4th Sep 2006 09:21
Ottoman Fund Limited (The)04 September 2006 FOR IMMEDIATE RELEASE 4 September 2006 The Ottoman Fund Limited US$110 million development site acquired in Riva, Istanbul The Ottoman Fund, which invests in the development of local housing and holidayhomes in the major cities and coastal resorts of Turkey, is pleased to announcethe acquisition of prime development land in Riva, located 45 minutes to thenorth east of Istanbul close to the Black Sea. The Fund, which is quoted on AIM, is managed by Development Capital Management(Jersey) Limited. Highlights • The Fund has purchased 917,900 square metres of development land. Thesite is located in Riva and is part of the Beykoz-Riva-Kavacik sub-region, whichis located in the north eastern part of the Asian side of Istanbul. Riva isexpected to become a major new area for the development of housing for theexpanding working population of Istanbul. Other developers active in the Rivaregion or with land holdings there include Alarko, Yapi Kredi Koray, Dogus andGalatasaray Sports Club, • The total purchase price is approximately US$110 million, consisting ofan immediate payment of US$100 million and a payment of US$10 million inSeptember 2007. This purchase price is equivalent to US$119.2 per square metreof land (applying a discount rate of 5.5% to the US$10 million payable inSeptember 2007) and approximately US$500 per square metre of buildable space. • The Fund intends to develop the land, in joint venture with a localdeveloper, into a residential complex of villas, town houses and associatedcommercial and recreational facilities. • Construction of phase 1 of the development is targeted to commencetowards the end of 2007 with marketing and sales commencing in the secondquarter of 2007. The entire development is expected to take between three andfour years. • Based on the Manager's cost and valuation estimates and assumptions, apotential gross return of approximately 70% is anticipated in respect of theFund's total investment. This assumes a development of approximately 220,590square metres of build area and that an average sales price of US$1,900 persquare metre over four years is achieved. This equates to a gross developmentvalue of approximately US$420 million. These estimates are not a profit forecastand should not be taken as an assurance that the units will be sold for theassumed valuation. • The purchase of land at Riva brings the Fund to approximately 60%invested. The Chairman of the Fund, Sir Timothy Daunt said: "The Board is pleased to beable to announce this important investment. The Riva area is becomingincreasingly popular following the creation of new roads improving the area'saccessibility. Other developers are active in the region and we are pleased tohave been able to secure this substantial area of development land. Theacquisition follows several months of detailed negotiation and analysis, and isa tribute to Development Capital Management's team." Further Details The Ottoman Fund Limited (the "Fund") has (through its local subsidiary, OsmanliYapi 2) signed an agreement to acquire 99 parcels of land comprising 917,900square metres of development land. The site is located in Riva and is part ofthe Beykoz-Riva-Kavacik sub-region, which is located in the north eastern partof the Asian side of Istanbul. The site is located in a wider area that has seen an increase in development inrecent years following the construction of the second bridge improving accessfrom the central business districts of the European side of Istanbul.Development to date has primarily focussed on the Beykoz-Kavacik area but Rivais becoming increasingly popular particularly since the creation of new roadsthat make the area more accessible; a major new road connecting Riva witheastern Istanbul has recently been completed, significantly reducing commutetimes to around 45 minutes by car. Other developers active in the Riva region orwith land holdings there include Alarko, Yapi Kredi Koray, Dogus and GalatasaraySports Club. Recent sales price increases in Riva are reflective of both thegrowing interest in the area and the limited amount of developable landavailable due to the presence of government protected forests and the boundarywith the Black Sea. The total purchase price is approximately US$110 million, consisting of animmediate payment of US$100 million and US$10 million in September 2007. Thispurchase price is equivalent to US$119.2 per square metre of land (applying adiscount rate of 5.5% to the US$10 million payable in September 2007) andapproximately US$500 per square metre of buildable space. Local taxes, agentfees and other transaction costs total an additional US$3.4 million. The Fund will work in joint venture with a local developer to produce adevelopment plan for the site and to select and appoint architects, aconstruction company and other professionals for the project. The Fund intendsto develop the land into a residential complex of villas, town houses andassociated commercial and recreational facilities. Construction of phase 1 of the development is targeted to commence towards theend of 2007 with marketing and sales in the second quarter of 2007. The entiredevelopment is expected to take between three and four years. Approximately 668,210 square metres of the land is comprised of parcels withimplementation development plan with a scale of 1:5000. An application is to besubmitted to the authorities for implementation development plan with a scale of1:1000 to allow development to commence. Elit (one of the valuers used by theFund for this investment) have indicated in their valuation report that there isa difference varying in the region of US$30 and US$55 between the sales valuesper square metre of those parcels that have implementation development plan witha scale of 1:1000 and those that do not. Based on the Manager's cost and valuation estimates and assumptions, a potentialgross return of approximately 70% is anticipated in respect of the Fund's totalinvestment. This assumes a development of approximately 220,590 square metres ofbuild area and that an average sales price of US$1,900 per square metre overfour years is achieved. This equates to a gross development value ofapproximately US$420 million. These estimates are not a profit forecast andshould not be taken as an assurance that the units will be sold for the assumedvaluation. The Board retains confidence in both the economic and political stability ofTurkey and the revival of domestic demand in the housing market as interestrates fall. List of contacts Development Capital Management 020 7355 7600Roger HornettTom Pridmore Buchanan Communications 020 7466 5000Charles RylandIsabel Podda Numis Securities Ltd 020 7776 1500Andrew DawberIain McDonaldBruce GarrowAdam Shapton This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Ottoman Fund