Och-Ziff Capital Management, the US hedge fund manager founded by former Goldman Sachs veteran Dan Och, has had plenty on its plate lately.
This summer's credit crunch has forced the firm to slash its IPO valuation by 40 percent to $12 billion in a move that the New York-based firm hopes will still raise around $1.2 billion of equity. However, unfavorable market conditions notwithstanding, Och-Ziff has still found time to ink a real estate deal in a hot market – Turkey.
Last month, details of a deal were revealed by Tekfen Real Estate Development Group, announcing that Och-Ziff had entered into a joint venture with it to concentrate on projects within the largest cities.
The new partnership was celebrated by a closing ceremony in Istanbul between Och-Ziff's head of Europe, Michael Cohen, and members of the Tekfen hierarchy, including president and chief executive officer, Erhan Oner, and Mehmet Erktin, vice president in charge of real estate.
Under the terms of the agreement, Tekfen and its new US partner is forming a new company, Tekfen-OZ Real Estate Development. The real estate business already employs 114 and owns a $220 million portfolio including the 26-story Tekfen Tower, as well as Taksim Residences and a one-third interest in Akmerkez, a modern shopping, office and residential complex (see photo).
Tekfen Holding, which can trace its roots back to 1956 when three engineers founded an engineering, consultancy and audit firm, is the ultimate holding company for Tekfen's stake.
The marriage between Och-Ziff, which has approximately $30 billion of assets under management, and a local constructor-developer is part of a wider trend. Turkey, population 70 million, is attracting considerable attention from foreign real estate investors partly based on the country's plans to join the Eurozone, but also because of other factors such as the increased availability of mortgage finance. The interest is in spite of Turkey having among the highest short-term interest rates in the world, at 17.5 percent.
In December last year, GE Real Estate made its foray into the country by acquiring a majority stake in Garanti Gayrimenkul Yatirim Ortakligi for €37.5 million ($50 million). Another to invest is JER out of its JER Europe Fund III vehicle, while London-based Europa Capital announced in March that Turkey was a target country for its Eastern and Southeast European vehicle. In June, Morgan Stanley said the country was one of the emerging markets it was looking at for MSREF VI, which raised $8 billion in June. Last year Morgan Stanley acquired Dutch developer AM, which has a number of projects in the country. Apollo Real Estate is also rumored to have invested.
Spain's richest man beats PE
Armancio Ortega, the founder of Spanish retailer Inditex Group and Spain's richest man, has headed off competition from a number of private equity investors to acquire part of a €4 billion ($5.7 billion) package of properties being sold by Banco Santander. GE Real Estate, Goldman Sachs' Whitehall Funds and RREEF were in the running to purchase the entire portfolio, Goldman and RREEF eventually bidding together. However, Ortega is acquiring 11 of the larger properties via his property group, Pontegadea. Santander is part of a consortium buying ABN Amro bank for €71 billion.
Europa sells Polish industrial park
Europa Capital, the London-based firm which acquired City Point in 2004 for Europa Fund II has sold the asset for €71.6 million ($102 million) to Morley Fund Management's Central European Industrial Fund, managed by Teesland iOG. City Point is an important asset as it accounts for 22.5 percent of modern warehousing in Warsaw, according to property services firm DTZ. It covers a total of 122,000 square meters of multi-let industrial and warehouse space. Europa together with its Poland partner Integrated Finance Group and an asset management firm Europa acquired, improved the property through a series of refurbishments and lease restructurings. Capital expenditure was €5 million. The park is more than 95 percent let, with tenants such as Colgate Palmolive and South African Breweries.
INREV finds 90 funds will expire by 2010
The European Association for Investors in Non-Listed Real Estate Vehicles' (INREV) recent Fund Termination Study, based on interviews with fund managers and investors, has found that 90 closed ended funds will expire in the next three years. The study revealed that 59 percent of core funds will extend or roll over their funds while opportunistic funds will be liquidated. The finding was made public at the 10th annual Expo Real property trade fair in Munich.
RREEF, Pirelli bidding for German stores
RREEF, the alternatives asset management arm of Deutsche Bank, is reportedly bidding with Italy's Pirelli Real Estate for a €4.5 billion ($6.4 billion) property portfolio owned by German retailer Arcandor. According to the Financial Times Deutschland, RREEF and Pirelli are interested in taking on the operational side of the department store business as well as owning the real estate. RREEF entered into a similar deal in 2006 when it acquired French department store chain, Printemps. Arcandor, which was formerly known as KarstadtQuelle, revealed on October 7 that it had received five firm offers for the stores. It owns 49 percent in a joint venture that owns the properties. The other 51 percent is owned by Goldman Sachs' Whitehall Funds.