 29
TO
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Breakdown–income Breakdown–tenants (GLA)
Fashion 43%
Food café 8%
Service 7%
Footwear 5%
Home 5%
Health beauty 5%
Jewellery 5%
Kiosk 3%
Restaurant 2%
Leisure goods 1%
Fashion 37%
Dept & Anchor 33%Health beauty 7%
Food café 6%
Restaurant 2%
Service 5%
Home 5%
Footwear 3%
Jewellery 3%
Leisure goods 1%
Kiosk 0.5%
Torunlar REIC‟s portfolio overview
Operational date 1999
Ownership Torunlar REIC (72.26%)
Occupancy (m²) (as of date) 98% (as of June 2010)
Number of stores 123
Anchor tenants4% anchors (30% of GLA): Migros, YKM,
Bimeks and Boyner
Appraisal value TL142.3mm (US$89.8mm)¹
Average LTM NOI (per TL/m²/month) TL30.1
Leasehold / Freehold status Freehold
The Property is located at the most central part of the city
Close to the metro station, on major public transportation routes and at the junction of intercity roads
The property includes a movie theater with six screens and an amusement park for children and teenagers
In 2000, Zafer Plaza was selected "The Best Shopping Centre" by the AMDP, Shopping Centres and Retail Centres Council
Majority of rents (80%) are USD denominated
Average lease term as of Jun-2010 2.5 years
Net rental income (Sep 2010), last 12 months TL6.1mm²
Note: Exchange rate US$/TL=1.5845 as of June 30, 2010; Average exchange rate for first half 2010 US$/TL is 1.5231
¹DTZ appraisal report (based on the RICS standards as of June 30, 2009); ² Assumption of 100% ownership (Torunlar REIC owns 72.26% of Zafer Plaza)
Source: Company as of June 30, 2010 Source: Company as of June 30, 2010
Dept & Anchor 15%
Breakdown–tenants (Income) Breakdown–tenants (GLA)
Source: Company as of June 30, 2010 Source: Company as of June 30, 2010
Fashion 26%
Dept & Anchor 44%
Health beauty 2%
Food 3%
Restaurant 2%
Service 4%
Home 3%
Footwear 4%
Jewellery 1%
Leisure goods 9%
Kiosk 0.5%
Storages 2%Fashion 41%
Dept & Anchor 14%
Health beauty 4%
Food 8%
Restaurant 4%
Service 7%
Home 5%
Footwear 7%
Storages 1%
Leisure goods 4%
Kiosk 2%
Jewellery 4%
Operational date H2 2007
Ownership Torunlar REIC (100%)
Occupancy (m²) (as of date) 98% (as of June 2010)
Number of stores 196
Anchor tenants(39% of GLA): Tesco, Koçtaş, Beymen,
C&A, Boyner and Electro World
Appraisal value TL511mm (US$323mm)¹
Average LTM NOI (per TL/m²/month) TL31.6
Leasehold / Freehold status Freehold
Net rental income (Sep 2010), last 12 months TL27.8mm
Average lease term as of Jun-2010 4.6 years
Korupark is the largest shopping mall in Bursa and is located on the Mudanya Highway in the
Nilüfer neighbourhood
The property has three retail floors and two carpark floors with a capacity for 2,500 cars
underground and 500 above ground
The property includes a hypermarket (12,000m²), a do-it-yourself store (5,127m²), cinema
complex (nine screens) and entertainment area (amusement park, children play centre) totalling
5,317m²
Most of the rents at the shopping mall are Euro denominated
Korupark shopping mallZafer Plaza shopping mall
Antalya
Bursa
Ankara
Istanbul
Marmaris
Samsun
Leasable are (m²) 23,482 (REIC share 16,969) Leasable are (m²) 71,267
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Ownership
Estimated start of construction
Estimated date of completion
Estimated operational date
Estimated investment
Appraisal value
Leasehold / Freehold status
Number of residential units
Current status
Torunlar REIC‟s portfolio overview (cont‟d)
Antalya
Bursa
Ankara
Istanbul
Marmaris
Samsun
Korupark Residences Phase IIIKorupark Residences Phase I & II
Located on the western side of Bursa (adjacent to Korupark Shopping Mall), the property is a residential settlement of luxurious units with sports and recreation facilities
The project is the first gated community in Bursa Phase I: 343 units, six blocks Phase II: 403 units, seven blocks For Korupark residences I/II, sales are Turkish Lira denominated
Note: Exchange rate US$/TL=1.5845 as of June 30, 2010;
Average exchange rate for first half 2010 US$/TL is 1.5231
¹ DTZ appraisal report (based on the RICS standards as of
June 30, 2009)
² Appraisal value + “other leasable units”
May, 2006
Torunlar REIC (100%)
TL70.6mm (US$45mm)¹,²
Freehold
Phase 1: January 2008/Phase 2: December 2008
February 2008
TL115.8mm (US$74mm)
Start of construction
Ownership
Appraisal value (remaining units)¹
Leasehold / Freehold status
Date of completion
Operational date
Total investment
Units sold (%) 75% (as of July 30, 2010)
2011
Torunlar REIC (100%)
Freehold
2012
2012-2013
TL89.5mm (US$56.5mm)
TL51.2mm (US$32.3mm)¹
643
Under project development
The property, adjacent parcel to Korupark phase I & II, is a luxurious housing settlement that
includes residences and office units
For Korupark Residences Phase III, sales will be denominated in Turkish Lira
Korupark Residences Phase III
Korupark Residences Phase I & II
Korupark Shopping Mall
Map of Korupark
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Korupark Residences Phase I & IIKorupark Residences Phase III
Antalya Deepo outlet mall–Antalya
Torunlar REIC‟s portfolio overview (cont‟d)
Antalya Deepo is the only outlet in the Mediterranean region. The property is located close to the Antalya Airport
The mall attracts annual foot traffic of c.5 mm For Antalya Deepo, majority of rents are denominated in USD Zoning of this region was recently approved (June 2010) and as a result the company has not
yet obtained the necessary licenses and permits Due to this problem and in order to abide by REIC regulations, Deepo Antalya is not
directly held by Torunlar REIC, but is instead held by a subsidiary which is 100% owned by Torunlar REIC
Antalya Deepo extension project
October 24, 2004Operational date
Torunlar REIC (100%)Ownership
99% (as of May 2010)Occupancy (%) (as of date)
90Number of stores
LCW, Ayakkabı Dünyası, Mudo City, Collezione,
Sarar, Aydınlı GroupAnchor tenants
TL271mm (US$171mm)¹Appraisal value
TL37.5Average LTM NOI (per TL/m²/month)
FreeholdLeasehold / Freehold status
TL9.7mmNet rental income (Sep 2010), last 12m
2.6 yearsAverage lease term as of Jun-2010
Torunlar REIC + Hastalya Ownership
Partially freehold, partially leasehold from
Hastalya Leasehold / Freehold status
March 2012Estimated date of completion
March 2012Estimated operational date
TL32mm (US$20.2mm)Estimated investment
Under zoning processCurrent status
July 2011Estimated start of construction
Breakdown–income Breakdown–tenants (GLA)
Source: Company as of June 30, 2010
Fashion 70%
Restaurants 5%
Food 4%
Home 3%
Service 2%
Jewellery 2%
Leisure goods 1%
Heath Beauty 1%
ATM & Kiosks 1%
Footwear & Access. 11%
Fashion 62%
Food 8%
Restaurants 6%
Home 3%
Service 3%
Jewellery 3%
ATM & Kiosks 2%
Heath Beauty 1%
Leisure goods 1%
Footwear & Access. 10%
Source: Company as of June 30, 2010
Note: Exchange rate US$/TL=1.5845 as of June 30, 2010; Average exchange rate for first half 2010 US$/TL is 1.5231
¹ Source: DTZ appraisal report (based on the RICS standards as of June 30, 2010)
Ankamall shopping mall + Crowne Plaza hotel–Ankara
Dividends - Torunlar REIC share (TLmm)²
Operational date 1999¹
OwnershipYeni Gimat in which Torunlar REIC holds
(14.83%)
Occupancy (%) (as of date) 100% (as of June 2010)
Number of stores 318
Number of rooms 263
Anchor tenants
Migros, Koçtaş, Tepe Home, Electro
World, Boyner, Mudo City,
Marks&Spencer, LCW
Appraisal value (REIC share) TL151.2mm (US$95.4mm)³
Leasehold / Freehold status Freehold
Ankamall is located in Yenimahalle, in the centre of Ankara. The shopping mall is considered
to be the largest in Ankara and third largest in Turkey
Ankamall is owned by Yeni Gimat which was formed as a cooperative with over 1000
investors, and in which Torunlar REIC currently has 14.83% stake, making it the largest
shareholder as of June 30, 2010
The property includes the Crowne Plaza Hotel which is a 21–storey building with 263 rooms
For Ankamall, the rents in Phase 1 are denominated in Turkish Lira, while the rents in Phase 2
are denominated in USD
1.9 2.1 2.4 2.7
2007 2008 2009 2010
Source: IFRS financials
¹ Expanded and reopened in 2006
² Using (Dividends paid to Torunlar REIC) / (Torunlar REIC‟s shares)
² GLA for parking 115,230m²
Antalya
Bursa
Ankara
Istanbul
Marmaris
Samsun
18,069 Leasable area (m²)
26,651Leasable area (m²)
Leasable area (m²) 88,421³ (REIC’s share 13,112)
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Mall of Istanbul–IstanbulTorium Istanbul shopping mall–Istanbul
GLA split¹ (‘000m²) GLA/GSA split¹ (‘000m²)
Torium is a mixed-use project of retail and residential use
It is located at the centre of high density residential settlements along one of the two major
highways of Istanbul
The shopping mall provides a broad range of leisure and entertainment facilities
Majority of rents at the shopping mall are denominated in EUR
Residential sales are expected to be denominated in Turkish Lira
Café/ Rest.
5%Anchor
25%
Entertainment
15%
MSU & small stores
35%
Note: Exchange rate US$/TL=1.5845 as of June 30, 2010; Average exchange rate for first half 2010 US$/TL is 1.5231
Electronic
stores
4%
Torunlar REIC‟s portfolio overview (cont‟d)
Residential
5%
Retail
95%
Hypermarket
10%
Others
4%
Source: DTZ appraisal report (based on the RICS standards as of June 30, 2010)
¹ Source: DTZ appraisal report (based on the RICS standards as of June 30, 2010)
Start of construction H2 2008
Ownership Torunlar REIC
Appraisal value TL437.4mm (US$283.2mm)¹
Leasehold / Freehold status Freehold
Estimated date of completion October 2010
Estimated operational date October 2010
Estimated investment TL38.3mm (US$24.2mm)
Number of stores 168
Current status Opened at 30th of October, 2010
Breakdown–Area¹ (GLA/GSA)
Retail 51%
Residential
31%
Office 9%
Hotel 8%
Ownership Torunlar REIC (100%)
Appraisal value TL603.1mm (US$380mm)¹
Leasehold / Freehold status Freehold
Number of residences 657
Estimated start of construction H2 2010
Estimated date of completion H2 2013
Estimated operational date H1 2013
Estimated investment c.TL491mm (US$310mm)
Current status Under project development
Mall of Istanbul is a mixed-use project with a large shopping mall development along with residential, office and hotel units
It is expected to be one of the largest mixed-use projects in Turkey Planned to be built with 139,500 m² GLA enriched with 16,000 m² kids entertainment,
7,200 m² snowpark, cinema complex and conference / performance hall¹ Mall of Istanbul is well connected to the city centre through the D100 and TEM highway. In
addition, the site is located within 5km of the airport For the Mall of Istanbul, rents will be denominated in USD. Sales will be denominated in Turkish
Lira
Antalya
Bursa
Ankara
Istanbul
Marmaris
Samsun
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NishIstanbul mixed use project–Istanbul
Torunlar REIC‟s portfolio overview (cont‟d)
Pre-sales figures
Cumulative pre-sales
agreements–TLmmPre-sold and remaining units
Source: Company financials as of June 30,
2010Source: DTZ appraisal report (based on the RICS
standards as of June 30, 2010)
63
105105
380
520
2009 H1 2010
Current year salesPrevious salesUnits sold
Ownership Torunlar REIC (41.4%)
Appraisal value TL35.5mm (US$22.4mm)³
Leasehold / Freehold status Freehold
Number of residences / Sellable area (m²) 585 / 53,204
Number of offices / Sellable area (m²) 63 / 16,925
Number of retail units / Leasable area (m²) 52 / 10,937
Start of construction H2 2008
Estimated date of completion H2 2010
Estimated operational date H2 2010
Estimated remaining investment TL15.3mm (US$9.6mm)
Located on the west-side
of Istanbul in Yenibosna,
1.5 km away from
Istanbul Atatürk Airport
Three residential blocks,
one office block and
retail units
As of June 2010,83% of
the offices and 80% of
the residences were
sold. The retail units will
be leased
For NishIstanbul, sales
are denominated in
Turkish Lira
289173 526
8532
0 11
374205
663
1+1 2+1 3+1 Office
Sold Remaining
³ DTZ appraisal report (based on the RICS standards as of June 30, 2009)
Note: Exchange rate US$/TL=1.5845 as of June 30, 2010; Average exchange rate for first half 2010 US$/TL is 1.5231
Breakdown–Area¹ (GLA)
Torun Tower–Istanbul
Ownership Torunlar REIC (100%)
Appraisal value TL221.8mm (US$140mm)¹
Leasehold / Freehold status Freehold
Estimated start of construction 2011
Estimated date of completion 2013
Estimated operational date 2013
Estimated investment c.TL132mm (US$83mm)
Current Status Under project development
Residential
55%Office
40%
Retail 5%
The property is located at the city
centre in one of the most expensive
commercial districts of Istanbul
It also has a subway
connection
40 floor high-rise tower is planned
The building is planned to be a
landmark for the city with
very modern architecture and
construction technology
The Property is planned as a mixed-
use project with office and residential
units
For Torun Tower, sales will be
denominated in USD
Antalya
Bursa
Ankara
Istanbul
Marmaris
Samsun
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Torunlar REIC‟s portfolio overview (cont‟d)
Note: Exchange rate US$/TL=1.5845 as of June30, 2010; Average exchange rate for first half 2010 US$/TL is 1.5231
Operational date 1989
OwnershipTorunlar REIC (44.6%) & Tek Art
Turizm (55%)
Occupancy (%) (year contract/yacht capacity) 97.9%
Average retail rent TL(31.3) (US$19.8/month)
Leasehold/freehold status Leasehold (till 22/12/2037)
Dividend yield on cost 16%
Occupancy (%) (closed area/yacht capacity) 103.7%
Appraisal value (REIC share) c.TL42.9mm (US$27.0mm)¹
Occupancy (%) (Retail units) 73%
Netsel marina is one of the three largest marinas in Turkey and services c.50,000 tourists
each year
The marina has a capacity for 805 yachts of various sizes, in all weather conditions. It
also includes a retail area of 6,400m²
Synergy benefits: Koç Holding‟s subsidiary, Tek Art Turizm, has 55% ownership of Netsel
Marina (0.4% is owned by the Torun family)
Koç Holding is currently the largest marina operator in Turkey, with seven marinas
currently in their portfolio
Rents are denominated in EUR
Dividends paid (TLmm)²
1.5 1.52.2 2.1
2007 2008 2009 2010
Nets
el M
ari
na
–
Ma
rma
ris
³
¹ Source: DTZ appraisal report (based on the RICS standards as of June 30, 2010)
² Source: IFRS financials
³ Income producing asset4 Development in pre-construction stage
Start of construction H2 2010
OwnershipTTA (Torunlar REIC (40%) Torun
Food–Turkmall Partnership)
Appraisal value TL14.3mm(US$9mm)
Leasehold/freehold statusLeasehold from Samsun
Municipality
Estimated date of completion H1 2012
Estimated operational date H1 2012
Estimated investment TL10.6mm(US$6.6mm)
Current status Under project development
Torunlar, together with Turkmall, intends to develop a shopping mall in Samsun by renovating
an old cigarette factory
The project is situated in a central location, surrounded by residential and commercial buildings
It is between two main boulevards, which host many modern stores in Samsun
Rents will be denominated in EUR
Sa
ms
un
sh
op
pin
g m
all
–
Sa
ms
un
4
The site is located on the European side of Istanbul and is close to the Bosphorus
It is next to the cruise port of Istanbul
High potential of attracting cruise visitors
Surrounded by historic buildings and tourist locations
The Company plans to build a boutique hotel and a touristic commercial centre project with a
3,900m² closed area
The site is located next to the Galataport project, and is expected to benefit from this urban
transformation project once it takes place
Estimated start of construction H2 2011
Ownership Torunlar REIC (100%)
Appraisal value TL11.7mm (US$7.4mm)¹
Leasehold / Freehold status Freehold
Estimated date of completion 2012
Estimated operational date 2012
Estimated investment TL12.8(US$8.2mm)
Kem
an
ke
s B
ou
tiq
ue
Ho
tel–
Ista
nb
ul4
Antalya
Bursa
Ankara
Istanbul
Marmaris
Samsun
17PO
RT
FO
LI
OO
VE
RV
IE
W
18
Financials 18
Introduction to Torunlar REIC 3
The Turkish opportunity 9
Portfolio overview 11
Corporate structure 24
Conclusion 27
Appendix 29
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Torunlar REIC maintains prudent financial targets geared to mitigate risks while
providing enough flexibility to support the growth strategy
Limit maximum loan-to-value¹ to 40%
Minimise cost of debt
Torunlar REIC intends to preserve a conservative funding strategy and therefore intends to remain primarily equity financed and at the same time have sufficient flexibility for significant growth plans
This conservative financing strategy has ensured that the company benefits from favourable banking covenants in its loan agreements
In addition, the personal guarantee of sponsors for financing has also helped in securing favourable covenants
However going forward the company does not intend to use personal guarantee of sponsors
Funding
policy
Hedging
policy
Growth
funding
The interest rate hedging policy is decided on a case by case basis depending on management‟s view on
current market conditions and expectations
Torunlar REIC intends to minimize its currency exposure by obtaining loans in the same currency of its
income
As a result, the company‟s debt is split in three different currencies (USD, EUR, and TL)
Dividend
policy
Torunlar REIC expects to pay an attractive dividend yield to its shareholders, with year-on-year growth aligned
with key performance indicators. However being mindful of growth capital expenditure requirements
The target is to pay-out c.50% of distributable profits
Combination of bank finance and equity issuance in line with funding policy
The proceeds from the IPO combined with the Company‟s debt and cash on the balance sheet, will be used to
finance the pipeline projects and future growth
Debt
Equity
¹ Net debt / Total assets
19FI
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Summary financials
Operational performance
¹ For 2010 LTV calculated based on the DTZ RICS compliant GAV
² Post Torium Shopping Mall opening in October 2010
Revenues 2009:TL120.2mm:
– 54% residential sales;
– 46% rental revenues and others
Sept. 2010: TL 150.9mm
– 69% residential sales;
– 31% rental revenues and others
EBITDA 2009: TL 71.7mm (margin: 59.7%) Sept. 2010: TL 47.4mm (margin 31.3%)
Gross Asset Value: TL 2,598mm (US$1,640mm) 60% operational²; 40% pipeline 73% shopping malls; 15% residential
Operational portfolio yield: c.6%
Capital structure: LTV: 19.6% Weighted average maturity: 5 years Weighted average cost of debt: 5.35%
Average occupancy: 98%
Average lease length : 3.8 years
Key financial metrics
Inc
om
e S
tate
me
nt
Ba
lan
ce S
hee
t
Income Statement
TLmm Sep 2009 Sep 2010 Change%
Rental revenue 30.2 38.6 27.8%
Income from associates 4.5 4.7 4.6%
EBITDA margin (%) 62.8% 31.5% -
Fair valuation (change) 12.0 114.7 855.8%
Balance Sheet
TLmm 2009 Sep 2010 Change%
GAV (CMB) 2,314 2,500 8.0%
Cash & cash equivalents 72.6 248.8 242.7%
Net debt / Assets (%) 21.8% 18.0% -
LTV¹ (%) 23.6% 19.6% -
Like for like
growth
6
5
7
4
3
2
1
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Torunlar REIC‟s financials
(„000 TL) 2007 2008 2009 Sep 2009 Sep 2010
Sales revenue 43,109 134,794 120,158 93,769 150,858
% growth - 212.7% (10.9%) - 60.9%
Residences sold - 68,639 65,380 51,434 103,485
Rental revenue 22,949 41,299 39,859 30,202 38,584
Other 20,160 24,856 14,919 12,133 8,799
Cost of sales (25,041) (68,218) (45,183) (35,240) (96,019)
Gross profit/loss 18,068 66,576 74,975 58,529 54,849
Operating expenses (12,497) (7,666) (8,014) (6,413) (12,224)
Other income/(expenses) 448,776 126,331 471,393 14,012 114,539
Net gains from fair value adj. on Inv. Properties 449,514 126,504 471,385 12,040 114,740
Operating profit / loss 454,347 185,241 538,354 66,128 157,164
Operating profit / loss excluding fair value gains 4,833 58,737 66,969 54,088 42,424
Share of profits of associates (recurring) 3,356 3,640 4,536 4,536 4,744
EBIT¹ 8,189 62,377 71,505 58,624 47,168
% margin 19.0% 46.3% 59.5% 62.5% 31.3%
EBITDA² 8,556 62,712 71,700 58,913 47,450
% growth - 633.0% 14.3% (19.4%)
% margin 19.8% 46.5% 59.7% 62.8% 31.5%
Share of profits of associates 58,846 11,788 2,704 (782) 8,865
Net financial interest income (exp) (8,511) (27,366) (25,433) (19,187) (20,306)
Net other financial income income(exp) 15,247 (103,802) (1,294) 4,351 31,905
Valuation gains from financial assets and liab. 13,607 (103,434) (2,251) 2,964 32,353
Profit before Tax 523,285 69,501 518,867 55,046 182,372
Tax expenses (143) - - - (833)
Net profit excluding fair value adj. gains³ 60,021 46,431 49,733 40,042 34,446
Net profit 523,142 69,501 518,867 55,046 181,539
Income statement
Source: IFRS financials, for September 2010 financials are according to CMB standards
Note: Sales are accounted when properties are physically transferred to buyers1 EBIT includes operating profit and share of profits from associates excluding any effect of fair value changes2 EBITDA = EBIT + Depreciation expenses ³ Excludes fair value gains/losses from “Investment Properties” and financial instruments
2
1
3
4
2
1
3
4
Rental revenues relate to the rental
income from operating shopping malls
Other revenue consists of electricity
sales income, excavation site rent
income, construction site rent income
and sales of other services and goods
Other income / (expenses) is mainly
driven by the net gains from fair value
adjustments on investment property
Share of profits of associates are
minority stakes in assets held by
Torunlar REIC. The latter in counterparty
receives dividends from those assets.
The split is into “dividends from
associates” which are considered as
recurring item and the gain in fair value
adj. of “Investment properties” are
considered non recurring
5 5 Financial income includes gains and loss
of financial instruments as well as the
sale of share of profits from associates
4
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Torunlar REIC‟s financials (cont‟d)
Balance sheet (‘000 TL)
2
1 Inventories consist of construction cost of
housing units (completed and in-progress) as
well as the cost of land used for these residential
projects. In addition lands for future development
of residential projects are also included in this
line-item
1
1
2 Investment properties are properties held for
long-term rental yields and/or for capital
appreciation. This also includes landbank on
which asset to be held for long term usage is
planned.
Net debt / Assets Net debt / EBITDA Interest coverage ratio²
² EBITDA/ Net interest expense
Source: IFRS financials, for September 2010 financials are prepared according to CMB standards
¹ For Sep 2010 EBITDA has been annualized
(„000 TL) 2007 2008 2009 Sep 2010
Total assets
Current assets 220,490 208,846 250,631 364,469
Cash and cash equivalents 137,441 80,168 72,639 248,827
Inventories 62,315 72,626 101,648 82,046
Other current assets 20,734 56,052 76,344 33,596
Non-current assets 1,461,352 1,719,189 2,259,156 2,455,214
Investment in associates 100,986 112,774 115,478 124,343
Investment property 1,308,832 1,557,584 2,096,430 2,293,100
Property, plant and equipment 1,831 629 407 1,362
Inventories 13,090 – – –
Other non-current assets 36,613 47,702 46,841 36,409
Total assets 1,681,842 1,928,035 2,509,787 2,819,683
Total liabilities and equity
Current liabilities 379,303 292,672 241,733 232,039
Financial liabilities 315,507 272,170 157,676 155,890
- Bank borrowings 240,839 266,637 155,694 155,890
- Due to related parties 74,668 5,533 1,982 –
Other current liabilities 63,796 20,502 84,057 76,149
Non-current liabilities 158,975 349,062 462,886 600,937
Financial liabilities 137,236 333,170 462,881 600,922
Other non-current liabilities 21,739 15,892 5 15
Total equity 1,143,564 1,286,301 1,805,168 1,986,707
Total liabilities and equity 1,681,842 1,928,035 2,509,787 2,819,683
22FI
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NC
IA
LS
27.2%21.8%
18.0%
2008 2009 H1 2010
8.4x
7.6x
8.0x
2008 2009 Sep 2010¹
2.3x2.9x
2.3x
2008 2009 Sep 2010
24
Corporate structure 24
Introduction to Torunlar REIC 3
The Turkish opportunity 9
Portfolio overview 11
Financials 18
Conclusion 27
Appendix 29
TO
RU
NL
AR
RE
IC
Torunlar REIC: An internalised management platform focused on the real
estate business
Chairman & CEO
Aziz Torun
Shopping Malls
Marketing and Sales
Sitare Algan
Muzaffer Gülöz
Receivables, Payments Tax
CMB Relations
Şerife Cabbar
Construction SitesProject Development Manager
İdil Gençaydın
Chief Marketing Officer
Yunus Emre Torun
Executive Committee
Audit Committee
Corporate Governance Committee
Accounting Manager
Lütfü Vardı
Chief Operating Officer
İlham İnan Dündar
Finance and Investor Relations
Chief Financial Officer
İsmail Kazanç
Chief Development Officer
Yezdan Kanaat
Chief Construction Officer
Remzi Aydın
Board of Directors
Independent Board Members
Aziz Torun
Chairman and CEO
Mr. Torun is the Chairman and CEO of Torunlar Group. For more
than 30 years Mr. Torun devoted all of his know how, energy and
experience to Torunlar Group companies, and in particular to
Torunlar REIC
In 1982 Mr. Torun resigned from public duty and joined family
business
Yunus Emre Torun
Board Member & CMO
Mr. Torun joined Tornular REIC in 2004 as Board Member and
since 2006 he is in charge of Residential and Office Sales
Mr. Torun has been working within Torunlar Group companies
since 1998
Mr. Torun holds a BA in Economics from Marmara University and
completed postgraduate studies at UCLA, Berkeley
Mahmut Karabıyık
Board Member–Legal
Mr. Karabiyik joined Torunlar REIC in 2008 as a Board Member
Mr. Karabiyik has been working as a private legal counsel
specialized in corporate law For more than 25 years
Mr. Karabiyik holds a BA in Law from the İstanbul University
Ali Coşkun
Vice Chairman
Mr. Coskun joined the board of Torunlar REIC in 2008 to serve as
a Vice Chairman
Currently Mr. Coskun is member of TOBB High Advisory Board
From 2002 to 2007, Mr. Coskun was the Minister of Industry and
Commerce. He served as well as a MP representing Istanbul
Mehmet Torun
Board Member
Mr. Torun joined the Board of Torunlar REIC in 2010 as a Board
Member
Mr. Torun started his business life in 1962 at his father‟s trading
house, and since then he is still working at Torunlar Group
companies
Prof . Dr. Ali ALP
Board Member
Dr. Alp joined Torunlar REIC in 2010 as a Board Member
Dr. Alp is a part-time lecturer at the Bilkent University. He is also
an academic member at the TOBB University of Economics and
Technology
Dr. Alp holds a PhD and a BS in Management from Ankara
University
Mehmet Mumcuoğlu
Board Member
Mr. Mumcuoğlu joined Torunlar REIC in 2008 as a Board Member
Currently, Mr. Mumcuoğlu is also serving as Vice Chairman of
Ziraat Bankası
Mr. Mumcuoğlu has been working in the banking and finance
industry for more than 30 years
Mr. Mumcuoğlu holds a BS in Management from Istanbul
University
Currently, he serves as the Chairman of Torunlar Food Industry & Trade Inc., Torun
Marketing Inc., Ulusal Foreign Trade Tourism & Yachting Inc. and Pakyağ Industry &
Trade Inc.
Mr. Torun serves also as the Vice Chairman of Torun Construction Inc., Nokta
Construction Inc., Torun Shopping Centre Investment and Management Inc.
In additions to his previous roles, Mr. Torun is the board member of Netsel Tourism
Inc., Kütahya Refinery Inc. and Depa Vegetable Oil Refinery
Mr. Torun is a member in TUSIAD (Turkish Industrialists‟ and Businessmen‟s
Association)
From 1986 to 1990, Mr. Coskun was the president of TOBB
Mr. Coskun previously served as General Manager, Chairman and Board Member in
several companies such as Çanakkale Seramik, Kale Porselen,
Mr. Coskun holds a BS in Electrical Engineering from Yıldız Technical University and
a MS in Business Economics from Istanbul University
From 1976 to 1982 Mr. Torun worked at the Ministry of Labor and Social Security as
an inspector
Mr. Torun is the Vice Chairman of “Trade Council of Shopping Centres & Retailers”
Mr. Torun holds a BA in Economics from Istanbul University
25CO
RP
OR
AT
ES
TR
UC
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Asset Management Property Management
Torunlar REIC has a proactive asset management approach aimed to maximise tenant
satisfaction and cost control
In-house asset management Outsourced property management
Va
lue-a
dd
ta
sks
No
n v
alu
e-a
dd
, day-to
-day ta
sks
Torunlar REIC: A fully integrated internally managed real estate platform
Torunlar REIC is an internally managed real estate
company where all asset management activity is
performed by the Company
Dedicated & experienced acquisition/disposal and asset
management personnel is in place
The Torunlar REIC asset management program includes
Asset per asset business plans
Regular asset management meetings involving senior
management
Regular reviews of individual asset performance
Regular site visits
Strategic decision making based on changing
conditions
Property management is outsourced to Zafer Plaza
Işletmeciliĝi A.Ş. and Torun AVM (both companies are
controlled by Aziz and Mehmet Torun) or other third party
service providers (ECE)
Standard contracts are in place that are terminable after
two years with no termination fee
Property managers are in charge of the day to day
management of the properties
Property managers work on an execution only basis
In addition, facilities management such as cleaning,
security services etc. are also outsourced
26CO
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TR
UC
TU
RE
27
Conclusion 27
Introduction to Torunlar REIC 3
The Turkish opportunity 9
Portfolio overview 11
Financials 18
Corporate structure 24
Appendix 29
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Torunlar REIC: Investment highlights
One of the leading real estate developers in Turkey
Well established performance track record of development and asset management
Excellent growth potential
1
2
3
Professional management team with long-term local experience and deal sourcing capability
Turkey has strong long term economic fundamentals supporting RE growth
4
5
Stable financial structure and flexible tax efficient REIC regime
6
28CO
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SI
ON
29
Appendix
Torunlar REIC today
List of properties held by other Torunlar Group companies
Turkish real estate market update
Selected REIC comparables
REIC regulation
29
Introduction to Torunlar REIC 3
The Turkish opportunity 9
Portfolio overview 11
Financials 18
Corporate structure 24
Conclusion 27
TO
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Torunlar REIC: Portfolio summary as of Jun 30, 2010
Retail is expected to be the main
driver of growth for the Company
¹ “Others” includes hotels, landbank, office and marina
² Current pipeline extends until 2014
Note: For MOI and Torun Tower the DTZ valuation methodology has estimated the total value of the property, only however for illustrative purposes the specific asset class GAVs
are estimated based on proportion of their leased/ sellable areas
Source: DTZ appraisal report (based on the RICS standards as of June 30, 2010)
Current portfolioDevelopment/
pipeline²Total+ =
Total
GLA/GSA (m²) 171,425 598,956 770,381
Pending inv. ($mm) 0.9 544.2 545.1
Shopping malls
GLA (m²)
Pending inv. ($mm) 0.9 218.3 219.2
119,417 267,027 386,444
Others¹
– 109.9 109.9
17,166 143,074 160,241
GSA (m²)
Pending inv. ($mm) – 215.9 215.9
Residential
34,842 188,855 223,697
GAV ($mm) 627.4 562.1 1,189
GAV ($mm) 38.6 208.4 246.9
36.8 166.9 203.6
GAV ($mm) 702.7 937.4 1,640.1
GLA (m²)
Pending inv. ($mm)
GAV ($mm)
Income producing assets
Zafer Plaza Shopping Mall–Bursa
Korupark Shopping Mall–Bursa
Korupark Residences Phase I & II–Bursa
Antalya Deepo Outlet Mall–Antalya
Ankamall Shopping Mall + Crowne Plaza hotel–Ankara
Netsel Marina–Marmaris
Development assets in the pipeline
Torium Istanbul Shopping Mall–Istanbul
NishIstanbul mixed use project–Istanbul
Korupark Residences Phase III–Bursa
Antalya Deepo Extension Project–Antalya
Mall of Istanbul–Istanbul
Torun Tower–Istanbul
Kemankes Boutique Hotel Project–Istanbul
Samsun Shopping Mall–Samsun
Kayabaşı Residential (landbank)–Istanbul
31AP
PE
ND
IX
Torunlar REIC‟s operational portfolio
¹ Gross Rental Income based on 14.83% of Yeni Gimat‟s Gross Rental revenue
² Torunlar REIC‟s stake
³ Weighted average based on the number of properties in each city
Source: DTZ appraisal report (based on the RICS standards as of June 30, 2010) and IFRS financials
Key metrics of the current portfolio of shopping malls
Metric Total Bursa Antalya Ankara¹
Number of properties 4 2 1 1
Gross Asset Value (TLmm) 994 654 195 145
Gross Asset Value (US$mm) 627 413 123 92
Total leasable area² (m2) 119,417 88,235 18,069 13,112
Gross Asset Value (TL/m2) 8,325 7,412 10,778 11,085
Gross Asset Value (US$/m²) 5,254 4,678 6,802 6,996
LTM Gross Rent(TL/m2/month) 48.5³ 38.7 49.9 66.7
Shopping mall–split by tenant type
Dept and variety stores 15.5%Fashion 31.0%
Dept and variety
stores 35.9%
Source: Company
Note: Provided information is as of June 30, 2010
Fashion
44.7%
Kiosk 0.5%
Jewellery 1.7%
Restaurants 2.0%
Health and beauty 2.3%
Home and household 4.0%
Services and other 4.3%
Food 4.4%
Footwear and access 6.6%
Leisure goods 7.3%
By GLA By rent
Kiosk 2.0%
Health and beauty 2.7%
Restaurants 3.1%
Jewellery 3.5%
Home and household 5.3%
Services and other 5.6%
Food 7.2%
Footwear and access 8.2%
Leisure goods 2.1%
Source: Company
Note: Provided information is as of June 30, 2010
Operational assets providing stable cash flows (by GAV)
Korupark–social
and retail area
1%
Netsel marina
4%
Korupark residences
5%
Ankamall
13%
Deepo Outlet
17%
Zafer Plaza
13%
Korupark
Shopping Mall
46%Total operational GAV= TL1.1bn(US$703mm)
Operational assets represent 43% of total GAV
Others 11%
Shopping malls
89%
Source: DTZ appraisal report (based on the RICS standards as of June 30, 2010)
Crowne Plaza Hotel
1%
32AP
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IX
Istanbul strategy illustration
Source: Company
AIRPORT
AIRPORT
ÜMRANİYE
ÇEKMEKÖY
ZEKERİYAKÖY
HALKALI
BAŞAKŞEHİR
ATAŞEHİR
KARTAL / PENDİKKURTKÖY
SANCAKTEPE
KEMERBURGAZ
BEYLİKDÜZÜ
HARAMİDERE
Torun
Tower
Mall of
Istanbul
NishIstanbulTorium
KemankeşBAHÇEŞEHİR
Metro under operation
Metro under planning/constructionMetrobus under operation
Metrobus under planning/construction
Light metro (tram) under operation
Light metro (tram) under planning/construction
Tram
c
Urban
Luxury residential
Suburban/New residential
Central Business District (CBD)
Under construction
Construction has not yet started
33AP
PE
ND
IX
34
Appendix
Torunlar REIC today
List of properties held by other Torunlar Group companies
Turkish real estate market update
Selected REIC comparables
REIC regulation
29
Introduction to Torunlar REIC 3
The Turkish opportunity 9
Portfolio overview 11
Financials 18
Corporate structure 24
Conclusion 27
TO
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RE
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List of properties held by other Torunlar Group companies
Torunlar Group’s property portfolio (excluding Torunlar REIC’s assets)
Property name Type of property
Rationale behind not including it in Torunlar REIT Comments
Izmir Marina+
shopping
mall+
residential
Zoning permit of the area has been revoked by
government authorities
New zoning discussions are currently in progress
with local municipal authorities
Once zoning approvals have been
received, the land could be potentially
included into Torunlar REIC
Kutahya Shopping
Mall
Zoning permit is not available on current site
Zoning discussions are currently in progress with
local municipal authorities
Once zoning approvals have been
received, the land could be potentially
included into Torunlar REIC
Ankamall (c.6% share
owned by Torunlar
family)
Shopping
Mall
The transfer of the additional c.6% from the Torunlar
family to Torunlar REIC cannot be executed by the
time of the IPO
Transfer will be completed post-IPO
Tuyap Exhibition
hall
Owned by Torunlar Food
Construction provides a tax advantage to Torunlar
Food
Can be potentially added into the REIC
once construction is completed
Headquarters (Istanbul) Office Owned by Torunlar Food
2 floors are leased to Torunlar REIC
The investment is not in-line with
Torunlar REIC’s investment strategy
Warehouses Warehouse Depot / entreport owned by sister companies
Used for business purposes
The investment is not in-line with
Torunlar REIC’s investment strategy
Potential additions to Torunlar REIC‟s portfolio
35AP
PE
ND
IX
36
Appendix
Torunlar REIC today
List of properties held by other Torunlar Group companies
Turkish real estate market update
Selected REIC comparables
REIC regulation
29
Introduction to Torunlar REIC 3
The Turkish opportunity 9
Portfolio overview 11
Financials 18
Corporate structure 24
Conclusion 27
TO
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RE
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Prime rents stabilized in 2010, but are still below the pre-
crisis levels…
Source: DTZ Pamir & Soyuer
Expectations of a strong rental market outlook for shopping malls in Turkey
Source: Jones Lang LaSalle report Q1 2010
Turkey remains amongst the low density markets
in Europe (GLA per 1,000 inhabitants)
7.5%8.0% 8.0%8.9% 8.9%
7.5%
0
200
400
600
800
1,000
1,200
2005 2006 2007 2008 2009 1Q2010
0%
2%
4%
6%
8%
10%
… similarly yields have stabilised but still remain higher
than pre-crisis levels
Source: DTZ Pamir & Soyuer, CBRE Global Research
($mm) Yield
Est. transaction value in TurkeyCzech Rep.GermanyHungary
PolandUKTurkey
0 50 100 150 200 250 300 350 400 450 500
Netherlands
Ireland
Sw eden
Estonia
Luxenbourg
Finland
UK
Spain
France
Portugal
Italy
Lithuania
Czech Republic
Latvia
Poland
Average
Germany
Slovakia
Hungary
Belgium
Turkey
Russia
Greece
Romania
Ukraine
Bulgaria
37AP
PE
ND
IX
Population and economic growth combined with increased mortgage lending is
fuelling demand for residential assets in Turkey
Annual permits (‘000)
721 718 708 700 693 682
2009E 2010E 2011E 2012E 2013E 2014E
Population increase MigrationRenew al Urban Transformation
New housing demand (‘000)
Breakdown of construction permits
Residential 76%
Other 7%
Offices 4%
Logistics 5%
Hotels 2%
Retail 6%
Supply
Demand
Population growth in Turkey (mm)
52% 52% 52% 52% 52% 52%
16% 15% 13% 11% 11% 9%
11%
21% 23% 24% 25% 26%
11% 11% 11% 11% 13%
20%
Source: TurkStatSource: Central Bank of the Republic of Turkey
Source: TurkStat, EIU Source: TurkStat, EIU
Comments
The residential market in Turkey offers significant
potential reflecting:
Need to replace existing earthquake-vulnerable
stock
Rapid growth in the number of households
Strong investment intentions of the expanding
middle-income population
Housing demand in Turkey is closely related to
economic growth, household incomes and financing
opportunities Demand for housing between 2009 and 2014 is
expected to continue due to the increase in:
The marriageable age population,
Immigration from rural areas and continued
urbanisation
Housing loans / Nominal GDP
Source: Central Bank of the Republic of Turkey
162 203
330
511
600
585
504
510
161
163
175 2
50 295
325
357 400
2002
2003
2004
2005
2006
2007
2008
2009
2002
2003
2004
2005
2006
2007
2008
2009
Construction Occupancy 2009
0
10
20
30
40
50
2003
2004
2005
2006
2007
2008
2009
0%
1%
2%
3%
4%
5%
Housing Loans (TLbn)
Housing Loans to GDP (%)
71.9
73.374.0
74.775.4
76.0
2009 2010E 2011E 2012E 2013E 2014E
38AP
PE
ND
IX
Istanbul office market
Istanbul office stock (m²)
Rental/vacancy level
European office market prime rent (€/ m²/annum)
Istanbul office stock by region (m²)
Prime rents/yields (annual growth %)
European office market prime yield (%)
Istanbul, İzmir and Ankara
are the major office markets
in Turkey
However, the office
market in Istanbul is more
developed and more
similar to international
standards
Offices are generally
classified as A, B or C
class based on the price
and location
While 2009 was slow in
terms of real estate
investments, towards the
end of that year the office
market began to show signs
of recovery
Developments initially
planned for retail use,
which were either left
incomplete or postponed
to later dates, were
repositioned towards the
office real estate segment
Istanbul attracted the
attention of many investors
in 2009 following the revival
of the office real estate
market towards the end of
that year. New projects are
being planned or are
underway all over Istanbul
Comments
Source: DTZ Pamir & Soyuer
Source: DTZ Pamir & Soyuer Source: DTZ Pamir & Soyuer
Source: DTZ research Source: DTZ research
Source: DTZ Pamir & Soyuer
39AP
PE
ND
IX
40
Appendix
Torunlar REIC today
List of properties held by other Torunlar Group companies
Turkish real estate market update
Selected REIC comparables
REIC regulation
29
Introduction to Torunlar REIC 3
The Turkish opportunity 9
Portfolio overview 11
Financials 18
Corporate structure 24
Conclusion 27
TO
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RE
IC
The analysis of other listed Turkish developers clearly demonstrates that
Torunlar REIC is one of the largest Turkish shopping mall developers
Market Cap (US$mm)¹ 1,2332
(NAV) 460 540 103 67 69
Market Cap (TLmm)¹ 1,953² (NAV) 729 855 163 107 110
Geographic split 4
İstanbul 52% 81% 67% 54% 19% 96%
Ankara 6% 12% 7% 2% 57% 0%
Bursa 30% 0% 16% 0% 0% 0%
Antalya 10% 6% 0% 0% 24% 4%
Other 2% 1% 11% 44% 0% 0%
TURKEY 100% 100% 100% 100% 100% 100%
Sector split 4
Retail 73% 29% 0% 3% 27% 94%
Residential 15% 0% 2% 0% 0% 0%
Office 6% 46% 0% 2% 16% 0%
Cash - 10% 8% 47% 50% 6%
Other3 6% 14% 90% 49% 7% 0%
Selected comparable listed REIC companies in Turkey
Source: Public Disclosure Platform
Note: Exchange rate US$/TL=1.5845 as of June 30, 2010
¹ As of August 5, 2010
² Net Asset Value as of June 30, 20103 Including landbank4 Based on the portfolio of Torunlar REIC
İS REIC is a member of IS Group of Companies, which includesTurkey‟s leading financial instituton, Is Bank. Its portfolio consists of office buildings, hotels and shopping
centres. The Company has a free float ratio of 55%
Sinpas REIC primarily focuses on residential real estate projects for sale and a significant portion of its portfolliois its landbank. The Company has a free float ratio of 49%
Alarko REIC has a 49% free float ratio and its portfolio comprises village lands, trade centres, shopping centres, stores, and holiday villages
Atakule REIC has a free float ratio of 49% and its portfolio comprises, shopping centers, office buildings and hotels
Dogus-GE REIC invests in and develops shopping centers, offices, residences, lands, and tourism projects. 51% of the Company is held by Dogus Holding and GE Capital,
whereas the free float ratio is 49%
41AP
PE
ND
IX
42
Appendix
Torunlar REIC today
List of properties held by other Torunlar Group companies
Turkish real estate market update
Selected REIC comparables
REIC regulation
29
Introduction to Torunlar REIC 3
The Turkish opportunity 9
Portfolio overview 11
Financials 18
Corporate structure 24
Conclusion 27
TO
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RE
IC
Turkey: Real Estate Investment Company (REIC)
General introduction
A REIT-like regime called REIC (Real Estate Investment Company) exists in Turkey
primarily under the administrative supervision of the CMB (Capital Markets Board), a
regulatory and supervisory body
REIC practices in Turkey started in 1995. REIC shares have been traded on the Istanbul
Stock Exchange since 1997
Due to the rapid increase in the population and internal migration, housing demands have
expanded in direct proportion to real estate investment
The new regulations regarding mortgage loans were introduced in 2007, further helping
the real estate sector‟s growth
Currently there are 17 REICs registered with the Capital Markets Board and with shares
quoted on the Istanbul Stock Exchange
Tax treatment at the level of REIC
The corporate income tax is 20%
Tax treatment at the shareholder level
Current income
Capital gains
Tax exempt
Tax exempt
Corporate shareholder Dividends and capital gains from share disposal subject
to standard corporate income tax rate
Individual shareholder 50% of dividends subject to individual income tax rate
Capital gains in principle tax exempt
Withholding tax Credit / refund may be possible
Source: EPRA reporting: Global REIT Survey (September 2009)
Selected requirements
Leverage
Short term credits limited to 3 times
the net asset value
Procedure
Regulated by the Capital Markets Board (CMB)
Statues must be in accordance with the law and the procedures of the Communiqué
Founders must have no records of legal prosecution due to bankruptcy or other offences
Legal
Legal form: Joint stock company
Minimum share capital: TL20mm
Shareholders
At least one of the founders must be leader equity owner (individually or by coming
together owning shares equal to at least 20% capital)
If the REIC is founded prior to 31 December 2009, at least 25% of the REIC‟s shares
should be offered to the public within:
1 year, if the REIC has a paid-up capital of less than TL50mm
3 years, if the REIC has a paid-up capital between TL50mm and TL100mm
5 years, if the REIC has a paid-up capital of more than TL100mm
If the REIC is founded after the 31 December 2009, at least 25% of the REIC‟s shares
should be offered to the public within 3 months
Asset level
Only transactions permitted by the Communiqué are allowed- Must primarily deal with
portfolio management
If the REIC is incorporated to invest in specific projects or to carry out business in specific
areas, 75% of the assets must consist of assets mentioned in their titles and/or articles of
association
Cannot be involved in the construction of real estate
Cannot commercially operate any hotel, hospital, shopping mall, etc.
Cannot provide services such as development and control of a project, by its personnel to
other individuals or institutions (except services provided to the projects within the portfolio)
Profit distribution
Operative income:
Minimum 0% of the distributable profit as first dividend ratio (2009)
Articles of association indicate the dividend ratio
Realised capital gains:
Will be regarded within the distributable profit
Unrealised capital gains:
Not part of distributable profit
Timing: Shall be decided by the General Assembly upon the Board‟s opinion taking into account the CMB regulations. As per the relevant Communiqué, It should be made within five months following the end of the fiscal year
4 3
25
16
43AP
PE
ND
IX