Istanbul mayor speaks of big sell off

Istanbul mayor speaks of big sell off

ISTANBUL - Hürriyet Daily News
Istanbul mayor speaks of big sell off

This aerial photo shows the headquarters of Istanbul Municipality in central Istanbul. The municipality is now authorized to gather all its assets under an umbrella real estate investment trust, Mayor Topbaş says. Hürriyet photo

The Istanbul Municipality plans to bring billions of dollars worth of assets together under a new Real Estate Investment Trust (REIT) and is preparing for an initial public offering of the REIT and the sole parking lot operator İSPARK, the Istanbul mayor said yesterday. 

“We are planning to bring together all assets of the municipality and found a real estate investment trust,” said Kadir Topbaş, responding to a Daily News question on his municipality financial plans for this year, speaking at a breakfast meeting in Istanbul. 

“It will be open to the public and we have received confirmation from the Capital Markets Board of Turkey (SPK),” said Topbaş, noting that the total income from the offering would be more than $2.4 billion.

The municipality brought in 5.98 billion liras from sales and rental income from municipality owned assets in 2010, accounting for nearly 17 percent of the annual income.

“I cannot comment on the asset volumes right now, but we are working on the IPO,” said Topbaş. 
The official data of the municipality says that total income of the municipality hit just over $2 billion from asset sales. However, the municipality has expropriated a total of 1.82 million square meters of land for $1.5 billion in the last eight years. “It will be open to everyone,” said Topbaş, responding to a question on whether the public offering will include possible foreign investors. 

Municipality owned İSPARK, the sole parking lots operator of the country, will also be offered to the public this year, said Topbaş, noting that its ranks among the municipality’s most valuable firms. The total income of İSPARK rose to 106.7 million liras in 2010, from 734 million liras in 2005, according to official data. “We are also planning all the details for the privatization of IGDAS, the sole natural gas provider of the Istanbul province, this year. We are expecting significant income from this sale,” added Topbaş. 

External debt

“The percentage of external debts in our budget is not high,” said Topbaş, responding to a Daily News question about the total external debt of the municipality last year. He said the municipality had used a total volume of external loans of $2.92 billion last year, and that according to official data, the total volume of investment by the municipality was 7.5 billion liras.

“We have also received another loan of $500 million for the construction of the Üsküdar-Ümraniye metro line this year,” said Topbaş. The Istanbul Municipality has used the external debt for financing the construction of the main metro lines and infrastructure projects. 

Speaking to business correspondents at the meeting, Topbaş also revealed that a long disputed 46,000 square meter lotin Şişli, in the heart of the city, would be sold this year. The sale process of the land owned by Istanbul Public Transport Authority (IETT) could not be finalized due to legal issues in 2007.

“The ones who brought the sale of the land to the court that year caused the municipality to face serious financial difficulty, we paid nearly 300 million liras interest on the loans we received,” Topbaş said. “We will compensate for all of our losses from the sale of the lot this year,” he added. The lot was sold in 2007 for nearly $1.6 billion to a Dubai sheik, who later withdrew his bid.

Minister: Bridge win-win project

ISTANBUL – Anatolia News Agency 

The third bridge over Istanbul’s Bosporus will be constructed by a joint venture between the state and the private sector, in which mutual rights are preserved, Transport Minister Binali Yıldırım said yesterday. 

The tender regarding the bridge will be based on win-win principle for both parties, he said, responding to reporters’ questions at the 2nd Light Rail System, Infrastructure and Logistics Fair in Istanbul.

It is expected that private sector firms will place bids, he said, adding that there is always a backup plan to proceed with the project if the tender fails. 

“We do not intent to change terms and conditions. Our idea is for a cooperated construction system, in which mutual rights of the state and the private sector are preserved. In other words [this will be a] state-public partnership,” he said.

There is also no problem in the environmental impact on the area the bridge will be built in, Yıldırım said. “There is no problem in any issue.”

The current railroad system will be expanded with an additional $30 billion in investments in next 10 years, bringing the total length of the high speed train network to 10,000 km and the conventional railroad network to 26,000 km, he said.

The Marmaray Project, which connects European and Asian sides of Istanbul through an underwater tunnel, will be the most important railroad corridor connecting London and Beijing, Yıldırım said. The railroad network connecting the two capitals spans a total population of 1.5 billion and a total economic size of $25 trillion, he added.