Turkey fund closes on €142m

BLG Capital has closed the BLG Turkish Real Estate Fund in what is believed to be the largest Turkish real estate-focussed offering since 2007.

BLG Capital has drawn a line under its Turkish real estate fund, closing on €142 million of capital commitments from an array of international investors.

Announcing the final close of BLG Turkish Real Estate, the Istanbul-based firm said it thought the vehicle to be the largest real estate fund focused on the Turkish market since 2007.

The most notable blind pool of opportunistic capital raised for the country in the last few years was by Merrill Lynch in 2007 before it was taken over by Bank of America. The US outfit corralled €204 million for Bosphorus Real Estate Fund I, which is now managed by European spinout, Peakside Capital.

BLG began fundraising early last year with an equity target of between €150 million and €250 million. It held a first close of €32 million in March 2011 and used MVision Private Equity Advisers as placement agent.

In a statement today, the firm said it had attracted a mix of institutional investors including university endowments, charitable foundations, pension funds, insurance companies and fund-of-funds from the US, Europe and the Middle East.

Serdar Bilgili, principal, said of the fundraising: “We believe the successful capital raise highlights the attractiveness of the Turkish market.”

The company highlighted macroeconomic statistics as it sought to underline the case for investing in the country. It said Turkey was one of the world’s fastest growing economies, with GDP growth of 8.5 percent in 2011 and 9 percent in 2010. It pointed out that growth can be attributed to the strength of Turkey’s banking sector, fiscal discipline and a programme of economic reforms over the past decade. In addition to a robust and resilient economy, Turkey’s population of approximately 75 million is growing at an annual rate of 1.3 percent with the urban population growing 2 percent a year, it added. Not only that, but half of Turkey’s population is under the age of 29.

The property market itself was ranked Europe’s 2012’s top investment and development location in a PwC and Urban Land Institute report earlier this year.

BLG’s opportunistic fund is targeting hospitality, high-end residential, student accommodation and mixed-use projects. Current fund investments include the Palazzo Corpi, an Italian-style palace built in 1873, located in the Beyoglu section of Istanbul. Palazzo Corpi is currently under redevelopment and will operate as a private club and luxury hotel with significant food and beverage.

To capitalise on the underpenetrated student accommodation market in Istanbul, the fund also launched a student accommodation platform and management company, Republika Academic Aparts. The fund completed redevelopment of two properties in Istanbul which are operating under the Republika brand with around 1,300 beds. These properties are among the first institutional quality products in the market, it said.

Additionally, the fund is looking to buy a company that retains the rights to operate and develop a mixed-use project within the Fatih Forest, a large urban forest area adjacent to Maslak, Istanbul’s most populous CBD.