Pipeline
The total pipeline in Turkey amounted to € 565.4 million at year-end
2008 (2007: € 459.2 million), including € 117.5 million (2007: € 154.7 million)
in investments already made. Of this total, 96.8% or € 547.4 million was in the
fixed pipeline and 3.2% or € 18 million in the variable pipeline. 55.7% of the
total is committed, while 44.3% could still be deferred.
The following projects were transferred out of the pipeline and taken into
operation in 2008: a 70% stake in the Adacenter shopping centre in Adapazari,
the 365 shopping centre in Ankara and Teras Park shopping centre in Denizli
(see Portfolio). The following projects were included in the pipeline at
year-end 2007 and year-end 2008: Akkoza (Essenyurt) and Akasya (Acibadem) in
Istanbul, Tekira in Tekirdag and Anatolium shopping centre in Bursa. Corio has
an interest in the development of the first two projects of 25% and 7%,
respectively. On completion, a further 25% stake will be taken in the Akkoza
centre. The Tekira and Anatolium projects are being developed on a turnkey
basis and will be transferred to Corio at a predetermined (initial) yield. The
Tekira project, with a gross lettable floor area of around 30,800 m2,
will be completed in the first half of 2009. At year-end 2008, 81% of the
centre was let. Corio Türkiye will also assume the management of this centre.
The Anatolium shopping centre project in Bursa, with a gross lettable floor
area of some 80,000 m2 and 200 retail units, will be completed in
2010. Corio is collaborating with the Maya group on this project, a
construction company, developer and the Turkish franchise-holder for IKEA. The
first phase of this project (24,000 m2) has now been taken into use
by IKEA. This large retail unit is subject to a sale and leaseback arrangement
coming into operation in 2010, at the same time as completion of the centre.
Other anchors in the centre alongside IKEA are the Carrefour hypermarket, Leroy
Merlin and the first Best-Buy in Turkey. As a result, around 50% of the
lettable area has been prelet. For more information, see the website under
Portfolio/Retail/Turkey, which lists both the projects in operation and those
in the fixed pipeline.
The following projects were added to the pipeline in 2008: Iskenderun, Malatya,
Tarsus and 11% of Teras Park in Denizli.
At the end of the year Corio cancelled contracts entered into earlier in 2008
for the acquisition of a shopping centre project in the city of
Iskenderun-Hatay in the south of Turkey. The project, with a gross lettable
floor area of around 55,000 m2, was in Corio’s variable pipeline for
an anticipated investment of around € 116 million. Based on the continuous
reassessment of pipeline projects, in combination with the negative market
developments in the fourth quarter of 2008 in particular, the contracts were no
longer attractive. The penalty paid for cancelling the project was included in
the indirect result for 2008 and the project was removed from Corio’s pipeline
at year-end 2008.
The shopping centre projects in Malatya and Tarsus fall under a partnership
agreement between Corio and ACTEEUM Group, in which Corio has an option for the
joint acquisition and development of a number of projects. The projects will be
wholly owned by Corio. After three years of operation above a predetermined
yield requirement for Corio, ACTEEUM is eligible for an exit bonus. Both
parties will be responsible for the letting, and the shopping centres will be
managed by Corio after completion. Malatya is the first project to be developed
under this arrangement. Malatya is a rapidly growing city in eastern Turkey
with around 400,000 inhabitants. The shopping centre project has a gross
lettable floor area of around 47,000 m2, with the potential to add a
further 8,000 m2, which has been incorporated in the pipeline for
approximately € 110 million. Anchors in the two-storey shopping centre will be
a hypermarket, a DIY store and a cinema with food court. The mall is centrally
located in the catchment area, enjoys high visibility and is easily accessible
from different parts of the city. The project is scheduled for completion in
the first half of 2011.
Tarsus is the second project covered by this agreement. It will be the first
shopping centre in the city and will have a total lettable floor area of around
25,000 m2. According to plan there the shopping centre will have two
retail floors and an underground car park for around 800 vehicles. Anchors in
the shopping centre will be a hypermarket and an electronics store. A strong
food court and a cinema provide a recreational component. The project has been
included in the fixed pipeline for € 50 million and is expected to be completed
in the second half of 2010.
Finally, Corio has reached agreement with the 60% joint-owner of Teras Park in
Denizli that Corio will acquire a further 11% stake in the centre. This will
give Corio a 51% interest, which means it will have operational control and
will organise the management and letting activities entirely in-house. The
acquisition of this 11% participating interest was effected in the first quarter
of 2009. The centre will be restructured. The total budget of around € 18
million for increasing the participating interest and revitalising the project
was included in the variable pipeline at year-end 2008, since approval still
had to be obtained from the Competition Board. Corio is determined to optimise
the results of this project.
Source: Annual Report 2008, Chapter Review of operations, page 116 (PDF, 2,1 MB)
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