This presentation will explore the Turkish REITS sector strengths and weaknesses, including what investors should be looking for. It will also explore which segment represents the main engine of growth of Turkish REITS.

1. www.pwc.com
TURKEY
Real Estate Sector and
REIT Structure
Cannes, 6 March 2012

2. Questions ?
What is expected in
real estate market?
Taxation?
Any specific REIT
What is a REIT? taxes?
Accounting
principles?
Why investors/developers
Regulatory background,
consider REIT?
How transparent is the
REIT system?
March 2012
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3. What is happening in the Market ?
• Mortgage loan demand dropped starting from 3Q 2011
with rising interest rates
• Foreign investment in RE in 2011 reduced to $2 billion
• Strong consumption off-set by increase in GLA where
turnover/m2 is stable for shoping centers
• Office market keeps its momentum with strong supply
and stagnating rental prices
March 2012
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4. What is expected in the Market ?
2B- LAND
NEW TURKISH CREATION
COMMERCIAL CODE
FOREIGN
OWNERSHIP IN
REAL ESTATE
STRONG GDP URBAN
GROWTH TO TRANSFORMATION
CONTINUE
March 2012
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5. Highlights of the REIT regulation
• Regulated by the Capital Markets Board (CMB)
• 24 REITs active, 5 in progress with Mcap of $7bn
• At least 25% of the shares has to go public
• One of the founders should be the leading investor and satisfy
certain requirements
• Either a new company as REIT or transform an existing one
• Turkish REIT’s are exempt from Corporate tax and dividend
distribution wht
March 2012
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6. Highlights of the REIT regulation
• Valuations are done by only CMB certified appraiser
• Accounting standards are TFRS (identical with IFRS)
• Clear segregation of developer and construction business
• Specific rules by CMB on assets which can be included in
portfolio
• Subject to independent audit semi-annually
• Sales/purchase/leasing transactions require independent
appraisal
March 2012
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7. REIT for Investors/Developers
Investor Developer
• International Standards on • Access to public funds
Financial Reporting through IPO
• Transparency • Alternative finance instruments
• Strong regulatory control • (ABS,Cover Bonds etc)
• Professional Real Estate • Tax advantage
portfolio management • Corporate Governance
• More Liquid/opportunity to
capitalise on market
fluctuations
• The market is not mature and • High discounts observed in
deep for fair value some IPOs in the past
• Consistent application of • Regulated buisness
valuation standards needs • Some assets may not qualify for
improvement legal requirements of CMB
Tax and Legal aspects of RE Investments to Turkey March 2011
PwC 7

8. Thank you...
Engin Cubukcu
Senior Manager, Real Estate
PwC Turkey
engin.cubukcu@tr.pwc.com
+90 212 326 6180
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© 2011 Basaran Nas Yeminli Mali Müşavirlik A.Ş. All rights reserved. In this document, “PwC”
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