IPOs driving Turkey's real estate market
ISTANBUL - Daily News with wires | 11/22/2010 12:00:00 AM |
Decisions by the Capital Markets Board at the beginning of the year have boosted initial public offerings from Turkish property developers as the total market value of real estate companies at the Istanbul Stock Exchange has doubled so far in 2010. The large IPOs are funding the country’s fast-growing real estate sector, a recent report by the board says
The initial public offerings by five Turkish real estate investment trusts generated more than 609.2 million Turkish Liras in 2010, according to a recent report by the Capital Markets Board, or SPK.
The total market value of the 19 property developers operating on the Istanbul Stock Exchange, or ISE, amounts to 5.56 billion liras while the value of their total portfolios stand at 8.24 billion liras, the report said.
The 2010 IPOs constitute 36.7 percent of the total market value and 41.18 percent of the portfolio volume of the real estate investment trusts at the ISE.
The successful offerings in 2010 doubled the volume of the real estate investment sector, said the SPK report.
“This situation will crystallize due to an IPO by Emlak GYO in November and turn the IPO campaign [by the ISE] into a success story for the sector,” it said.
Along with Emlak Konut, three other real estate trusts – Akfen GYO, Albayrak GYO and Büyükhanlı GO – have applied to the SPK for an IPO.
The four IPOs are expected to bring nearly 1.17 billion liras into the capital markets.
Akfen Holding, which is also active in tourism and energy industries, will sell 33.1 million new shares to 36 foreign investors at 12 liras a share, raising its float to 28.2 percent from 7 percent, Bloomberg reported.
Brokerage Standard Ünlü Menkul Değerler applied Thursday to the Istanbul Stock Exchange to carry out the transaction, it said in a statement to the bourse Monday.
Akfen will increase its capital from 112.4 million to 145.5 million liras via the sale so as to strengthen its financial structure, the company said in a statement to the bourse Oct. 22.
The company sold 8 million shares at 12.5 liras a share in an IPO in May, raising 100 million liras. It had reduced the size of the IPO from 38.8 million due to a decline in demand.
The SPK report estimates the market value of the sector will triple by the beginning of 2011.
“The successful IPOs in 2010 are expected to continue and accelerate in the following years,” the report said. “The large IPOs aims to create cheaper and long-term financing for the fast-growing real estate sector of the country via capital markets as an alternative to traditional funding methods.”
At the beginning of the year, SPK had eased the public offering procedure for real estate trusts, reducing the base for IPOs from 49 to 25 percent.
Besides, the board made a 25-percent IPO mandatory for the real estate investment companies in the first 3 months following the official founding.
Real estate investment companies in Turkey, moreover, do not pay corporation income taxes thanks to a special law.