Zirve Eki - ISTANBUL REstate

16-17 Haziran 2010
especially in Italy; That is the construction of the idea of a new
company, where land owners, developers, builders who could
be the final users or a mix of this, could share risk and earn out
at the end of the project. So downsizing the volume of the
investment is the first thing. So we have to forget big huge
dreams about big projects because banks don't like to have
financing only one project with a big amount and big risk. So
there is a very simple idea but this idea is against the human
behavior as everyone wants to be entrepreneur of the project.
The land owner wants to sell when he has the best price he can
get and he doesn't want to be involved anymore. The developer
doesn't want to invest in the land or the constructor is already
financing the work of them, so this could be a utopia, I could
say. But, there could be some way to try. So the idea is finding
the right time to recover. We have done this in Italy, especially
with the privatization of public properties where public property
government companies own important properties in the center
of town. We convinced them in some way and made a proposition
on how to develop and we were assisting the property by giving
them our advice about the projects which were the most credible
one, and then they start. They form new companies and now
they are developing. So the banks are happy because the risk is
reduced, because within one company, there are people that are
acting one for the urban planning rules, because there is the
government in the company and this is reducing the risk.
fienay Azak-Matt: This is alternative financing but as you said
nothing new. You involve your stakeholders in your project and
so you get more equity in. There is a project in Turkey, originally
it was developed as a purely retail one. Afterwards they converted
the project into a mix- use, now they are selling the office buildings
or residential mature and from this money they are building the
retail part. So this is how it goes. Involving stakeholders means,
for especially in retail, you can take and you can sell the hyper
market to the hyper market or you can ask for advanced payment
of the rents, for at least some years and put the money in your
construction. Also in a hotel construction, you know, you can go
to the hotel manager ask for some out of need distributions.
Gayrimenkul Zirvesi 10
They are some possible as well, in the end it means increasing
your equity through getting more parties involved and sharing
the risk. So at the end the investors are sharing the risk and the
bank is sharing the risk. Because what is sure we as a bank won't
go up with our leverage for the next years. In contrary, we go
down. We also went down in Turkey from LTBs and LTCs from
70% to now 60-65%. We won't go up for the next years as we
see the market is still volatile, and the only possibility is then
involving the stakeholders.
Andreas Schiller: Nuri, we should integrate you. You want to
say something? With my question...
Nuri fiapkac›: Yes, I mean. I just want to say couple of things
about the period before the crisis. When we came to Turkey like
ten years ago, we came as a management company just to get
to know Turkey. Our first investment actually started in 2006 with
an approximately 80 million Euro project in Eskiflehir called Espark
together with Areal Bank and at that time as we agreed with
them it was 100% financed. I mean the leverage is 100%. But it
was before the crisis. As Miss Matt actually said, after the crisis
everything is different. Because before the crisis, the real estate
pricing was increasing a lot and nobody was really caring about
their investments whether they had a good feasibility or not. The
banks were actually giving the money without looking too carefully.
That was before the crisis. But now, of course, as fienay stated,
the banks are looking more equity and before the crisis we were
not really actually putting our hands under the stone. But now
actually we have to put really half of our body under the stone
and take the risk accordingly. Otherwise it will not work. But on
the other side we have to also state that for example during the
crisis in the shopping center business investments, terracity was
maybe the only project which received financing. Why did they
receive the financing? Because it was a proper and reliable project
from all aspects. There is an institutional investor behind it and
we are the management company together with them. And that
is why the banks actually even during the crisis financed them. I
don't know how much they gave. Approximately more than 60
million Euros as far as I know.
Andreas Schiller: A blank check?
Nuri fiapkac›: Yes. This is all announced everywhere but even
actually before the financing, there is couple of other points; The
finance is not high and we have to take risk as an investor at the
moment but there is actually some legal and commercial legislation
risks. Assuming that we found the financing, assuming that Areal
Bank is financing my new project but there is new law coming.
The coming Commercial code is actually killing the leasing contract
at the moment. So how will the foreign investors come to Turkey
under these scenarios? On the other side, we as all investors,
maybe we were so conservative and that is why so many people
were complaining about ECE as we are not investing too much.
But this is because there is no legislation in Turkey. For example
on certain streets there are tens of shopping centers. Nobody is
concerned about this but if you look at the Europe, there are
certain rules and regulations and you cannot build shopping center
wherever you want.
Andreas Schiller: I had the feeling that Burhanettin wants to
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