Zirve Eki - ISTANBUL REstate

16-17 Haziran 2010
side. I can't support the alternative financing but I can at least
bring up some ideas on how alternatively to traditional financing
maybe and how you can generate money to your products.
Andreas Schiller: Well. Thank you very much fienay. And this
story is true when we had that preparation phone call, indeed
we were speaking about alternative financing, and also we should
mention that we agreed on the question, "is it really alternative
or not?" And in that phone call, I also said "let's ask the guy who
is representing the international company, Jones Lang LaSalle".
"What is alternative financing? It is a term which is on the market?"
Alan S. Robertson: Yes, Andreas. You told me five minutes
ago. I had a lot of time to prepare my thoughts. About "Alternative
Financing", I am afraid I will disappoint everyone and say there
isn't a magic secret about it. Someone isn't going to invent a
completely new way of financing. But what we are seeing in
other countries, perhaps more than Turkey so far is a number of
variations on existing methods of financing because the players
in the property, investment and development market, they know
that bank finance is not going to be available to the same extent,
and on the same terms that it has been. And probably wouldn't
be for the foreseeable future, because the banks have got problems
to fix which will take some years. But we are seeing a number
of different reactions to that. And property companies, we are
seeing them raising new equity, for example in Holland, Corio,
familiar name in Turkey. Corio this year had a share issue and
they raise 600 million Euros, and one of the French funds went
to the capital markets and they issued 7 year Eurobonds and
raised 900 million Euros in that way we are also seeing some of
the property companies selling assets to recycle the money into
new projects. It is not going to provide all the finance but allows
them to go to Areal or whichever bank they deal with, and say,
we will take a much lover LTV than we would have asked for
two years ago. And example of that is land securities, one of the
largest REITs in the UK. It was reported the press yesterday that
they are selling a project in Oxford street in London for 500
million pounds and their reason is that they want to raise new
funds to recycle into their development pipeline. So I think you
Gayrimenkul Zirvesi 10
might find property companies who in the past behaved as
investment companies. You may find them reselling on their
developments at an earlier stage than they have done in the past.
We are also seeing one increasing trend, which is that developers
and property companies form joint ventures with equity houses.
In Turkey, a very good example of that is Areal formerly called
Apollo Capital Partners, an American owned private equity house.
They have a joint venture with Multi and they are developing a
large scheme in Merter shopping, with Carrefour, 30.000 square
meters of offices. That is an arrangement that we are seeing much
more commonly across Europe and I think we will see much more
of that. The developer can be anything either working on the
basis of a fee, so effectively, a development manager arrangement
right to the other end of the spectrum where there are fifty fifty
through joint venture partners. The developer gets to do the
projects which otherwise they cannot get finance for, in the
present climate. And the private equity house gets development
returns which they probably couldn't access if they only took on
an investment role. And the last main sector are the direct equity
holders which are private investors. For example the family that
owns H&M bought a development in Regent Street in London
earlier this year for 225 million pounds cash. We're seeing these
super high net worth individuals coming into real estate market
and the return of some sovereign wealth funds as well, who can
be 100% equity investors and developers if they want. We are
also beginning to see the institutions coming back into the market
in a more aggressive way. And the German open ended funds
have got some issues to fix before they come back in. But remember
these retail funds are having investors from people like us who
give the money every month to invest and they have to invest in
somewhere. We are seeing the UK institutions coming back into
the investment market and development market with their equity.
And we will probably see one or two of the retail German open
ended funds coming back in. So, no magic formula but we are
seeing ways of bridging that funding gap that begin to come
through. Andreas Schiller Well. Thanks Alan for this. That means
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GYODER