GE Real Estate has made its first foray into Turkey by acquiring a majority stake in Turkish real estate investment trust Garanti Gayrimenkul Yatirim Ortakligi for €37.5 million ($50 million).
GE, which has acquired the stake through its Central and Eastern Europe division, which is headed by Karim Habra, has made the investment in conjunction with fast expanding Turkish conglomerate Dogus Group.
The deal gives GE ownership interests in properties in Istanbul and Antalya, as well as exposure to the Romanian capital of Bucharest, where Garanti has also invested.
The largest asset in the portfolio is Dogus Power Center, a new retail development in the heart of Istanbul, comprising 63,000 square meters.
Under present plans, the two investors plan to significantly grow the REIT, which currently has a market capitalization of $95 million. In a combined statement the investors said they want to expand Garanti into a $500 million investment vehicle.
Although REITS are yet to be introduced in the UK, Germany and Italy, they have existed in Turkey since 1998.
Under current legilsation 49 percent of a REIT must remain listed. GE and its joint venture partner have acquired the maximum 50.98 percent allowed.
Habra called Turkey an “exciting market.”
“Its rapidly developing real estate sector and thriving economy offer a compelling opportunity for us to grow our business further in new European markets,” he said.
Turkey is in talks to join the European Union; however negotiations have recently stalled over the future of divided island Cyprus. Nevertheless, real estate investors are being attracted to the country because of its underlying growth potential. Turkey enjoyed GDP growth of 5.6 percent in 2005.
Among those expressing an interest in the country is AIM-listed Charlemagne Capital, which wants to carry out development projects in the country. Istithmar PJSC, an investment company owned by the ruling family of Dubai, said earlier this year that it was also looking towards the country for property investments.