Torun Center Development Valuation Report
Prepared on behalf of Torunlar GYO
31 December 2012
www.dtz.com/tr
This Report titled “Torun Center Development Valuation Report Update” has been prepared by DTZ Pamir & Soyuer, as requested by Torunlar Gayrimenkul Yatırım Ortaklığı A.Ş.
DTZ Debenham Tie Leung International Property Advisers is exclusively represented in Turkey by Pamir ve Soyuer Gayrimenkul Danışmanlık A.Ş. (“DTZ Pamir & Soyuer”).
The mailing address of Pamir & Soyuer is presented below:
Hakkı Yeten Caddesi 15/7 Şişli - İstanbul 34365
Phone : +90 (212) 231 5530 Fax : +90 (212) 231 5820 E-mail : [email protected]
Executive contacted for the purposes of this Report is:
Prepared by:
Fadime Coban, Urban Planner, M.Sc. in Real Estate Development CMB Licensed Valuer
Manager/Advisory Services (e-mail: [email protected])
Reviewed by:
Firuz Soyuer, MBA, MRICS Managing Partner
We do not guarantee the fulfillment of any estimates contained within this report, although they have been conscientiously prepared on the basis of our own research and information made available to us. The report may not be published, reproduced or quoted in part or in whole, nor may it be used as a basis for any contract, prospectus, agreement or other document without our prior written consent. www.dtz.com/tr
TABLE OF CONTENTS I. EXECUTIVE SUMMARY ...... 1 II. INTRODUCTION ...... 2 A. INSTRUCTION ...... 2 B. PURPOSE OF VALUATION ...... 2 C. BASIS AND DEFINITION OF VALUATION ...... 2 D. MARKET VALUE ...... 2 E. DEFINITION OF VALUE ...... 2 1. Definitions ...... 2 2. Market Value ...... 2 F. APPROACHES TO VALUATION ...... 3 G. ASSUMPTIONS AND SOURCES OF INFORMATION ...... 4 H. HIGHEST AND BEST USE ASSESSMENT ...... 4 I. APPROACH & METHOD ...... 5 J. DATE OF VALUATION ...... 5 K. CURRENCY EXCHANGE RATES ...... 5 III. ISTANBUL GENERAL INFORMATION ...... 6 A. GENERAL OVERVIEW ...... 6 B. POPULATION ...... 6 C. TRANSPORTATION ...... 7 D. ECONOMY ...... 9 IV. İSTANBUL PROPERTY MARKETS ...... 11 A. RETAIL MARKET ...... 11 B. OFFICE MARKET ...... 12 C. RESIDENTIAL MARKET ...... 14 V. REAL ESTATE TRENDS IN THE AREA ...... 16 A. RESIDENTIAL MARKET IN THE AREA ...... 16 B. RETAIL MARKET IN THE AREA ...... 17 C. OFFICE DEVELOPMENTS IN THE AREA ...... 19 VI. TORUN CENTER PROJECT (ALİ SAMİ YEN PROPERTY) ...... 25 A. LOCATION, ACCESSIBILITY & ENVIRONS ...... 25 B. DESCRIPTION OF THE PROPERTY ...... 27 C. LEGAL DESCRIPTION OF THE PROPERTY ...... 28 Deed Registry Records ...... 28 Encumbrances ...... 28 Zoning ...... 29 Proposed Development ...... 30 VII. VALUATION ...... 32 A. COMMENTS / EXPLANATION / METHODOLOGY...... 32 B. VALUATION OF THE PROPERTY ...... 32 1. Construction Area ...... 32 2. Project Timing ...... 32 3. Construction Costs ...... 33 4. Soft Costs ...... 33 5. Infrastructure Cost ...... 33 6. Residential Component Assumptions ...... 33 7. Office Component Assumptions ...... 34 8. Retail Assumptions ...... 34 9. Discount Rate ...... 36 10. Cost Spent to Date ...... 36 11. Landowner’s Share – Revenue Share Model ...... 36 12. Conclusion ...... 37
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VIII. APPENDICES ...... 38 A. VALUATION TERMS AND CONDITIONS ...... 38 B. TITLE ...... 38 C. ENVIRONMENTAL MATTERS ...... 38 D. STATUTORY REQUIREMENTS AND PLANNING ...... 38 E. INFORMATION ...... 39 F. LEGAL ISSUES ...... 39 G. DATE OF VALUATION AND CURRENT MARKET CONDITIONS ...... 39 H. DISPOSAL RIGHTS ...... 39 I. INFRASTRUCTURE ...... 39 J. ROAD PROPOSALS ...... 39 K. SURVEYS ...... 40 IX. REFERENCES & EXHIBITS...... 41
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I. EXECUTIVE SUMMARY
We herewith submit our Valuation Report pertaining to the Torun Center Development (the “Property”) located in Şişli, İstanbul.
We have inspected the Property and analyzed the market conditions in the related area. Our report has been prepared in accordance with RICS (Royal Institute of Chartered Surveyors) standards.
Property Type Land Owner of Record T.C. Başbakanlık Toplu Konut İdaresi Başkanlığı (TOKI) Land Value has been paid to TOKI but title deed has not been transferred to Torunlar yet. Deed Record City İstanbul District Şişli Quarter Dikilitaş Block No. 1199 Lot No. 383 Area 33,615 sq m
Zoning Commercial and Tourism Area FAR=2.5 Mixed use development including residential, retail and Components of office components. Development Total construction area is 241,967 sqm Sellable Area 60,808 sq m (residential) 75,316 sq m (office) 11,588 sq m (retail)
Based on the available data and market information, together with our analysis and experience in the İstanbul real estate market, our opinion of value of Torun Center Property is;
Estimated Land Value : USD 289,154,434 Cost Spent to Date : USD 15,732,000 Total Value –Rounded : USD 304,900,000
Share of Torunlar GYO_ 65% of Total Value : USD 198,185,000 (One hundred ninety eight million and one hundred eighty five thousand US Dollars) (Exhibits pp. 42 - 46)
The above Market Value is estimated by Income Capitalization Approach – DCF Method.
We hereby certify that we have no undisclosed interest in the Property, and our employment and compensation are not contingent upon our findings and valuation.
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II. INTRODUCTION
A. Instruction
DTZ Pamir & Soyuer has been instructed by Torunlar Gayrimenkul Yatırım Ortaklığı A.Ş. (“Torunlar GYO”) to update the valuation of the property located in Mecidiyeköy Quarter of Şişli District of İstanbul.
DTZ Pamir & Soyuer and the Client have agreed the exact scope of instructions. In summary, Torunlar GYO requires the “market value” of the subject property.
B. Purpose of Valuation
The valuation has been undertaken to estimate the value of the property which is included in the portfolio of Torunlar GYO, listed in İstanbul Stock Exchange (ISE). This is an update report of which the original was dated 30 June 2010 and will be publicized on the web page of Torunlar GYO.
C. Basis and Definition of Valuation
The basis of valuation is the Market Value.
D. Market Value
The value of Torun Center Project has been assessed in compliance with the RICS (Royal Institute of Chartered Surveyors) standards.
The International Valuation Standards Council (IVSC) publishes the International Valuation Standards (IVS) that set out internationally accepted valuation principles, procedures and definitions. RICS has adopted these standards.
The approved IVSC definition of “Market Value” is stated in the paragraph “Definitions”.
E. Definition of Value
1. Definitions
The Property has been valued in accordance with the relevant parts of the IVSC (International Valuation Standards Committee) manual as adopted by RICS. The bases of valuation are as follows:
2. Market Value
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“Market Value” is the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.
Notes: “…date of valuation…” means the date at which the property is deemed to be sold. “…the estimated amount…” refers to a price expressed in terms of money payable for the property an arm’s-length market transaction. “…a property should exchange…” refers to the fact that the value of a property is an estimated amount rather than a predetermined or actual sale price. It is the price at which the market expects a transaction to be completed. “…on the date of valuation…” requires that the estimated Market Value is time specific to a given date and this date is normally the date that the hypothetical sale is deemed to take place and is therefore different from the date when the valuation is actually prepared. “…between a willing buyer…” refers to one who is motivated, but not compelled to buy. “…a willing seller…” is neither an over-eager nor a forced seller who is prepared to sell at any price, nor one prepared to hold out for a price not considered reasonable in the current market. “… in an arm’s-length transaction…” an arm’s length transaction is one between parties, who do not have a particular or special relationship which may make the price level uncharacteristic of the market, or make it inflated because of an element of special value. “…after proper marketing…” means that the property would be exposed to the market in the most appropriate manner to effect its disposal at the best price reasonably in accordance with the Market Value definition. “…wherein the parties had each acted knowledgeable and prudently…” presumes that both the willing buyer and the willing seller are reasonably well informed about the nature and characteristics of the property, its actual and potential uses and the state of the market at the date of valuation. “…and without compulsion…” establishes that each party is motivated to undertake the transaction, but neither is forced nor unduly coerced to complete it.
F. Approaches to Valuation
The three approaches to valuation are:
- Sales Comparison Approach
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The Sales Comparison Approach is based on the comparable asking price and/or realized transaction value of similar properties located in the subject area, having the same quantitative and qualitative specifications with the subject property. The value indication is produced by comparing the subject property to sales of similar properties. The sale prices of the properties that are judged to be the most comparable indicate a range in which the value of the subject property will fall.
- Income Capitalization Approach
The Income Capitalization Approach measures the present value of the future benefits of property ownership. Income streams are converted into a present value estimate through discounting (“discounted cash flow analysis”).
- Cost Approach (Depreciated Replacement/Reproduction Cost)
The Cost Approach reflects market thinking by recognizing that market participants relate value to cost. In estimating the value of a property, the reproduction or replacement cost of the building improvements are estimated, accrued depreciation is subtracted, and estimated land value is added.
G. Assumptions and Sources of Information
These general terms, conditions and assumptions are the basis of our valuations and reports normally prepared and also applied to the valuation contained in this Report unless otherwise stated.
We have relied upon the details and information about the subject Property that are provided by the officials of the owner company Torunlar GYO.
Areas have been taken from the information supplied by the owner company. We have not carried out measurements on sites, but from our inspection of the properties we have no reason to believe that the stated areas are materially inaccurate.
H. Highest and Best Use Assessment
The “Highest and Best Use Value” is synonymous with Market Value. Highest and best use is defined by IVSC as: The most probable use of a property which is physically possible, appropriately justified, legally permissible, financially feasible, and which results in the highest value of the property being valued.
The concept of highest and best use is inherent in the Market Value definition.
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We are in the opinion that commercial use is the highest and best use of the Property, and is in accordance with the zoning of the Property.
I. Approach & Method
In the valuation study of Torunlar Center Property; Income Capitalization Approach using Development DCF (Discounted Cash Flow) Analysis - NPV of Landlord’s Share model have been applied.
J. Date of Valuation
The date of valuation is 31 December, 2012.
K. Currency Exchange Rates
Central Bank of Turkey selling rates of the valuation date used in the valuation report are as below.
TL/USD : 1.7826 TL/EUR : 2.3517 USD/EUR : 1.3192
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III. ISTANBUL GENERAL INFORMATION
A. General Overview
İstanbul, the commercial and cultural capital of Turkey is one of the most crowded metropolitan areas of the world with a total population of over 13.6 million.
Because of the geographically strategic location, İstanbul has direct control of the Turkish Straits that link the Black and Aegean Seas. The city serves as a junction between the land and sea trade routes.
The city is located on two continents separated by the Bosphorus, one of the busiest and strategic straits of the world. The Bosphorus and Fatih Sultan Mehmet Bridges connect the Asian and European Sides. European Side has mainly a commercial and residential character while the Asian Side is basically residential. Two thirds of the population resides in the European Side that also contains the CBD of İstanbul such as Maslak, Levent, and Zincirlikuyu areas.
B. Population
There are 39 districts in İstanbul. According to address based population census in 2012 population of İstanbul is 13.8 million (18.3% of Turkey). Average population density is 2,666/sq km in the province. Approximately 100% of the population live in the urban areas.
The most crowded district is Bağcılar with a population of 749,000 (5.4% of total) and the less populated district is Adalar with a population of 14,552.
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The population increase between 2009 and 2010 was 2.6%, between 2010 and 2011 was 3%, and 2011 and 2012 has been recorded as 1.6% in İstanbul province. Male and female populations are approximately the same. People aged less than 35 years comprise 58.8% of the total population
According to the 2012 Census, the populations of the districts are as follows:
District Population District Population Adalar 14,552 Gaziosmanpaşa 488,258 Arnavutköy 206,299 Güngören 307,573 Ataşehir 395,758 Kadıköy 521,005 Avcılar 395,274 Kağıthane 421,356 Bağcılar 749,024 Kartal 443,293 Bahçelievler 600,162 Küçükçekmece 721,911 Bakırköy 221,336 Maltepe 460,955 Başakşehir 316,176 Pendik 625,797 Bayrampaşa 269,774 Sancaktepe 278,998 Beşiktaş 186,067 Sarıyer 289,959 Beykoz 246,352 Silivri 150,183 Beylikdüzü 229,115 Sultanbeyli 302,388 Beyoğlu 246,152 Sultangazi 492,212 Büyükçekmece 201,077 Şile 30,218 Çatalca 63,467 Şişli 318,217 Çekmeköy 193,182 Tuzla 197,657 Esenler 458,694 Ümraniye 645,238 Esenyurt 553,369 Üsküdar 535,916 Eyüp 356,512 Zeytinburnu 292,407 Fatih 428,857 Total 13,854,740 Source : Turkstat
C. Transportation
Transportation to İstanbul is provided by airways, railways, highways and seaways. TEM (Trans European Motorway) and D-100 (E-5) highways connect Asia and Europe via bridges over the Bosphorus and provide access to Ankara and other European cities.
There are two airports in İstanbul. Atatürk International Airport is located in Yeşilköy on the European side of the City approximately 25 kilometres from the city centre (Taksim). Sabiha Gökçen International Airport is located in Kurtköy on the Asian Side of İstanbul 50 km away from city center.
İstanbul has three ports, namely İstanbul Port (Karaköy), Haydarpaşa Port and Ambarlı Port. Haydarpaşa and Ambarlı are freight, container and Ro-Ro ports, while İstanbul Port is the cruiser port. Relocation of İstanbul Port is being
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considered and new port developments are planned in Bakırköy and Zeytinburnu.
Public transportation system within city limits of İstanbul comprises of various railway systems, funicular, bus network and maritime services.
İstanbul maritime system operates on the shores of Bosphorus and Marmara Sea. Ferryboats, car ferries and catamarans operate between 70 terminals.
Metrobus BRT (Bus Rapid Transit) system between Söğütlüçeşme on the Asian Side and Avcılar on the European Side provides transportation following the E5 Road via Bosphorus Bridge. Metrobus line currently is 41 km and has 32 stations. Construction of BRT extension to Beylikdüzü is being continued.
The railway transportation system of İstanbul comprises of various suburban network, light railway system, metro and funicular systems.
Railway transportation in İstanbul can be summarized as below.
Length Passenger Railway System Type (km) Capacity Şişhane – Atatürk Oto Sanayi Metro 14.5 195,000 person/day Kadıköy - Kartal Metro 22 70,000 person/hr Aksaray – Atatürk Airport Light Railway 19.6 240,000 person/day Kabataş - Zeytinburnu Tramway 13.2 245,000 person / day Zeytinburnu - Güngören - Bağcılar Tramway 5.2 40,000 person / day Topkapı - Habibler Tramway 15.3 150,000 person / day Tünel - Karaköy Funicular 0.5 13,000 person / day Taksim – Kabataş Funicular 0.64 30,000 person / day Taksim - Tünel Nostalgic Tramway 1.6 5,000 person / day Kadıköy - Moda Nostalgic Tramway 2.6 2,500 person / day Maçka - Taşkışla Cable Car 0.347 1,000 person / day Eyüp – Piyer Loti Cable Car 0.384 2,160 person / day Sirkeci - Halkalı Subway Train 30 13,000 person / hour Haydarpaşa - Gebze Subway Train 42 13,000 person / hour
Bosphorus Rail Link ‘MARMARAY’:
Marmaray is the major transportation project of İstanbul aiming to link the European and the Asian sides’ railway systems with an undersea rail tunnel across Bosphorus.
The project includes 1.4 km İstanbul Strait crossing by a tunnel from Yenikapı on the European side and Söğütlüçeşme on the Asian side. 41 stations and the upgrade of 63 km of suburban lines will create a 76.3 km high capacity line between Gebze and Halkalı Intermediate stations will be built at Sirkeci and Üsküdar. An interchange station with İstanbul metro and light rail will be built at Yenikapı. Marmaray is expected to start operating in 2013.
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Major projects under construction are:
Taksim - Yenikapı Metro 5.2 km; across the Golden Horn on a bridge and underground through the old city. Otogar (City bus terminal in Esenler) - Kirazlı 5.8 km LRT Line (2012) Kirazlı - Olympic Village Metro 21.7 km with 16 stations (will serve 212)
D. Economy
Throughout history, İstanbul has been a strategic intersection between Europe, Asia and the Middle East, allowing trade to flourish. İstanbul boasts a young population, a dynamic private sector, regional connections and a developing infrastructure. It has been one of the major seaports of Turkey for imports and exports of traditional commodities such as textiles, tobacco, glass and leather.
The city is the dominant force in the Turkish economy providing 27.65% of gross value added (GVA) activities. İstanbul takes the first place with USD 182.8 billion GVA in 2008. Based on the current data, the share of İstanbul increased from 21% to 27.65% in Turkey’s gross value added (GVA) activities, between 2001 and 2008. (2008 is last data available)
In terms of total gross value added, İstanbul ranked first place. The share of industrial sector is 27.1% in total Turkish industrial sector, while share of services sector is 31.4% in total Turkish services sector in 2008.
The contribution of services, industrial and agricultural sectors to total GVA of İstanbul is 73.1%, 26.7% and 0.2% in 2008, respectively.
İstanbul has the highest share in foreign trade with 44% and 52.5% of export and import of goods and services in Turkey, respectively. 2011 volume of exports is recorded as USD 59.5 billion while volume of imports amounted to USD 124 billion.
Many of Turkey’s manufacturing industries and commercial sectors are concentrated around İstanbul, with large developments to the borders of the city, within İzmit and Gebze Organized Industrial Zones. The original industrial zones of İstanbul were concentrated within the city. Currently, large scale manufacturing plants are located on the TEM Highway and towards the outskirts of the city.
The city never played a dominant role in agricultural activities, but it is the biggest consumer of agricultural goods in the country.
41.5 % of the bank deposits are collected in İstanbul, the financial capital of the country. 38.5 % of the credits are also used in the city. Headquarters of major local banks and insurance companies are located in İstanbul.
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Along with the industry, insurance and banking companies, major corporations and multinational firms in the city steer the nation's economic life. As end of 2011, İstanbul accommodated 56.4% of all FDI firms in terms of number of firms. Of these firms 36% are active in retail sector, 17% in manufacturing and 15% in real estate.
İstanbul plays an important role in tourism sector with meeting, conventions, exhibitions and congresses in the last couple of years. İstanbul accommodates approximately 8 million foreign visitors per year.
Economic Indicators İstanbul Turkey GDP per capita (USD, 2008) 14,591 9,384 Unemployment rate (%, 2011) 11.8 9.8 Total export volume (billion USD, 2011) 59.5 134.6 Total import volume (billion USD, 2011) 123.9 240.8 Total bank deposit (billion USD, 2010) 165.9 339.6 Total banking loan (billion USD, 2010) 126.8 329.7 Source: TURKSTAT.
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IV. İSTANBUL PROPERTY MARKETS
A. Retail Market
Total retail supply in İstanbul reached to 3.2 million sq m in 100 centres, as of end 2012. İstanbul retail market accounts for 38.8% of total retail supply in Turkey.
District shopping centres dominate retail supply with a share of 55%. Town centre malls constitute 23% of total supply. However, the share of outlet centres increased from 10% to 20% since the end of 2008, due to new openings and conversion of district shopping centres to outlet centres.
İstanbul : retail centres (total supply by type, as of 2012 end)
Retail Parks, 2.2% Outlet Centres, 20.2%
Town Centre District Malls, 22.8% Shopping Centres, 54.7%
Source : DTZ Pamir & Soyuer
In 2012, approximately 241,000 sq m additional supply was delivered to İstanbul retail market. 2012 openings included Trump Tower in Mecidiyeköy, Buyaka Shopping Center in Ümraniye and Marmara Park in Beylikdüzü. The figure below shows the cumulative gross leasable areas of retail supply in İstanbul by types in a time series.
İstanbul : retail centres (end 2012)
3,500,000 Retail Parks Outlet Centers 3,000,000 Town Center Malls District Shopping Centers 2,500,000
2,000,000
1,500,000 GLA (sq m) GLA 1,000,000
500,000
0 1989- 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2000 Source : DTZ Pamir & Soyuer
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The average GLA per 1,000 population is 236 sq m in İstanbul, which is quite above the country average which is 110 sq m per 1,000 inhabitants. Taking into consideration the 52 provinces with shopping centers, this number increases to 127 sq m.
Currently, 1.3 million sq m new retail schemes are under construction in İstanbul. In addition, approximately 585,000 sq m additional supply is in the planning stage. In 2015, total supply is expected to reach 4.5 million sq m with under construction developments.
Major projects with over 50,000 GLA that are under construction are as follows:
Under Construction Retail Centre Location Opening GLA Mall of İstanbul İkitelli 2013 139,500 Akasya Acıbadem 2013 84,000 Zorlu Center Zincirlikuyu 2013 60,000 Vialand Theme Park Halkalı 2013 140,000 Brandium Ataşehir 2013 60,000 Ispartakule Shopping Center Bahçeşehir 2014 85,000 Şahinler SC Beylikdüzü 2014 80,000 Emaar Square Libadiye 2014 126,000 Venezia Metris 2014 70,000
Retail rents in İstanbul range between USD 60 (€42.60) – 100 (€71) /sq m/month in town centre malls, between USD 30 (€21.30) – 60 (€42.60) /sq m/month in district shopping centres and between USD 15 (€10.65) – 30 (€21.30)/sq m/month in outlet centers.
B. Office Market
New office supply was quite limited during 2012, compared with the previous year. As end of 2012, total Grade A office supply reached to 2.2 million sq m in the primary office regions.
Total office supply in the European and Asian sides are 1.37 million sq m and 0.8 million sq m, respectively. Total Grade A office supply is estimated 2.7 million sq m including secondary office areas.
Approximately 63% of total Grade A office supply is located in the European side. Although Levent - Etiler region still remain as the supply leader, Ümraniye became the second largest primary office region, as the fastest growing region for the last four years.
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İstanbul : Grade A office supply (by regions, as 2012Q4)
600 500 400 300
200 Thousands 100
0
Airport
Maslak
Kavacık
Ümraniye
Kozyatagi
Altunizade
Sisli-Z.kuyu Etiler-Levent
KozyatagiPrimary office areas AirportSecondary office areas(*) (*) Estimation Source: DTZ Pamir & Soyuer
Approximately 650,000 sq m under construction (450,000 sq m in the European side and 200,000 sq m in the Asian side) will be delivered to the market by 2015. Total Grade A office supply is estimated to exceed 3 million sq m in the primary areas within the next four years. In addition, approximately 800,000 sq m office supply in planning stage is expected to be delivered to the market in the next five years.
The majority of the under construction developments are concentrated on the main CBD areas, Levent and Maslak regions where availability is relatively low. On the other hand, most of the planning stage developments are located on the Asian side, especially, Kozyatağı - Ataşehir area where will be the new “İstanbul Financial Center” with the relocation plan of government institutions and banks.
İstanbul office market supply forecast (2012 – 2017), ‘000 sq m
3,250 3,000 2,750 2,500 2,250 2,000 1,750 1,500 1,250 1,000 750 500 250 - 2012 2013 2014 2015* 2016-18* Asia Europe Source: DTZ Pamir & Soyuer
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As end of 2012, the rental level turned back to pre-crisis level. Vacancy rate decreased in the European side, while it slightly increased in the Asian side.
The highest asking rent is still running around USD 45 /sq m/month in Levent - Etiler region where vacancy rate decreased to 1.5% in 2012Q4. The highest asking rent stand at USD 30 /sq m/month and vacancy rate decreased 5.75% in Maslak region. In Şişli – Zincirlikuyu – Beşiktaş region, the highest asking rent is USD 40 /sq m/month and vacancy rate was 6.85% in the 2012Q4.
The highest asking rent is USD 25 /sq m/month and the vacancy rate is 10% in Kozyatağı. In Ümraniye, the highest asking rent stands at USD 22 /sq m/month and vacancy rate is 15% in the third quarter of 2012.
C. Residential Market
The residential market of İstanbul is generally characterized by multi-owner apartment buildings that can be seen in all residential areas of the city with various qualities.
The upscale residential areas on the European Side are Nişantaşı, Etiler, Akatlar and Levent. Arnavutköy, Bebek, İstinye and Yeniköy are the most valuable residential regions in the European Side Bosphorus Area. Water side villas (“Yalı”) which line up the Bosphorus are among the most expensive real estates of İstanbul. Some of these Yalı’s are historical buildings dating back to the 17th Century. New developments are limited within the Bosphorus Area, therefore supply is very low.
The upscale residential areas of the Asian Side are Moda, Kalamış and Fenerbahçe on the sea coast and Caddebostan, Göztepe, Erenköy and Suadiye along the Bağdat Street, which is one of the major high streets of the city.
Although, the Asian Side is mostly residential, due to the earthquake of 1999 and traffic problems that occur in peak hours on the bridges, the European Side is more valuable in terms of housing. Besides, the primary value added of the European Side is the presence of the main Central Business District (CBD); Şişli, Levent and Maslak Regions.
İstanbul is the largest city in Turkey with a population of approximately 13 million. The population of İstanbul has grown approximately 17 times in the last 85 years and reached to 13.85 million in 2012.
There always will be demand for proper housing in İstanbul due to increasing population and the need for relocation to better environments. Earthquake risk is a major issue in the residential real estate market; therefore there is a tendency to relocate to locations, having solid ground formations
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Gated Communities
In early 90s the high-income groups relocated to new developments to live in master-planned suburban environments for achieving superior living standards. This tendency has brought a new phenomenon of gated communities, mostly developed towards the peripheral areas with better infrastructure, social and recreational facilities and security.
The most preferred gated community areas have been in Kemerburgaz, Hadımköy and Zekeriyaköy on the European side and Beykoz, Çekmeköy and Ömerli on the Asian side. All of these locations have access from the E-80 Highway (TEM).
The pioneering suburban projects have been Kemer Country in Kemerburgaz and Alkent 2000 in Hadımköy on the European Side, and although developed later, Acarkent, Beykoz Konakları and Kasaba on the Asian Side.
High-density Developments
High density housing developments provide affordable housing for the low, middle and upper-middle income segments of the population of İstanbul. These developments range from settlements with apartment blocks of lower quality to settlements with apartment blocks and villas finished with first quality materials together with various social, retail and recreation facilities. Some of the master planned high density housing projects in İstanbul are Bahçeşehir, Ataköy, Halkalı, Başakşehir and Ataşehir.
Metropolitan Residence Developments
The residence developments offering a wide range of services are generally located in the valuable parts of the European Side within the CBD of the city, mainly in the Şişli, Levent, Mecidiyeköy, and Etiler areas. These “Residence” projects that also present social and recreational functions within their structure offer a different and practical lifestyle. They are generally preferred by the upper income and active segment of the population.
Cleaning and maintenance services as well as social and recreational facilities like sports centers, swimming pools, restaurants and bars are generally located within these buildings with high standard technical specifications. Closed parking and depot areas are also available.
Some of the full service residence developments on the European Side are Akmerkez Residence, Metrocity Millennium, Elit Residence, Polat Tower Residence, Selenium Residence, Maya Residences, Süzer Plaza, Taksim Residences, Bellevue Residence, Astoria Kempinski Residence, and Kanyon Residences.
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V. REAL ESTATE TRENDS IN THE AREA
Torunlar Center is located in Mecidiyeköy at the heart of city center and CBD in Şişli districts of İstanbul.
A. Residential Market in the Area
Around the Torunlar Center, high-end residential developments are located as below;
Number of units, types, delivery dates, unit sales prices, and locations of the main downtown residence projects in İstanbul are summarized in the table below:
Gross Total Area Unit Price Range Project Developer Location # of Completion Range (US$/m2) Units (m2) Zorlu September Zorlu Group Zincirlikuyu 584 117-733 $11,000 $18,000 Center 2013 İstanbloom Esin Yapı Zincirlikuyu 170 108-306 2013 Q4 $6,555 $8,550
December Soyak Soho Soyak Zincirlikuyu 77 65-252 $6,500 $11,000 2013 İstanbul Kiler REIC 4. Levent 187 120-750 Completed $9,000 $13,000 Sapphire Trump Doğan Holding Mecidiyeköy 204 121-254 Completed $6,430 $10,300 Towers Akfen &Yıldız Levent Loft H. Levent 82 100-210 Completed $7,143 $7,450
Quasar İstanbul has been developed by Viatrans and Meydanbey J.V. which is adjacent to Torun Center development. Development will be comprised of Fairmont offices, Fairmont residences, Fairmont hotels, retail center and cultural center. Office and retail asking price is USD 9,000 / sq m and residence asking price is USD 6,000 / sq m.
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B. Retail Market in the Area
The locations of the major competitor existing and pipeline retail centers are illustrated in the map below.
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10 9 8 3 7 6 4 5 2 1 The Property
1 - Cevahir 2 - Zorlu Center- Pipeline 7 - Metrocity 3 - Akmerkez 8 - Özdilek – Pipeline 4 - Trump Towers 9 - Kanyon 5 - Profilo 10 - Sapphire 6 - Astoria Kempinski 11 - İstinye Park
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Comparison of the existing and pipeline shopping centers in the vicinity of the Torunlar Center is provided in the table below.
Non-Food Food Opened GLA Stores Stores Project Location Floors Hypermarket Anchors Entertainment In (m2) (US$/m2/m (US$/m2/ th) mth) Existing Beymen, Zara, Mudo AFM Cinema, 6 Akmerkez 1993 Etiler 34,680 50-100 40-130 4 Macro Center City, Vakko screens Boyner, Zara, Koton, Metrocity 2003 4th Levent 31,980 30-60 50-90 4 Migros ---- Teknosa, Essporto Harvey Nichols, Habitat, Cinebonus, 9 Kanyon 2006 4th Levent 37,500 40-100 30-120 4 Macro Center MAC Sport Club, screens Beymen, Zara, Boyner, Afm Cinema, 12 İstinye Park 2007 İstinye 82,000 Average 75 4 Macro Center H&M, Burbery, Polo screens Ralph Lauren Cinema, 12 screens, Koçtaş, Debenhams, Cevahir Atlantis 2005 Şişli 110,000 30-120 70-140 6 Migros Mudo, Tepe Home, İstanbul Entertainment YKM, Teknosa, Zara Center Afm cinema, 7 Boyner, Mango, Koton, Profilo 1998 Mecidiyeköy 40,600 40-70 50-80 6 Tansaş screens, PAM Marks & Spencer Theather H&M, LC Waikiki, Sapphire 2011 4th Levent 33,185 23-64 47-99 6 Kiler YKM, Teknosa & D&R, ---- Çarşı Koton, DeFacto Trump Mars Entertainment 2012 Mecidiyeköy 42,000 N/A N/A 5 Migros GAP, Mudo, Saturn, Towers Group Pipeline Zorlu Cinema, 12 screens, Zincirlikuyu 60,000 N/A N/A N/A N/A N/A Center children play area Özdilek 4th Levent N/A N/A N/A N/A N/A N/A N/A
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C. Office Developments in the Area
Büyükdere Avenue has been developing as main CBD – Central business district area of İstanbul since 1980s. Major part of Büyükdere Avenue is Levent region, and Mecidiyeköy is an extension of Levent.
In the following years, due to availability of land, office developments has extended towards both north and south-west directions of Büyükdere Avenue.
Maslak region, located on the north side of Büyükdere Avenue, was an industrial area since late 1980s. Within time Maslak has developed as an office area and high-rise office buildings including İz Giz Plaza, Sun Plaza, Beybi Giz Plaza, Vodafone, Oyak, Doğus, Alarko, Akbank Headquarters were built in this once industrial area. Prime high-rise office buildings and high-end residences are located in Levent, such as Sapphire, Kanyon, Metrocity etc.
Mecidiyeköy, Zincirlikuyu and Esentepe are located on the south and south- west direction of Büyükdere Avenue. Majority of the office space was converted from former residential buildings along the Zincirlikuyu, Esentepe and Mecidiyeköy region.
Delivered new office developments; Trump Tower and Rönesansbiz in Mecidiyeköy, in central business district (CBD) of İstanbul are, as below;
Development Developer Completion GLA Trump Tower Doğan H. 2011 36,000 sq m office,
Trump Tower Development Developer Completion Land Area RönesansBiz Rönesans 2013 March 3,917 sq m Gross Closed A. GLA Parking Capacity Floor 13,766 sq m office, 893 sq m 3 Basement, 8 24,896 sq m retail 1 / 100 sq m GLA Normal F.
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Rönesansbiz
Rönesansbiz
Pipeline new office developments are as below;
Development Developer 2013 2014 2015 Kristal Tower Soyak 55,000 Zorlu Center Zorlu 23,700 Levent Zorlu Zorlu 70,000 Skymark Tower Pramerica-Eria n/a Özdilek – River Plaza Özdilek 35,000 İstanbloom Esin Yapı 9,700 Torun Tower Torunlar GYO 63,395 Torun Center Torunlar GYO 53,244 Quasar İstanbul Viatrans&Meydanbey n/a Supply/year 138,400 118,395 53,244 Total Supply 310,039
Torun Tower Trump Towers Tat Towers Astoria Özsezen Maya Akar Zorlu C. Torun Center & Quasar D.
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Kristal Tower
Zorlu Center
Levent Zorlu Tower
Skymark Tower
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Levent Özdilek D.
İstanbloom
Torun Center Quasar İstanbul
New office developments
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Subject property is located in Mecidiyeköy region which is the major hub of European side of Istanbul. Existing office buildings in close vicinity are Entaş, Aygaz, Kuveytturk, Finansbank, TMSF, Denizbank, Halkbank headquarters, and Astoria, Maya Akar, Özensen and Maya Akar office buildings.
Pipeline developments are Quasar İstanbul Development, Torun Center Tower Development, Zorlu Center and Tat Towers mixed use projects in the region.
Currently asking rents in CBD – Central Business District, between Şişli and Levent area range between USD 30/sq m/month and USD 45/sq m/month. Realized rents in A grade offices is highest in Levent region between USD 30 and USD 40/sq m/month. Asking office rents are as below;
Development GLA –sq m Asking Rent-USD sqm/mnth Mecidiyeköybiz Office 1,700 USD 24 - 30 Trump Tower 10,000 USD 32 - 42 Metrocity D Block 2,762 USD 32 - 35 Kanyon 1,167 USD 45 Telpa 1,180 USD 45 Akmerkez USD 30 - 40 RBS 780 USD 52 Özdilek (River Plaza) 35,000 USD 40 – 45 İstanbloom 9,700 USD 30 Astoria (Semi-furnished) USD 30 – 43 Maya Akar USD 26 – 33 Maya Akatlar USD 24 – 30
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Asking second hand residence and office price are as below;
Name of Unit Area - sq Asking Unit Asking Development Type m Price Price Trump 1+1 118 650,000 5,508 Trump 1+1 104 724,000 6,962 Trump 1+1 105 725,000 6,905 Trump 3+1 258 2,550,000 9,884 Trump 2+1 175 1,600,000 9,143 Astoria 2+1 160 1,250,000 7,813 Kanyon 1+1 87 975,000 11,207 Kanyon 4+1 187 1,500,000 8,021 Kanyon 2+1 165 1,275,000 7,727 Selenium Twins 4+1 236 1,750,000 7,415 Selenium Twins 3+1 235 1,500,000 6,383 Selenium Twins 5+1 600 6,500,000 10,833 Selenium Twins 4+1 240 1,300,000 5,417 Selenium Twins 1+1 95 670,000 7,053 Selenium Twins 4+1 300 2,500,000 8,333 Fulya Terrace 4+1 312 1,250,000 4,006 Metrocity 4+1 320 1,750,000 5,469 Metrocity 2+1 176 900,000 5,114 Metrocity 1+1 120 700,000 5,833 Ulus Savoy 3+1 160 1,050,000 6,563 Ulus Savoy 3+1 162 1,090,000 6,728 Maçka Residences 2+1 202 3,100,000 15,347 Maçka Residences 1+1 141 1,300,000 9,220 Maçka Residences 1+1 135 1,250,000 9,259 Bellevu Residence 4+1 350 1,750,000 5,000 Extensa Bomonti 2+1 139 643,000 4,626 Office Developments Terrace Fulya 60 325,000 5,417 Terrace Fulya 58 300,000 5,172 Terrace Fulya 195 1,050,000 5,385 Terrace Fulya 140 700,000 5,000 Terrace Fulya 350 1,800,000 5,143 Terrace Fulya 137 720,000 5,255 Astoria 193 1,400,000 7,254 Astoria 600 5,500,000 9,167 Fulya Polat 800 4,500,000 5,625 Itower 120 750,000 6,250 Itower 60 375,000 6,250
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VI. TORUN CENTER PROJECT (ALİ SAMİ YEN PROPERTY)
A. Location, Accessibility & Environs
The property, Ali Sami Yen Stadium was the home of the Galatasaray football club in Şişli, İstanbul, from 1964 to 2010. It is located on the Büyükdere Avenue in Mecidiyeköy quarter of Şişli District on the European side of İstanbul. Mecidiyeköy is one of the most crowded quarters of central Istanbul, surrounded by dense urban development.
The Property
Access to the property is provided by E5 Highway, metro - subway system and Metrobus mass transportation.
Mecidiyeköy is the most important hub (transit station) for European side of İstanbul. Metro started operating in 2000, and includes 11 stations. The system currently consists of a single north-south line. It is serpentine shaped and is fully underground, running from the Darüşşafaka station in the north to the Şişhane station at Beyoğlu in the south.
Metrobüs transit bus line is between Avcılar to Söğütlüçeşme. The total length of the line is approximately 41 km and it has 32 stations. Metrobus route follows E-5 highway, which is the main highway of Istanbul.
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According to the official web page of municipality, everyday 600,000 passengers are transported by Metrobüs.
Metrocity SM
Profilo SM Çağlayan Trump Tat Towers Court Center Towers Astoria Towers Maya Center Zorlu Mixed Use Metrobüs The Former Likör Factory Project Station Property
Cevahir SM
Former Likör Factory, Cevahir Shopping Mall, Çağlayan Courthouse Center, Profilo Shopping Mall, Astoria Mixed-use Project, Maya Akar Center, Şişli Municipality, Trump Towers and headquartes of Kuveytturk and Finansbank are located in close vicinity of the property.
The Property
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The property is approximately 20 km Atatürk International Airport, 5.5 km to Fatih Sultan Mehmet Bridge and 3 km to Bosporus Bridge.
B. Description of the Property
The subject property is located in Mecidiyeköy, within the border of Şişli Municipality. Total land area of the Property is 33,615.15 sq m. The development construction was started in August 2011 and planned to be completed in 2015.
The site has a rectangular shaped with a northern frontage of 150 meters to Büyükdere Avenue, western boundary of 246 meters to Akıncı Bayırı Street, southern boundary of approximately 111 meters and a eastern boundary of 251 meters.
The site has a gentle slope from the centre of the site towards its northern boundary, with the lowest point located on the south eastern corner. All usual services including gas, electricity, water, mains sewer and telephone exist in the region.
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C. Legal Description of the Property
Deed Registry Records
As record of Şişli Deed Office, the lot is defined as follows:
Province : İstanbul District : Şişli Region : 2.Bölge Quarter : Dikilitaş Street : Büyükdere Caddesi Plan No : 58 Block No : 1199 Lot No : 384 Land Area : 33,615.15 sq m Type : Land T.C. Başbakanlık Toplu Konut İdaresi Owner : Başkanlığı
According to the information that is provided from the client, Torunlar has paid the total land value in advance which was stated on Revenues Share Agreement with TOKİ but title deed has not been transferred to Torunlar yet.
Land Owner Emlak Konut Gayrimenkul Yatırım Ortaklığı A.Ş. Developers Torunlar GYO 65% Torun Yapı 30% Kapıcıoğlu 5%
Encumbrances
Based on the information provided by İstanbul Şişli Deed Registry, the following annotation is recorded on the property;
Concerning the subject property and adjacent parcel (lot # 230); There is easement right after 5 meter height, [105x2.8=294 + (7x2.8)/2=9.8 =303.80 sqm] as shown in the map with the yellow shading. Dated on 30/09/1965 with document no 3742. Concerning the subject property and adjacent parcel (lot # 230); There is easement right after 5 meter height, [105x2.8=294 + (7x2.8)/2=9.8 =303.80 sqm] as shown in the map with the yellow shading. Dated on 30/09/1965 with document no 3742.
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Zoning According to 1/1000 scale Şişli, Dikilitaş revision application plan regarding to Block 1199, Lot 384 (The Property) has been approved by Şişli Municipality dated on 02.04.2010 zoning of the property is as follows;
“TT” Accommodation facilities, commercial centers, Commercial & residences, office buildings, shopping centers, Tourism stores, social facilities like cinema, museum, and theatre, restaurants and administrative buildings can be developed in the “Commercial & Tourism” areas. Area ~ 23,100 sqm (*)FAR 2.50 (above the ground) (Allowable “Commercial & Tourism” area will be calculated with gross land area) (**)FPAR 0.40 Height Unlimited “A” Playground, fountain, car parking, green space, Recreational kiosks, café and single storey temporary building Area can be developed in the “Recreational Area” Area ~ 10,500 sqm FAR 0.05 (above the ground) “B” Indoor and outdoor parking space can be Parking Area developed in the “ Parking Area” Area ~ 1,040 sqm (*) Floor Area Ratio, (**) Footprint Area Ratio
The relevant planning notes mentioned within the 1/1000 scaled Application Plan are as follows:
Road elevation will be taken from Büyükdere Avenue. Basement floors will not be included within FAR. Connection to the metro station can be made under the ground level.
Name of Block Block Block A Block B Block C Block D E Social Uses Office and retail Residential Residential Office Club 5 basement 5 basement 5 basement 5 basement floors, ground floors, ground floors, ground floors and floor and 42 floor and 42 floor and 36 # of Floors ground floor normal floors normal floors normal floors 14 retail, 114 horizantal office 231 residential 177 residential # of Units units units units 113 office units 1 unit
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Proposed Development
Net Land Area – sq m 33,615 sq m Gross Land Area – sq m 34,640 sqm (*)FAR 2.50 (above the ground) (Allowable “Commercial & Tourism” area will be calculated with gross land area) Permitted Construction Area 86,601 sq m according to FAR – sq m (**)FPAR 0.40 Permitted Construction Area 13,856 sq m according to FPAR – sq m Height Unlimited Block Gross Area / Block Net Area / Footprint Area / Sellable Area A Block 132,070.26 sq m / 345.71 sq m / 5,728.47 sq m / 11,588.18sq m B Block - Residential 36,865.64 sq m / 29,532.98 sq m / 946.59 sq m / 32,799.56 sq m C Block - Residential 32,476.16 sq m / 25,381.60 sq m / 669.88 sq m / 28,007.97 sq m D Block - Office 40,448.02 sq m / 30,903.84 sq m / 998.39 sq m / 45,263.16 sq m E Block 106.90 sq m / 106.90 sq m / 106.90 sq m Total Floor Garden Area 5,860.59 sq m Total Technical Area 19,539 sqm Total Shelter Area 3,723.91 sq m Total Closed Car Parking Area 1,900 * 25 sq m = 47,500 sq m Total Gross Area 241,966.92 sq m
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VII. VALUATION
A. Comments / Explanation / Methodology
Land value of the Torun Center Project is estimated with Income Capitalization Approach to Valuation – Discounted Cash Flow Method (DCF) and NPV of Landlord’s Share of the Development
Our DCF valuation analysis is based on the proposed construction and marketable areas of different components which have been provided by Torunlar GYO and land valuation is based on these areas.
Torunlar GYO has indicated that residential and office spaces will be sold and retail areas will be leased. All sales and rental revenues and all related costs have been considered in the valuation study.
For the DCF analysis, valuation study of retail component has been carried out with 3 years construction and 4 years holding period followed by capitalization of the estimated net operating income at the point of expected reversion. Office and residential components sale and construction period are assumed as 3 years.
B. Valuation of the Property
In arriving at our opinion of Market Value of the property with DCF analysis we have adopted the following main input variables:
1. Construction Area Total construction area is 241,967 sq m of which the breakdown is as below.
Construction Area
A Block - Under Ground Office and Retail Areas 46,620 sq m B Block (Residential) 36,866 sq m C Block (Residential) 32,476.16 sq m D Block (Office) 40,448.02 sq m E Block (Social Club) 106.9 sq m ClosedY Car Parking, Common & Technical Areas 85,450.26 sq m TotalO 241,967 sq m
2. Project Timing
Project timing is estimated as follows;
Construction Period 3 years, will be completed in 2015
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3. Construction Costs
Torunlar GYO has provided the total development cost estimations (USD 232,691,202 - TL 414,190,341) for the Torun Center project and unit construction costs of different components are estimated as follows.
Type Average Unit Construction Cost (US$ /sq m) Office & Retail Areas $900 Residential Areas $1,200 Car Parking & Technical Areas $400
4. Soft Costs
Soft costs are architecture/engineering projects, development and project control, legal advisory and other professional expenses and are estimated as 8% of total construction costs.
5. Infrastructure Cost
Infrastructure expenses are estimated as 10% of total construction costs.
6. Residential Component Assumptions
Sellable Areas
Gross residential sellable area is 60,808 sq m.
Average Residential Unit Sale Price
Sale prices of residential developments in close vicinity of property in downtown area are between USD 5,000 and USD 10,000 per sq m. Astoria and Trump Towers residential projects are the major competitor for the development. Unit asking prices for completed residences are between USD 5,500 and USD 10,000 per sq m in Trump Tower and between USD 7,000 and USD 9,000 per sq m Astoria. Initial average sale price is estimated as USD 5,850 /sqm considering the location of the property and assumed high quality of the apart residences. Average sale price of the project is USD 6,300 /sqm. Sale price increase is estimated as 3% semi-annually.
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Marketing Costs
Marketing costs are estimated as 1% of residential sales amounts.
Sales & Brokerage Expenses
Legal sales expenses and brokerage are estimated as 3% of residential sales amounts.
7. Office Component Assumptions
Sellable Areas
Gross office sellable area is 75,316 sq m.
Office Space, Above the Ground Level 45,263 sq m Office Space, Under the Ground Level 30,053 sq m
Average Office Unit Sale Price
Sale prices of office developments in close vicinity of property in downtown area are between USD 5,000 and USD 9,000 per sq m.
Initial average sale price is estimated as USD 5,250 /sqm considering the location of the property and assumed high quality of the above ground offices.
Initial average sale price is estimated as USD 4,000 /sqm considering the location of the property and assumed high quality of the underground offices.
Sale price increase is estimated as 3% semi-annually.
Marketing Costs
Marketing costs are estimated as 1% of office sales amounts.
Sales & Brokerage Expenses
Legal sales expenses and brokerage are estimated as 3% of office sales amounts.
8. Retail Assumptions
Gross Leasable Area
Breakdown of areas is as follows.
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Retail Area-sq m Retail Leasable Areas 11,588 Total GLA 11,588
Estimated Unit Rents
Taking into consideration the rent of basement retail levels in CBD; average monthly unit rents per sq m is estimated as USD 15 / sq m / month. Annual rent increase is assumed as 3%.
Lease Schedule
Lease schedule and occupancy rates are estimated as follows for retail areas:
Years 4th 5th Total Retail areas 85% 100% 100%
Property Tax & Insurance Premiums
Insurance premium for the retail areas to be paid by Torunlar GYO is estimated as 3% of EGI starting from Year 4.
Operational Costs
Generally, operational costs of the office buildings (management, security, energy etc.) are paid by the tenants. Facility management service fee (administrative expenses) is assumed to be included in the operational costs and is not considered as an additional expense.
Operational costs are not included in the cash flow.
Vacancy and Collection Loss
5% of PGI is assumed to be vacancy and collection loss.
Replacement Allowances
2% of total rent revenues is assumed to be replacement allowances starting from the 6th year of operation.
Taxes
The figures provided in this study do not include VAT.
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Capitalization Rate – Terminal Value
The capitalization rate expresses the relation between annual net operating income produced by the property and its sales price. We have estimated a capitalization rate of 8% for the retail development terminal value projections at the end of the year 8. Deed Transaction & Brokerage Fee
It is assumed that the retail property will be sold at the end of the construction completion according to NPV of expected potential rental revenues and terminal value. Deed transaction fee is 2% of sales price. Brokerage fee is estimated as 0.75% of sales price (2.75% total).
9. Discount Rate
We have assumed a discount rate of 11% has been used in the Fourth- Year Net Present Value calculations of the retail component.
Fourth Year Net Present Value of retail component was inserted to 4th year “Total Sales Revenue” column in Total Cash Flow table of the property.
Considering the current risk associated with the residential sales, office sales and retail market, marketing risks, location risk and competition risk, an annual discount rate of 14% (Semi – annually discount equal to 6.77%) is applied for overall project.
10. Cost Spent to Date
It has been stated by Torunlar GYO that circa USD 15,732,000 (TL 28,002,637) has been spent on site works, levelling and basement floors of development as of 31/12/2012.
11. Landowner’s Share – Revenue Share Model
Based on the Revenue Share Model, the development will be undertaken by a developer and a percentage of the rent and terminal sale revenues will be given to the landowner in return for land. Landowner’s share is exclusive of all development costs. Revenue Share Agreement with TOKİ, share of Landowner was 46.32%. We assume that developer will undertake the development and will give 46.32% of the revenues to the land owner in return for land.
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12. Conclusion
Having regard to the above factors and assumptions, we are of the opinion that the total Market Value of the Property with Revenue Sharing Model is;
Estimated Land Value : USD 289,154,434 Cost Spent to Date : USD 15,732,000 Total Value : USD 304,886,434 Total Value Rounded : USD 304,900,000
Share of Torunlar GYO : USD 198,185,000 65% of Total Value
(One hundred ninety eight million and one hundred eighty five thousand US Dollars)
(Exhibits pp. 42 - 46)
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VIII. APPENDICES
A. Valuation Terms and Conditions
These are the general terms, conditions and assumptions upon which our valuations and reports are normally prepared. They apply to the valuations contained in this Report unless we have specifically mentioned otherwise elsewhere in this Report. In the event that any of these assumptions prove to be incorrect then our valuations should be reviewed.
B. Title
We have been provided the title deeds of the properties. Where a Certificate of Title has been made available, we have reflected its contents in our valuations. We have not observed the presence of mortgage records at the related Deed Office. Latest record summary issued by the Deed Registrar’s Office was provided by Torunlar GYO.
We have sighted copies of title documentation and have verified title only based on the documents received. In addition, we have relied on copies of other documentation made available to us and have assumed that such copies are both accurate and valid and that there have been no material changes since these documents were issued.
C. Environmental Matters
No investigations have been carried out to establish the presence of deleterious materials on or near the properties, and for the purposes of our report we have assumed that no such materials are present.
However, should it be established subsequently that contamination, seepage or pollution exists at the properties, or on any neighboring land, or that any of these properties have been, are, or will be put to a contaminative use, our conclusions, including our valuation, may be significantly affected.
D. Statutory Requirements and Planning
Verbal or written enquiries have been made of the relevant planning authorities as to the possibility of highway improvement proposals, comprehensive development schemes and other ancillary planning matters that could affect property values. The results of our enquiries have been included within our Report where relevant.
We would draw your attention to the fact that employees of town planning departments now always give information on the basis that it should not be relied upon and that formal searches should be made if more certain information is required.
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E. Information
We have assumed that the information that the landlord and your/their respective professional advisers have supplied to us in respect of the properties are both full and correct.
It follows that we have assumed that details of all matters likely to affect value within your/their collective knowledge have been made available to us and that the information is up to date.
F. Legal Issues
Legal issues, and in particular the interpretation of matters relating to title and leases, may have a significant bearing on the value of an interest in property. Where we have expressed an opinion upon legal issues affecting the valuation, then such opinion should be subject to verification by the client with a suitable qualified lawyer. In these circumstances, we accept no responsibility or liability for the true interpretation of the legal position of the client or other parties in respect of the valuation of the property.
G. Date of Valuation and Current Market Conditions
All conclusions reached are as reasonably could be expected given today’s market conditions and are valid as at the date of valuation only. We would make the very important observation that real estate markets are dynamic and subject to fluctuation.
We accept no responsibility for legal, economic, financial or other changes after the date of our valuation which may impact either on the real estate market or on investor motivations.
H. Disposal Rights
We have assumed that the owners of the properties have full and unhindered rights to dispose of its interest in the related property.
I. Infrastructure
In carrying out this valuation report we have stated the available infrastructure.
J. Road Proposals
Unless we have commented to the contrary, we have assumed that no proposed road schemes shall adversely or beneficially affect the properties.
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K. Surveys
We have not carried out any geological, archaeological or soil surveys of the properties.
We have assumed that the properties contain no inherent or unforeseen defects or pollutive substances; that there are no unusual soil conditions which may hinder development or use of the properties; that the load bearing qualities of the site are sufficient to support the building(s) proposed to be built thereon; that no harmful or dangerous materials are present in, on, under, or near the properties; and that no items of an historical nature are present on or under the sites.
If the properties are subject to any legal burden which has not been disclosed to us then we reserve the right to amend our valuation.
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IX. REFERENCES & EXHIBITS
İsmail Kazanç Torunlar Group of Companies CFO
Haluk Yükler Director
Levent Sümer Torunlar REIC Planning&Cost Control Manager
Yıldırım Sarıbal Torunlar REIC
Alev Kökenler Torunlar REIC Architect Tel : (216) 425 2007
Çınar Tuncer Torun Center Tel : (212) 267 47 47
DTZ Pamir & Soyuer’s data base Sales personnel of the major developments mentioned.
Sources of demographic and economic information: State Planning Organization (SPO) Central Bank of Republic of Turkey (CBRT) Turkish Statistical Institute (TURKSTAT) Banking Regulation and Supervision Agency (BRSA) Ministry of Tourism and Culture
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ALİ SAMİ YEN - TORUN CENTER Construction Costs
A Block (Office & Retail) 46,620 sqm B Block (Residential) 36,866 sqm C Block (Residential) 32,476 sqm D Block (Office) 40,448 sqm E Block (Social Club) 107 sqm Common & Parking Areas 85,450 sqm Total Construction Area 241,967 sqm
Construction Program Year 1/2 Year 1 Year 1 1/2 Year 2 Year 2 1/2 Year 3 Total Office 20% 30% 30% 20% 0% 0% 100% Residential 20% 20% 25% 25% 10% 0% 100% Basements 40% 40% 5% 5% 0% 0% 90%
Construction Costs Year 1/2 Year 1 Year 1 1/2 Year 2 Year 2 1/2 Year 3 Total Office & Retail $900 /sqm $15,672,244 $24,213,616 $24,940,025 $17,125,484 $0 $0 $81,951,369 annual increase @ 3.0% Residential $1,200 /sqm $16,642,032 $17,141,293 $22,069,415 $22,731,497 $9,365,377 $0 $87,949,614 annual increase @ 3.0% Common & Parking Areas $400 $13,672,041.60 $14,082,202.85 $1,813,083.62 $1,867,476.13 $0.00 $0.00 $31,434,804 annual increase @ 3.0% Infrastructure, Landscaping etc. $3,678,905.38 $4,434,968.97 $3,905,801.85 $3,337,956.56 $749,230.15 $0.00 $16,106,863 of total const. costs @ 8% Soft Costs (*) $4,598,631.72 $5,543,711.22 $4,882,252.32 $4,172,445.70 $936,537.68 $0.00 $20,133,579 of total const. costs @ 10% TOTAL $54,263,854 $65,415,792 $57,610,577 $49,234,859 $11,051,145 $0 $237,576,228
TOTAL CONSTRUCTION COSTS $237,576,228
*(Soft Costs - other services and costs include project management, design/engineering, general administrative expenses, legal advisory and other professional works)
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ALİ SAMİ YEN - TORUN CENTER Retail Marketing Program
Total GLA 11,588 sqm Leasable Areas Gross Leasable Area Initial Average Rents
Shopping Center 11,588 sqm 15 /sqm/mth
Lease Program Years 4 5 6 Total Shopping Center % 85% 100% 100% 100% Area (sqm) 9,850 11,588 11,588 11,588
Total Leased Area 9,850 11,588 11,588 11,588
Annual Rent Escalation 3%
ALİ SAMİ YEN Retail Cash Flow
Rent Revenues (USD)
Year 4 Year 5 Year 6 Year 7 Shopping Center 1,772,992 3,974,630 6,306,771 $6,495,973.91
Potential Gross Income, PGI 1,772,992 3,974,630 6,306,771 6,495,974
Vacancy and Collection Loss -88,650 -198,731 -315,339 -324,799 of total PGI @ 5%
Effective Gross Income, EGI 1,684,342 3,775,898 5,991,432 6,171,175
Fixed Operating Expenses Replacement Cost (% of EGI) 2% 119,829 123,424 Property Tax&Insurance Premiums 3% 50,530 113,277 179,743 185,135 TOTAL EXPENSES 50,530 113,277 299,572 308,559
Net Operating Income, NOI 1,633,812 3,662,621 5,691,861 5,862,616
Capitalization Rate @ 8.00% Gross Terminal Value $73,282,706 Deed Transaction & Brokerage Fee ($2,015,274) of Terminal Value @ 2.75% Net Terminal Value $71,267,431
Total Net Cash Flow, USD 1,633,812 3,662,621 76,959,292
Fourth Year of Net Present Value, USD 11.00% $60,716,539
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ALİ SAMİ YEN - TORUN CENTER Office Sale Cash Flow
Office Sale Revenues Office Space, Above the Ground Level 45,263 sq m Office Space, Under the Ground Level 30,053 sq m
Estimated Sales Program Year 1/2 Year 1 Year 1 1/2 Year 2 Year 2 1/2 Year 3 Year 3 1/2 Total 15% 15% 20% 20% 15% 15% 100% Above Ground Estimated Office Area Sold (sqm) 6,789 6,789 9,053 9,053 6,789 6,789 45,263 Average Initial Unit Sale Price (US$/sqm) 5,250 semi-annual Price Increase @ 3% Unit Sale Price per Year (US$/sqm) 5,250 5,408 5,570 5,737 5,909 6,086 5,660
Above Ground Office Sale Revenues 35,644,744 36,714,086 50,420,678 51,933,298 40,118,473 41,322,027 256,153,305
10% 15% 20% 20% 20% 15% 100% Under Ground Estimated Office Area Sold (sqm) 3,005 4,508 6,011 6,011 6,011 4,508 30,053 Average Initial Unit Sale Price (US$/sqm) 4,000 semi-annual Price Increase @ 3% Unit Sale Price per Year (US$/sqm) 4,000 4,120 4,244 4,371 4,502 4,637 4,312
Under Ground Office Sale Revenues 12,021,200 18,572,754 25,506,582 26,271,780 27,059,933 20,903,798 0 130,336,047
Expenses Marketing Expenses 1.0% 476,659 552,868 759,273 782,051 671,784 622,258 0 3,864,894 Sales & Brokerage Expenses 3.00% 1,429,978 1,658,605 2,277,818 2,346,152 2,015,352 1,866,775 0 11,594,681 Total Expenses 1,906,638 2,211,474 3,037,090 3,128,203 2,687,136 2,489,033 0 15,459,574
Net Cash Flows, Office 45,759,306 53,075,366 72,890,170 75,076,875 64,491,270 59,736,792 0 371,029,778
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ALİ SAMİ YEN - TORUN CENTER Residential Cash Flow
Residential Sale Revenues Residential Sale Area 60,808
Estimated Sales Program Year 1/2 Year 1 Year 1 1/2 Year 2 Year 2 1/2 Year 3 Year 3 1/2 Year 4 Total 13% 15% 20% 20% 17% 15% 100% Estimated Residential Area Sold (sqm) 7,905 9,121 12,162 12,162 10,337 9,121 0 0 60,808
Average Initial Unit Sale Price (US$/sqm) 5,850 semi-annual Price Increase @ 3%
Unit Sale Price per Year (US$/sqm) 5,850 6,026 6,206 6,392 6,584 6,782 6,307 Residential Sale Revenues 46,244,127 54,959,366 75,477,530 77,741,856 68,062,995 61,857,251 0 0 384,343,124
Expenses Marketing Expenses 1.0% 462,441 549,594 754,775 777,419 680,630 618,573 0 0 3,843,431 Sales & Brokerage Expenses 3.00% 1,387,324 1,648,781 2,264,326 2,332,256 2,041,890 1,855,718 0 0 11,530,294 Total Expenses 1,849,765 2,198,375 3,019,101 3,109,674 2,722,520 2,474,290 0 0 15,373,725
Net Cash Flows, Residential 44,394,362 52,760,992 72,458,429 74,632,181 65,340,475 59,382,961 0 0 368,969,399
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ALİ SAMİ YEN - TORUN CENTER Total Cash Flow
Total Sale Revenues Year 1/2 Year 1 Year 1 1/2 Year 2 Year 2 1/2 Year 3 Year 4 Total Office Sale Revenues 45,759,306 53,075,366 72,890,170 75,076,875 64,491,270 59,736,792 0 371,029,778 68620.32 Residential Sale Revenues 44,394,362 52,760,992 72,458,429 74,632,181 65,340,475 59,382,961 368,969,399 65200 Retail Value 0 0 0 0 0 60,716,539 60,716,539 11,588
Total Revenues 90,153,668 105,836,358 145,348,598 149,709,056 129,831,744 119,119,753 60,716,539 800,715,717
Landlord's Share 46.32% 41,759,179 49,023,401 67,325,471 69,345,235 60,138,064 55,176,270 28,123,901 370,891,520 semi-annually discounted @ 6.77%
NPV of Landlord's Share 289,154,434
Torun GYO's Share 65% 187,950,382
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