Real Estate Investment Company

12/01/2011 Torunlar REIC Equity / Mid Cap. / Real Estate Investment Company Company Report 12 January 2011 OUTPERFORM Torunlar REIC Bloomberg: TR...
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12/01/2011 Torunlar REIC

Equity / Mid Cap. / Real Estate Investment Company

Company Report

12 January 2011

OUTPERFORM

Torunlar REIC Bloomberg: TRGYO TI

Upside Potential* Reuters: TRGYO IS

Stock Data

59%

TRY

US$

Large discount to NAV is overlooked

Price at 11 01 2011

6.48

4.10

12-Month Target Price

10.28

7.20

Discount to NAV of 36% is higher than the sector’s average discount of a mere 12%. Torunlar REIC trades at 36% discount to its latest NAV (adjusted with the IPO proceeds) and has a historic discount of 37% from the first day of trading compared to sector’s average current discount of 12% and historic discount of 24%. Furthermore, Torium shopping mall is evaluated at its land value plus investment cost in the 3Q10 NAV table while it will be valued as a shopping mall in 4Q10 NAV which will add approximately TL240mn to the NAV.

Mcap (mn)

1,452

920

Float Mcap (mn)

203

No. of Shares Outstanding

129 224 mn

Free Float (%)

14.00

Avg.Daily Volume (3M, mn)

5.3

Market Data

3.5 TRY

ISE 100

67,669

Shopping malls dominate the Gross Asset Value (GAV). 73% of the US$ Spot Rate 1.5778 company’s TL2.6bn GAV composed of shopping malls. Residential US$ 12-Month Forw ard 1.6345 projects rank second in the current GAV with a 15% share. The company Price Performance (%) 1 Mn 3 Mn 12 Mn currently has five shopping malls in operation, providing stable cash flows. TRY 6 -9 n.a In other words, 89% of the total stable cash flows, either in the form of US$ 1 -18 n.a rental revenues or dividends (as for Ankamall), directly comes from Relative to ISE-100 2 -6 n.a shopping malls. Operational assets make TL1.5bn of the total GAV, while pipeline projects make TL1.1bn of the current GAV (i.e. 42%). Of the total Price / Relative Price projects under development shopping malls has again a clear dominance TL Relative 6.8 98 with 46% share. 97 Leasable area to significantly increase until 2014. The company has a 6.6 96 gross leasable area of 214K sqm in shopping malls currently. Until 2014, 95 with the completion of the investments in Samsun, Antalya and Istanbul 6.4 94 total leasable area of the REIC is expected to increase to 386K sqm in 6.2 93 shopping malls. Including offices total leasable area of the company will 92 reach to 546K sqm by 2014 from the current level of 231K. Gross sellable 6.0 TRGYO 91 area at 35K sqm is estimated to also show a growth trend, reaching to 224K sqm with various mixed-use projects. Sustainable growth in rental stream. Being the controlling shareholder at four shopping malls, namely Torium, Zafer Plaza, Korupark and Antalya Deepo, the company generates sustainable rental revenues from the retail spaces and offices. Thanks to the increase in leasable area almost every year with new shopping mall additions, the company’s annual rental revenues showed a steady increase. Rental income is projected to reach TL90mn in 2011 from TL55mn in 2010. Lucrative dividends will be paid every year. The company adopts a policy to distribute at least 50% of its distributable profits as dividends to its shareholders. This corresponds to an estimated 3% yield from 2010 earnings and 4% yield from 2011 earnings in 2012.

Relative to ISE 100

5.8 10-10

12-10

90

02-11

52 Week Range (Close TRY)

5.78

7.10

Burak Berki [email protected] +90 212 350 25 80

We are initiating our coverage for Torunlar REIC with a rewarding 59% upside to our 12-month target price of TL10.28/share. Given its high discount of 36% to its NAV and high upside potential derived from our DCF model, Torunlar REIC is our top recommendation in the REIC universe.

1

12/01/2011 Torunlar REIC Summ ary of Key Financials (TL m n)

11/01/2011

TRGYO

01/01/2008 01/01/2009 01/01/2010 01/01/2011 01/01/2012 #########

Incom e Statem ent (TL m n)

2008A*

2009A*

2010E

2011E

2012E

2013E

Revenues EBITDA Other income (expense), net Financial expenses, net Income before tax Taxation on Income Net income Balance Sheet (TL m n)

135 59 110 (116) 53 0 53

120 67 488 (20) 536 0 536

225 77 115 25 217 0 217

175 79 0 23 102 0 102

200 105 0 (7) 98 0 98

1,032 540 0 56 596 0 596

Tangible Fixed Assets Other Long Term Assets Intangibles Goodw ill Long-term financial assets Inventories ** Trade receivables Cash & equivalents Other current assets Total assets Long-term debt Other long-term liabilities Short-term debt Trade payables Total Debt Other short-term liabilities ** Total liabilities Minority Interest Total equity Paid-in capital Total liabilities & equity Ratios

1 1,693 0 8 0 73 52 80 4 1,911 332 17 272 15 604 5 642 0 1,270 176 1,911

0 2,251 0 8 0 102 75 73 2 2,510 463 0 158 11 621 73 705 0 1,805 176 2,510

1 2,441 0 0 0 82 0 665 57 3,245 600 0 317 0 917 40 957 0 2,288 224 3,245

1 2,595 0 0 0 381 0 79 93 3,149 359 0 19 0 378 381 759 0 2,390 224 3,149

1 2,738 0 0 0 637 0 128 108 3,610 165 0 321 0 486 637 1,123 0 2,488 224 3,610

1 2,939 0 0 0 544 0 426 191 4,101 132 0 341 0 473 544 1,017 0 3,084 224 4,101

4.5 8.84 41% 44.0 39.3

34.9 8.16 30% 56.0 446.7

10.6 3.27 11% 34.2 96.3

4.3 3.78 13% 45.3 58.2

4.0 3.43 14% 52.2 48.8

21.4 0.09 2% 52.3 57.7

n.a. n.a.

n.a. n.a.

6.7 0.0%

14.3 0.0%

14.9 3.5%

2.4x 3%

ROE (%) Net debt/EBITDA (x) Net debt/Equity (%) EBITDA Margin Net Margin Valuation Metrics P/E (x) Dividend yield (%) *based on average Mcap during the year

** as revenue and cost recognition occurs after the delivery of the units the company records presales in B/S under inventories and advances received

2

12/01/2011 Torunlar REIC

Investment Case

We have an OUTPERFORM recommendation for Torunlar REIC with 59% upside potential to our 12-month target price of TL10.28/share. We updated our DCF driven model in accordance with the recently acquired Mecidiyeköy land, on which the company will develop a mixed use project, including residential units and a small shopping mall and revisions in the pipeline projects. The stock currently trades at 36% discount to its NAV versus sector average of just 12% which we deem irrational given the strong and stable cash flow generation, which will even be better in the coming periods after the projects at hand are completed and start to generate revenues. The most and the best diversified asset portfolio among the REIC universe. Although Torunlar REIC’s main focus is shopping mall development, the company also has exposure to residential and office segments as well as hotel development. The company is/will be operational in Istanbul, Bursa, Ankara, Antalya, Mu la and Samsun real estate markets which is a clear indicator of the company’s diversified portfolio not only in terms of asset class but also in terms of location, contrary to many listed REICs that are operational just in Istanbul and miss the growth potential of the less developed cities. In the current portfolio shopping malls have clear dominance in the asset portfolio with 73% of TL2.6bn Gross Asset Value followed by 15% residential projects and 6% office units. In the long run, retail is expected to be the main driver of growth for the company. Projects in the pipeline are for a higher gross leasable area. After the opening of Torium shopping mall in Istanbul as of end of October 2010, the company has eight cash generating assets, including the residential projects NishIstanbul and Korupark Phase I&II. Moreover, Torunlar REIC has six projects in the pipeline composed of several types of assets such as shopping mall, residential, office and hotel projects. While current GLA of the company is 231K sqm, consisting of office spaces and shopping malls, GLA in the development pipeline stands at 315K sqm. Top-notch growth in the top-line. Torunlar REIC will regularly increase its rental revenues year over year due to the contribution of the upcoming projects. While the company is projected to increase its rental revenues by 64% on a yearly basis in 2011 to TL90mn, in 2014 rental revenues are estimated to reach TL253mn, implying 36% CAGR between 2010 and 2014, thanks to addition of Mall of Istanbul, Torun Tower and higher leasable space in Antalya Deepo Mall. According to our calculations the company will produce TL1,030mn EBITDA between 2011 and 2014, which more than covers the current net debt position of TL165mn. Discount to NAV of 36% is higher than the sector’s average discount of a mere 12%. Torunlar REIC trades at 36% discount to its latest NAV (adjusted with the IPO proceeds) and has a historic discount of 37% from the first day of trading compared to sector’s average current discount of 12% and historic discount of 24%. Furthermore, Torium shopping mall is evaluated at its land value plus investment cost in the 3Q10 NAV table while it will be valued as a shopping mall in 4Q10 NAV which will add approximately TL240mn to the NAV. We will also see the recently acquired Mecidiyeköy land in company’s 4Q10 NAV. We estimate the value for company’s 65% stake at the high profile residential project at Mecidiyeköy at US$107mn. Lucrative dividends will be paid every year. Torunlar REIC has the policy to distribute at least 50% of distributable profits as dividends to shareholders. With a 50% pay-out ratio assumption, we estimate the company to pay TL43mn dividends from its 2010FY distributable income, which corresponds to 3% dividend yield in 2011. The dividend yield is expected to climb to 20% in 2014 with the addition of Mall of Istanbul.

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12/01/2011 Torunlar REIC

Investment Risks

The company’s operations are highly dependent on the macroeconomic dynamics. In times of economic crisis, people limit their consumption and have a natural tendency for saving instead. Accordingly their visits to shopping malls decline, which in turn negatively affect Torunlar REIC’s tenants and their capability to pay their rents. Especially the revenue portion of the rents falls as the clients’ turnovers decrease. To illustrate the company provided its tenants with fixed exchange rate scheme and froze the rents between April 2008 and May 2010 for Korupark Shopping Mall and February 2009 and June 2010 for Zafer Plaza Shopping Mall. This way, the company maintained the occupancy but sacrificed the revenues. On the other hand, interest rate movements is the most important driver for the housing demand. Any sizeable upward movement in interest rates on the upside may negatively affect the demand for residential projects. GDP growth is also an important factor in shaping the market dynamics. In 2009 for example when GDP contracted by 4.7%, contraction in the construction sector was more severe at 16.3%, similar to the previous years’ trend. Sizable portion of the company’s GAV is made up of projects in the pipeline. Of the total US$1.6bn Gross Asset Value (GAV) based on the DTZ report dated June 30, 2010, upcoming projects consist of 42% with US$684mn size, excluding the Torium shopping mall which became operational in October 2010. Leveraged balance sheet compared to other listed REICs. The company had a net debt position of TL165mn as of end-September 2010, adjusted for the IPO proceeds unlike other listed REICs which mostly have net cash positions. Since revenues and accordingly cash flows are estimated to inflate in the coming years, once new projects come on stream the net debt position is not significant. Even it could be counted as a positive since it enhances the ROE of the company, given 12% US$ cost of equity vs company’s average cost of debt of 5.35%. Has short FX position of TL527mn. 60% of the total debt is dollar denominated, while remaining 35% is Euro denominated. The maturity of the hard currency varry between 47 years. The company will pay TL87mn loan in 2011, while 2012 repayment is high at TL143mn. Nevertheless, 97% of company’s rent income is FX denominated (37% dollar, 60% Euro)

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12/01/2011 Torunlar REIC

We have valued Torunlar REIC via sum of the parts (SOTP) method, in which we have valued each asset with discounted cash flow analysis (DCF). Rather than comparing with the previous transactions made in the market, we preferred DCF as we believe it will be a better method to reflect the growth potential of the company, as well as the value of the operational assets due to steady rental stream that will grow with the contribution of upcoming projects.

Valuation

Figure 01: Basic Assumptions of DCF models Assets Zafer Plaza Korupark shopping mall Antalya Deepo outlet mall 1 Ankamall shopping center 2 Torium Shopping center * Mall of Istanbul * Torun Tower Offices Mecidiyeköy project Netsel Marina Samsun Shopping Mall * NıshIstanbul project Korupark Phases I&II Korupark Phase III MOI residences

Leasable area

Sellable area 3

23,482 71,267

Rent/sqm

-

18,069 88,421 95,280 162,500 52,000 6,690 13,990 -

126,000 13,474 34,842 73,971 111,000

4

US$26 €20 US$34 TL65 US$22 US$27 US$66 €61 €25 -

Salesprice/sqm

Annual Rental Cost of Capex Opex/Revenues Income sales/Revenues (US$mn) (US$mn) *

Construction cost/sqm (TL)

US$6,778 US$3,050 US$1,356 US$1,356 US$2,300

US$2,305 US$800 US$1,000

12% 12%

10% 10%

10% 10% 10% 10% 10% 10% 10% -

8% 10% 10% 10% 10% 10% 10% -

-

7.3 23.0 20

20 228 82 7 -

7.4 55.7 23.4 23.0 20.4 6.5 4.7 -

* Rent/sqm are the expected prices in the first operational year of the property or 2011 prices for operational ones 1

With the extension project total leasable area w ill increase to 44,720 sqm in 2013

2

While total leasable area of Ankamall is 105,421 sqm Yeni Gimat ow ns 88,421 sqm

3

Sellable area is the sum of offices and residential sellable areas

4

By the end of lease terms rent/sqm are increased by 2% on a yearly basis for Euro denominated contracts and 3% for US$ contracts regarding the currency of the lease aggrement

Source: The Company



We have run DCF model for each asset with a ten year forecast horizon. For Netsel Marina we have projections until the end of operating rights in 2037.



We have increased rental rates per sqm in both operational assets and upcoming projects by 2% per annum for Euro denominated lease agreements and 3% for US$ contracts.



We expect Torunlar to generate TL175mn turnover in 2011 and TL200mn in 2012. Apart from the residential sales, the company will book TL90mn rental revenues in 2011 which will rise to TL104mn in 2012 and TL184mn in 2013.



Our EBITDA margin projection is 45% for 2011, and 52% in 2012, thanks to higher rental revenues in 2011 and 2012. As the ongoing operations are completed in the coming years, our assumptions point to an EBITDA margin of 63% in 2014.



Cost of sales are projected to vary between 10-12% of the revenues both in operational and upcoming projects, while operational expenses/revenues ratio differ from property to property from 8% to 10%.



Lands in Kayabasi and building in Kemankes are added to our model via their appraisal values.



We assumed 3% terminal growth rate in our DCF-driven US$ model, reflecting the growth potential of the company.



We have used a US$ based risk free rate of 5.5%, equity risk premium of 5% and a beta of 1.3x which yielded a WACC of 10%. When calculating beta we have taken the average of unlevered betas of the two biggest listed REICs, Sinpas and IS REIC, and relevered it. Torunlar has a sizeable leverage as opposed to the its listed peers.



Since the REICs are exempt from corporate tax, no corporate tax is calculated for the company throughout the forecast horizon. 5

12/01/2011 Torunlar REIC



Occupancy rates in the table below shows the current occupancy rates of the rent generating assets of the company and estimated occupancy rates of the projects in the pipeline.

Figure 02: Occupancy Rates of Rent Generating Assets Operational Assets Zafer Plaza Korupark shopping mall Antalya Deepo outlet mall

1

Ankamall shopping center

2

Torium Shopping center * Netsel Marina Projects in the pipeline

2011E

2012E

100%

100%

100%

100%

100%

100%

100%

100%

90%

95%

100%

100%

2013E

2014E

2015E

Mall of Istanbul

50%

85%

98%

Torun Tower

50%

85%

98%

Samsun Shopping Mall

85%

98%

98%

Source: IS Investment & Company

Figure 03: WACC Calculation Risk free rate Equity risk premium Beta Cost of equity Cost of debt Weight of Equity Weight of debt WACC Discount Factor

Source: IS Investment estimates

Figure 04: Summary of Consolidated Forecasts

!

! " %& '

"

""

#

#

$

#

Source: IS Investment estimates

6

12/01/2011 Torunlar REIC

Figure 05: Sum of the Parts Valuation ( )*

) +

01 # $ % & ! ' ( !! ) * + $( . / ! - ' 0 1 * 1 (, 2 2- 3 & ! ' ,,, * , 2 0 0 3 ( !! ) * * 4 . '5. * " 67 % 42 -5 & . 2 8 & ' 9 0 (: ; 3 ( ,$ $ 4 < 0/ 2 =0 / 2 0 ( )*

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, -.

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Source: IS Investment estimates

Figure 06: Rental Yield of Torunlar, IS REIC and Akmerkez US$ 2010 2011 2012 2013 Source: ISE, IS Investment esti- 2014

mates

Rental Yield based on Mcap TRGYO ISGYO AKMGY 4% 9% 5% 7% 10% n.a. 8% 11% n.a. 13% 11% n.a. 17% 12% n.a.

Rental Yield based on NAV TRGYO ISGYO AKMGY 3% 6% 6% 5% 6% n.a. 5% 7% n.a. 9% 7% n.a. 12% 7% n.a.

Cap Rate based on NAV TRGYO ISGYO AKMGY 2% 5% 3% 4% 5% n.a. 4% 6% n.a. 7% 6% n.a. 9% 6% n.a.

Figure 07: Torunlar REIC Rental Yield and Cap rate breakdown Operational Assets (US$) Rental Yield * Cap Rate * Zafer Plaza ** 9% 7% Korupark ** 9% 7% Antalya Deepo *** 10% 8% Torium ** 8% 7% Projects Mall of Istanbul **** 14% 11% Torun Tower **** 9% 7% (*) based on our fair value calculations for each asset (**) based on 2011 figures (***) based on 2013 figures with completion of extansion investment (****) based on 2014 figures with completion of extansion investment Source: ISE, IS Investment estimates

Torunlar REIC trades at 36% discount to its latest NAV which we have adjusted with the IPO proceeds and has a historic discount of 37% from the first day of trading compared to sector’s average current discount of 12% and historic discount of 24%. Furthermore, Torium shopping mall is evaluated at its land value plus investment cost in the 3Q10 NAV table while it will be valued as a shopping mall in 4Q10 NAV which will add approximately TL240mn to the NAV. This will lead to a 42% discount to the NAV at current Mcap. 7

Description

Location

Area (m²)

Date of Purchase

Appraisal Date

Land

Portfolio

% of Total

Value (TL)

Portfolio Value

934,758,610

Portfolio Value ($) 647,608,847

stanbul, Ba ak ehir, kitelli-2

project to be developed

Istanbul

122.860 m 2

10/07/07

30/06/10

627,963,050

24.1%

stanbul, Ba ak ehir, kitelli-2

project to be developed

Istanbul

24/04/08

30/06/10

881,970

0.0%

611,036

stanbul, i li, Esentepe Arsa stanbul, Ba ak ehir, Kayaba ı Arsa Bursa,Osmangazi, Emek-

project to be developed project to be developed

Istanbul Istanbul

882 m 2 14.492 m 2 81.277 m 2

24/04/08 24/04/08

30/06/10 30/06/10

238,960,290 15,609,150

9.2% 0.6%

165,553,755 10,814,154

project to be developed Korupark 3.Etap Konut Arsası Buildings Zafer Plaza AVM. Shopping mall Bursa/Osmangazi : Korupark AVM. Bursa/Emek : (B2)* Shopping mall Korupark,Yunus Havuzu Social facilities Korupark,Sosyal Tesis&Yüzme Social facilities Havuzu (B3*) Korupark,3 ad. yeri+5ad.Depo Storage facility (B4*) stanbul/Beyo lu - Kemanke Building

Bursa

35.773 m 2

24/04/08

30/06/10

51,344,150

2.0%

35,571,671

5.5%

524,703,395 98,363,357

20.5% 0.0%

369,676,562 832,818

1997

30/06/10

Bursa Bursa

2006 31/12/08

30/06/10 30/06/10

533,591,150 1,202,090

435,058,231

Bursa

31/12/08

30/06/10

2,411,970

0.1%

1,671,034

Bursa

31/12/08

30/06/10

5,031,090

0.2%

3,485,583

Binası: 1.ve 2. Etap Konutları Korupark Bursa/Osmangazi-Emek (B5*) Real Estate Projects

Buildings

Istanbul Bursa

26/08/05 2006

30/06/10 30/06/10

11,813,110 61,329,800

0.5% 2.4%

8,184,225 42,489,816

Torium Shopping Mall Nish stanbul 8 adet Ofis:(2.160 m2) Nish st/Bahçelievler-Yenibosna stanbul Projesi :(P2**)

Shopping mall

Istanbul

2008

30/06/10

274,770,400 232,569,750

8.9%

190,363,309 161,126,334

Office spaces

Istanbul

23/03/10

30/06/10

4,092,620

0.2%

2,835,403

Residential project

Istanbul

26/01/09

30/06/10

38,108,030

1.5%

26,401,573

Total Real Estate Portfolio

1,966,885,890

Affiliates Yeni Gimat yerleri Netsel Turizm A. .

1,362,675,551

388,141,460 letmesi A. .

30/06/10 30/06/10

268,907,759

138,273,590 30,722,680

5.3% 1.2%

95,797,139 21,284,938

TTA Gayrimenkul A. .

30/06/10

14,824,410

0.6%

10,270,479

TRN AVM Yatırım Yönetim A. .

30/06/10

204,320,780

7.8%

141,555,203

Dividend History Dividend Date No dividend payment

Total Real Estate Portfolio Dividend Yield

Marketable Sec. & Participations Total Portfolio Value Liquid Assets Receivables

1,966,885,890

1,362,675,551

248,787,000

9.6%

172,361,785

2,603,814,350 730,000

100%

1,803,945,095 505,750

92,235,000 52,447,000

63,901,205 36,335,735

Other Assets Debt (-)

831,376,000

575,984,481

IPO proceeds

349,670,000

242,254,399

2,267,520,350

1,328,703,305

224,000,000

224,000,000

Net Asset Value (NAV) Number of Shares NAV per Share * Current Share Price % Premium / (Disc) to NAV

8

*As of January 11, 2011

10.12 YTL 6.48 YTL (36.%)

5.93 YTL

Figure 08: Portfolio Table as of September, 2010

Bursa

757,356,880 141,977,670

12/01/2011 Torunlar REIC

Portfolio

12/01/2011 Torunlar REIC

The Company

Briefly on the group. Aziz Torun and Mehmet Torun, two brothers formed Torunlar Group with equal stakes as a food company. Once operational in the food sector, with the foundation of Toray Construction back in 1996, Torunlar Group entered into the construction business via real estate development including shopping centers and residential projects. As the company added projects to its portfolio breathlessly, it decided to form a real estate investment company (REIC) and Torunlar REIC was established in 2008. Torunlar REIC concentrates on major urban areas in Turkey. The Company’s headquarter is located in Istanbul and it mainly focuses on the development of shopping malls. Before entering a new region, Torunlar REIC analyses different aspects of the region considering demographics characteristics, population, cultural and educational profile, and business outlook. A family owned business with two major shareholders. Major shareholders of the company are Mehmet Torun and Aziz Torun with 37.4% shares, each. Remaining stake is shared between the public (25.2%) and other family members (0.1%). Figure 09: Shareholding Structure

8

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Source: Company

7

Shopping malls dominate the Gross Asset Value (GAV). As of 1H10 73% of the company’s TL2.6bn GAV was composed of shopping malls. Residential projects rank second in the current GAV with 15% share. The company has five shopping malls currently in operation, that provide stable cash flows. In other words, 89% of the total stable cash flows either in the form of rental revenues, or dividends (as for Ankamall), directly comes from shopping malls. While operational assets make TL1.5bn of the total GAV, the pipeline projects make TL1.1bn of the current GAV (i.e. 42%). Of the total projects under development shopping malls has again clear dominance with 46% share. Figure 10: GAV breakdown and breakdown of operational assets providing stable cash flows 3 ?

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Leasable area to more than double until 2014. The company has a gross leasable area of 214K sqm in shopping malls currently. Until 2014, with the completion of the investments in Samsun, Antalya and Istanbul total leasable area of the REIC is expected to increase to 386K sqm .

9

12/01/2011 Torunlar REIC

Including offices total leasable area of the company will reach to 546K sqm by 2014 from the current level of 231K.

Portfolio of the company is focused on Turkey with exposure to Istanbul, Bursa, Ankara, Antalya, Mu la and Samsun real estate markets. Among operational assets Bursa, one of the most industrialized cities of Turkey and heart of Turkish automotive industry, is the definite leader with 66% share as of 9M10. Antalya, the tourism centre of Turkey, houses the second biggest asset, Antalya Deepo and accounts for 20% of the NAV. Ankamall located in the capital city Ankara makes 5% of the operational GAV. Projects in Istanbul, the biggest city in Turkey housing over 18% of country’s total population have the highest share of GAV in the pipeline. Figure 11: 1H10 and pipeline sellable and leasable place

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