Netherlands-based pan-European retail property investor VastNed Retail has entered Turkey by acquiring a neighborhood shopping center in Istanbul at a price of €9.7 million.
The shopping center is located on Kazim Orbay street, Sisli, Istanbul and is called Elysium Shops. This neighborhood shopping center is newly built and comprises 4,850 m² of retail space and 200 parking spaces. A Tansas (Migros) supermarket anchors the center, which furthermore consists of a shopping gallery and a fitness club. The shops are for the larger part let to national retail chains. For the vacant units a rent guarantee is in place.
The rent levels are at an average of €125/m²/year. Sisli is one of the most prominent and affluent districts in Istanbul. It has an excellent infrastructure with all the major means of transportation. In the direct surroundings of the center, which has over 200 apartments on the floors above it, numerous residential developments are expected to be initiated, further strengthening the neighborhood.
The annual gross rental income is expected to amount to approximately €750,000. The larger part of the lease agreements include turnover rent clauses, fixed indexation of 3% and are denominated in US dollars. To limit the currency effect, the acquisition will be financed using a dollar loan. The net initial yield after tax and excluding turnover rent amounts to circa 7.0%.
The sellers of the center are the Istanbul based developer Mimtur and the local construction company Ofton. Hans Pars, Chief Investment Officer of VastNed Retail: "This acquisition clearly shows what type of investment we are looking for: locally embedded retail space at a modest price that provides substantial upside for the future. Taking step rents and turnover clauses into account we are confident that we will achieve a total (unleveraged) return of over 10% in due time. Going forward, our clear aim is to build a retail property portfolio in Turkey which delivers higher returns than available in Western Europe and with a size for the time being of 10% of the total VastNed Retail property portfolio."
Source: VastNed Retail