5th Apr 2006 07:00
Ottoman Fund Limited (The)05 April 2006 For immediate release 5 April 2006 The Ottoman Fund Limited Announcement of first investment Update on progress The Ottoman Fund is pleased to announce its first investment and update themarket on progress. The objective of the Ottoman Fund is to invest in the development of localhousing and holiday homes in the major cities and costal resorts of Turkey. Investment highlights: •The Fund has invested in an apartment resort in Alanya on the South coast of Turkey. •The resort is a gated complex bordering a river and close to the beach, with landscaped garden and recreation facilities (including a half Olympic size swimming pool, fitness centre, indoor gymnasium, club-house and tennis court). •The apartments are due for completion in October 2006, and are already selling off-plan. •Total financing of €10.4 million (107 apartments). •The financing is based on a price of €740 per square metre, a 30% discount to the estimated "as if built" market value (€1,050 per square metre). •If all of the apartments are sold at the independently estimated "as if built" market value within the next 18 months, the gross internal rate of return on Fund's investment would be in the region of 40%.* Up-date: •Development Capital Management (Jersey) Limited, the manager of the Fund, is assessing projects, including land acquisitions, in Istanbul, Izmir, Antalya, Mersin and the Bodrum area. •The tourist market is reacting positively to the change in law allowing foreigners to purchase properties. There is some fall-out from the "bird flu" outbreak, but this is not expected to be enduring. •Since the launch of the Fund, interest rates have fallen from 14% to 13.5% with 2 cuts each of 25 basis points. The currency and stock markets have reacted to the uncertainties regarding the appointment of a new Central Bank Governor. The Chairman of the Fund, Sir Timothy Daunt said, "I am pleased that the Fundhas been able to secure its first investment. The Alanya development is alreadyselling well and so should provide the Fund with early returns. Good progress isalso being made by the manager on further investments which the Board expects tobe able to announce in the coming months." Further details on investment The Ottoman Fund (the "Fund") was launched in December 2005 to invest inresidential property in Turkey. The Fund will invest in second home properties,built for tourist and local buyers, and in local housing projects in Istanbuland the other major cities of Turkey. The Fund has signed an agreement to provide finance to the developer of anapartment complex in Alanya, Turkey. Alanya is one of Turkey's leading Mediterranean resorts, situated to the east ofAntalya City. Antalya Airport is currently the main access for foreign tourists.A new airport is planned at Gazipasa, 35 km to the east. The total bed capacityof Alanya is estimated at 133,400. In 2004, around 1.1 million tourists visited,mostly from the Scandinavian countries, Germany, the UK and Ireland. The apartment resort is being built on a 16,400 m(2) site beside the Dim Creek,6 km to the east of Alanya town. The site allows easy access to the beach ashort distance away. A walking route will be provided by the creek. The complex is made up of four separate blocks with 9 floors and penthousefloor. It will be a gated complex with landscaped garden. Palm trees wereplanted before the construction started. Recreation and sports facilities willinclude a half Olympic size swimming pool, fitness centre, indoor gymnasium,club house and tennis court. The complex will be served by 24 hour security andauxiliary generator. The apartments are due for completion in October 2006 and are already sellingoff-plan. The Fund is investing in the remaining 107 unsold apartments. The Fund's total financing is of €10.4 million. This will be lent to thedeveloper in two instalments: €60% (€6.2 million) at the outset €40% (€4.1 million) one month after the last apartment is completed. On the sale of apartments, the proceeds above the Fund's €740 price are appliedsuch that the Fund receives the first €165 per m(2). Excess sales proceeds abovethis are split 65% to the developer and 35% to the Fund. The purchase price of €740 per square metre represents a discount of 30% to theestimated "as if built" current market value of the relevant properties asdetermined by DTZ Pamir & Soyuer. If all of the apartments are sold at the independently estimated "as if built"market value within the next 18 months, the gross internal rate of return onFund's investment would be in the region of 40%.* Up-date Development Capital Management (Jersey) Limited, the manager of the Fund, iscurrently actively assessing projects, including land acquisitions, in Istanbul,Izmir, Antalya, Mersin and the Bodrum area. The tourist market in Turkey has reacted positively to the recent change in lawwhich will again allow foreigners to purchase properties. There appears to havebeen some reaction to the "bird flu" outbreak in terms of numbers of visits, butthe manager would not expect this to be enduring. List of contacts Development Capital Management 020 7399 4270 Roger HornettTom Pridmore Buchanan Communications 020 7466 5000 Charles RylandIsabel Podda Numis Securities Ltd 020 7776 1500 Andrew DawberIain McDonald * This internal rate of return (IRR) calculation is based on the assumption thatthe apartments are sold over a period of 18 months at the estimated open marketvalue provided by DTZ referred to above. The calculation is before tax but netof sales commission and other marketing costs (assumed at 13%). The Directors ofthe Fund consider the IRR to be calculated after due and careful inquiry. Thisstatement should not be taken as an assurance that the apartments will in factbe sold for the estimated valuation within 18 months. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Ottoman Fund