Corio has announced the acquisition of a 40% interest in Teras Park shopping center currently under development in Denizli, in the south west of Turkey, for an amount of approximately €55 million.
The shopping center will comprise approximately 55,000 m² GLA. The expected opening date of the shopping center will be in the first half of 2008. The transaction reflects a net initial yield of around 8% once the centre is fully operational. In line with its strategy, Corio has set up an office in Istanbul and has engaged a Chief Executive Officer for Turkey.
Denizli is a fast developing city in the Aegean region with approximately 1 million inhabitants with a higher than average purchasing power. Besides the growing population, the city is visited by many tourists every year attracted by the prehistorical Pamukkale site nearby. The university city of Denizli is well located at a crossing of important highways to Izmir, Aydin, Antalya, Ankara and Marmaris.
The Teras Park shopping center is located in the Yenisehir district, 5 kilometres west of the city center, with a primary catchment area of 400,000 inhabitants. It is one of the fastest expanding parts of the city.
Teras Park shopping center will be the first shopping center in Denizli and comprises 55,000 m² of GLA divided over four floors, and 1,426 parking spaces in the basement and surrounding the shopping center. There will be entrances to the center on different floors, which is possible because of the differences in altitude of the site. The lowest shopping level will be anchored by a Carrefour hypermarket. The upper floor will for the greater part be used for leisure activities, such as a cinema, for which an operator has already made commitments. Most of the lease contracts in this shopping center will be based on the Euro.
The developer, also owner of the 60% interest in the shopping center is Tan Group, which is one of the top three textile manufacturers in Turkey. They have engaged well known architects and retail experts for the design of the center. Besides this, Corio will contribute its expertise as manager and owner of shopping centers in Europe. The center currently is under construction and Corio will make progress payments for its 40% share of the shopping center in accordance with the progress of the construction. The expected opening date of the shopping center will be in the first half of 2008.
The transaction is subject to approval of the Turkish Authorities. Although there are no other remaining material suspensive conditions for this project, until this approval has been received the project will remain in the variable pipeline. In the shareholders agreement it is arranged that Corio will have a first right of refusal in case the Tan Group wants to sell its interest in the shopping centre. Corio and Tan group will decide jointly about the management of the shopping centre, which is expected to be a dedicated center management team on site of the center.
The addition of the Teras Park shopping center in Denizli brings the total variable pipeline in Turkey to approximately €209 million as of 31 December 2006. Two projects in Istanbul and one in Ankara were already included in the variable pipeline as of 30 September 2006. Further details about these projects will follow in due course upon completion of negotiations. Moreover, Corio holds a 46,92% interest in shopping center Akmerkez, which is valued at USD 246.6 million as of 31 December 2006 by external appraisers, a 10% increase in value in comparison with 31 December 2005. The exchange rate difference on this investment (and the annual direct income) is largely covered by a loan (and interest) for a total amount of USD 190 million.