State-Owned Turkish Property Developer in 1 Billion TYR IPO

Posted on 07 November 2010

State-owned Turkish real estate developer is selling a 25% stake of the company in an Initial Public Offering next week. The firm is selling 625million shares at between 1.60 and 2.15 Turkish Liras each.

Doing the math that is a valuation of 1 billion liras (at the lowest price of 1.60 per share), which is £443 million 400 thousand at the current exchange rate. The expectations are much higher, UniCredit Spa and Turkiye Sinai Kalkinma Bankasi AS are managing the sale, and it is expected to raise at least 1.34 billion liras (£590m).

This is the sixth share offering from companies involved in the Turkish real estate industry this year; five real estate investment trusts have had very successful offerings. Emlak Konut, which is owned by government housing agency Toki and has approximately 6.9 billion liras in assets, buys government-owned land, and turns it into housing schemes on a revenue-share arrangement.

“We will use the proceeds from the IPO in new projects,” Murat Kurum, chief executive officer of the company, said in the statement.

Rapid economic growth (11% 1H 2010), low interest rates, and increasing housing demand and rapid growth in the mortgage market mutually fuelling each other, are making Turkish real estate investments hotter than ever.

Emlak Konut sold 558 million liras worth of properties in the first 9 months of 2010 for a profit of 201 million liras, Kurum said. He also revealed that the company currently has 1.34 million liras in debt. The firm has completed 350,000 homes, has contracts in place for a further 100,000, and 5 million square meters of land available for new projects, for which it plans to raise 5 billion liras in financing starting with the IPO.

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