Paşabahçe Property Valuation Report

Transcription

1 Paşabahçe Property Valuation Report Prepared on behalf of Torunlar GYO A.Ş: 31 December

2 This Report titled Paşabahçe Property Valuation Report has been prepared by DTZ Pamir & Soyuer, as requested by Torunlar Gayrimenkul Yatırım Ortaklığı A.Ş. DTZ, a UGL Company, which is a global leader in property services, is exclusively represented in Turkey by Pamir ve Soyuer Gayrimenkul Danışmanlık A.Ş. ( DTZ Pamir & Soyuer ). The mailing address of Pamir & Soyuer is presented below: Hakkı Yeten Caddesi 15/7 Şişli - İstanbul Phone : +90 (212) Fax : +90 (212) admin@dtz.com.tr Executive contacted for the purposes of this Report is: Prepared by: Özlem ŞAHİN, Ph.D. CMB Licensed Valuer sahino@dtz.com.tr Director, Advisory Services Reviewed by: Firuz SOYUER, MBA, MRICS CMB Licensed Valuer soyuerf@dtz.com.tr Managing Partner We do not guarantee the fulfillment of any estimates contained within this report, although they have been conscientiously prepared on the basis of our own research and information made available to us. The report may not be published, reproduced or quoted in part or in whole, nor may it be used as a basis for any contract, prospectus, agreement or other document without our prior written consent.

3 TABLE OF CONTENTS I. EXECUTIVE SUMMARY... 2 II. INTRODUCTION... 4 A. INSTRUCTION... 4 B. PURPOSE OF VALUATION... 4 C. BASIS AND DEFINITION OF VALUATION... 4 D. MARKET VALUE... 4 E. DEFINITION OF VALUE Definitions Market Value... 5 F. APPROACHES TO VALUATION... 6 G. ASSUMPTIONS AND SOURCES OF INFORMATION... 6 H. HIGHEST AND BEST USE ASSESSMENT... 6 I. APPROACH & METHOD... 7 J. DATE OF VALUATION... 7 K. CURRENCY EXCHANGE RATES... 7 III. TURKEY GENERAL INFORMATION... 8 A. GENERAL OVERVIEW... 8 B. DEMOGRAPHY... 8 C. ECONOMIC OVERVIEW... 9 IV. İSTANBUL GENERAL INFORMATION A. POPULATION AND DEMOGRAPHY B. TRANSPORTATION C. ECONOMY D. HOTEL MARKET OVERVIEW E. RESIDENTIAL MARKET OVERVIEW V. DESCRIPTION OF THE PROPERTY A. LOCATION, ACCESS AND ENVIRONS B. PHYSICAL DESCRIPTION C. SITE HISTORY D. LEGAL DESCRIPTION Deed Registry Records Ownership Encumbrances & Annotations Zoning E. PLANNED DEVELOPMENT F. SPECIAL ASSUMPTION VI. VALUATION A. COMMENTS / EXPLANATION / METHODOLOGY B. ASSUMPTIONS AND INPUT VARIABLES C. CONCLUSIONS VII. EXHIBITS i i

4 I. EXECUTIVE SUMMARY We herewith submit our Valuation Report update pertaining to pertaining to the Paşabahçe Property (the Property ), located in Beykoz, İstanbul. We have inspected the Property and analyzed the market conditions in the related area. Our report has been prepared in compliance with the International Valuation Standards Council (IVSC) and the Royal Institution of Chartered Surveyors (RICS) Valuation Professional Standards. Current Uses Vacant land, warehouse and water tank H&BU Boutique Hotel and Waterside Houses Owner of Record Torunlar Gayrimenkul Yatırım Ortaklığı A.Ş. Deed Record City İstanbul District Beykoz Neighborhood Paşabahçe Locality Paşabahçe Çubuklu Yolu (block/parcel: 195/7 and 209/3), E. Çubuklu Cad. Y. Çubuklu (block/parcel: 200/3) Plan No. 39 Block No Parsel No Land Area(m2) ,

5 , Total Land Area 70, Zoning Block/Parcel No Land Use 195/7 Tourism Area 209/3 Recreation Area 200/3 Green Area Project Development * A boutique hotel development, having 68 rooms and waterside residences. Total construction area is 47,600 m 2. Special Assumption We have assumed that residential units could be developed and sold on the land, having tourism zoning. Exchange Rate USD/TL= , EUR/TL = (The Central Bank of the Republic of Turkey, as of ) (*) Provided by the client Based on the available data and market information, together with our analysis and experience in the İstanbul real estate market, our opinion of the project value is; US$ 234,500,000 (Two hundred thirty four million and five hundred thousand US Dollars) The above Project Value is estimated by Income Capitalization Approach. We hereby certify that we have no undisclosed interest in the Property, and our employment and compensation are not contingent upon our findings and valuation. 3

6 II. INTRODUCTION A. Instruction DTZ Pamir & Soyuer has been instructed by Torunlar Gayrimenkul Yatırım Ortaklığı A.Ş. ( Torunlar GYO ) to undertake the valuation of the property located in Beykoz District of İstanbul. DTZ Pamir & Soyuer and the Client have agreed the exact scope of instructions. In summary, Torunlar GYO requires the market value of the property. B. Purpose of Valuation The valuation has been undertaken to estimate the value of the property which is included in the portfolio of Torunlar GYO, listed in İstanbul Stock Exchange (ISE). This is the third update report of which the original was dated 30 June 2010 and will be publicized on the web page of Torunlar GYO. C. Basis and Definition of Valuation The basis of valuation is the Market Value. D. Market Value The value of Torunlar GYO properties has been assessed in compliance with the RICS (Royal Institute of Chartered Surveyors) standards. The International Valuation Standards Council (IVSC), publishes the International Valuation Standards (IVS) that set out internationally accepted valuation principles, procedures and definitions. RICS has adopted these standards. The approved IVSC definition of Market Value is stated in the paragraph Definitions. E. Definition of Value 1. Definitions The Property has been valued in accordance with International Valuation Standards (IVS) which is also adopted by RICS. The bases of valuation are as follows: 4

7 2. Market Value Market Value is the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. Notes: date of valuation means the date at which the property is deemed to be sold. the estimated amount refers to a price expressed in terms of money payable for the property an arm s-length market transaction. a property should exchange refers to the fact that the value of a property is an estimated amount rather than a predetermined or actual sale price. It is the price at which the market expects a transaction to be completed...on the date of valuation requires that the estimated Market Value is time specific to a given date and this date is normally the date that the hypothetical sale is deemed to take place and is therefore different from the date when the valuation is actually prepared. between a willing buyer refers to one who is motivated, but not compelled to buy. a willing seller is neither an over-eager nor a forced seller who is prepared to sell at any price, nor one prepared to hold out for a price not considered reasonable in the current market. in an arm s-length transaction an arm s length transaction is one between parties, who do not have a particular or special relationship which may make the price level uncharacteristic of the market, or make it inflated because of an element of special value. after proper marketing means that the property would be exposed to the market in the most appropriate manner to effect its disposal at the best price reasonably in accordance with the Market Value definition. wherein the parties had each acted knowledgeable and prudently presumes that both the willing buyer and the willing seller are reasonably well informed about the nature and characteristics of the property, its actual and potential uses and the state of the market at the date of valuation. and without compulsion establishes that each party is motivated to undertake the transaction, but neither is forced nor unduly coerced to complete it. 5

8 F. Approaches to Valuation The three approaches to valuation are: - Sales Comparison Approach The Sales Comparison Approach is based on the comparable asking price and/or realized transaction value of similar properties located in the subject area, having the same quantitative and qualitative specifications with the subject property. The value indication is produced by comparing the subject property to sales of similar properties. The sale prices of the properties that are judged to be the most comparable indicate a range in which the value of the subject property will fall. - Income Capitalization Approach The Income Capitalization Approach measures the present value of the future benefits of property ownership. Income streams are converted into a present value estimate through discounting ( discounted cash flow analysis ). - Cost Approach (Depreciated Replacement/Reproduction Cost) The Cost Approach reflects market thinking by recognizing that market participants relate value to cost. In estimating the value of a property, the reproduction or replacement cost of the building improvements are estimated, accrued depreciation is subtracted, and estimated land value is added. G. Assumptions and Sources of Information These general terms, conditions and assumptions are the basis of our valuations and reports normally prepared and also applied to the valuation contained in this Report unless otherwise stated. We have relied upon the details and information about the subject Property that are provided by the officials of the owner company Torunlar GYO. Areas have been taken from the information supplied by the owner company. We have not carried out measurements on sites, but from our inspection of the properties we have no reason to believe that the stated areas are materially inaccurate. H. Highest and Best Use Assessment The Highest and Best Use Value is synonymous with Market Value. Highest and best use is defined by IVSC as: The most probable use of a property which is physically possible, appropriately justified, legally permissible, financially feasible, and which results in the highest value of the property being valued. 6

9 The concept of highest and best use is inherent in the Market Value definition. We are in the opinion that commercial use is the highest and best use of the Property, and is in accordance with the zoning of the Property. I. Approach & Method In the valuation study of Torunlar GYO Income Capitalization Approach to Valuation has been applied. J. Date of Valuation The date of valuation is 31 December K. Currency Exchange Rates Central Bank of Turkey selling rates of the valuation date used in the valuation report are as below. USD/TL EUR/TL EUR/USD

10 III. TURKEY GENERAL INFORMATION A. General Overview Turkey is strategically located over two continents - south eastern Europe and south western Asia - and has direct control of the Turkish Straits that link the Black Sea and Aegean Sea. Turkey is bordered by Greece and Bulgaria to the west, Syria and Iraq to the south, the Black Sea to the north and Iran, and Armenia and Georgia to the east. The total area of the country is 814,578 sq km. Turkey has 81 provinces. B. Demography According to the Address Based Population Registration System ( ADNKS ) 2012 Population Census results, the total population of Turkey is approximately 75.6 million. Approximately 77.3% of the population lives in urban areas. Annual population increase is recorded as 1.2% between 2011 and Half of the population is under the age of 29.. People with ages between 15 and 64 comprise 67.6% of the population. Ratio of young people with ages between 0 and 14 is 24.9%. Population density is 98 per square kilometer in Turkey. The most crowded city is İstanbul with a population density of 2,666. Ankara, the capital city, has a population of 4.97 million and accounts for approximately 6.6% of the total population. İstanbul, the commercial and cultural capital of the country, represents approximately 18.3% of the country s population with a population of million. 8

11 C. Economic Overview Turkish GDP reached to USD 786 billion with 2.2% annual growth in 2012, which was relatively low compared with the previous year (Figure 2). However, confidence in the economy s long-term prospects remains high, so GDP growth is expected to accelerate to over 5% in 2014 and beyond. Inflation followed a downward trend throughout the year and, came down to the lowest level recorded in the last 44 years, as end of The year-end inflation was 6.2%, mainly driven by the developments in unprocessed food prices. In addition, the government revised inflation expectation 5.3% for Capital inflows have recently accelerated due to a significant rise in global risk appetite and a relative improvement in risk perceptions regarding Turkey. Market interest rates declined markedly in the last quarter due to improvement in the risk appetite and the liquidity policies implemented by the CBRT. The decline in long term rates was more significant. Historically low levels bank lending rates have also continued to decrease, while consumer loan rates have maintained a downward trend in line with the market interest rates. It is expected that CBRT policy will continue to keep interest rates at low levels. The consumption demand remained weak in the last quarter; however a mild pickup in consumption is expected with lower inflation and a gradual improvement in the global outlook, through Economic indicators Q Indicator GDP (%) GDP per capita 10,079 10,444 10,504 Population (million-2012) Private Expenditure Consumer Prices (%) Unemployment (%) FDI (million USD) 9,036 16,047 12,421 FDI inflow growth (%) 7.5% Policy Rates (%) ISE Price index (XU100) 66,004 51,267 78,208 Exchange rate (TRY/EUR) Exchange rate (TRY/USD) Source : TURKSTAT, SPO, CBRT 9

12 IV. İSTANBUL GENERAL INFORMATION İstanbul, the commercial and cultural capital of Turkey is one of the most crowded metropolitan areas of the world with a total population of over 13.8 million. Located at the meeting point of Asia and Europe, the Black Sea and the Mediterranean Sea, the city is located on 5,343 square kilometres of land area representing 0.7 % of the total land area of the country. Because of the geographically strategic location, İstanbul has direct control of the Turkish Straits that link the Black Sea and Aegean Sea. The city serves as a junction between the land and sea trade routes. İstanbul is located on two continents separated by the Bosphorus, one of the busiest and strategic straits of the world. The Bosphorus Bridge and Fatih Sultan Mehmet Bridge connect the Asian and European Sides. European Side has mainly a commercial and residential character while the Asian Side is basically residential. A. Population and Demography According to the Address Based Population Registration System (ADNKS) 2012 results, total population of İstanbul is 13.8 million. Approximately 100% of the population lives in the urban areas. İstanbul has the highest population density with 2,666 person/sq km, in Turkey. The most crowded district is Bağcılar with a population of 749,000 (5.4% of total) and the less populated district is Adalar with a population of 14,552. The population increase between 2009 and 2010 was 2.6%, between 2010 and 2011 was 3%, and 2011 and 2012 has been recorded as 1.6% in İstanbul 10

13 province. Male and female populations are approximately the same. People aged less than 35 years comprise 58.8% of the total population According to the 2012 Census, the populations of the districts are as follows: District Population District Population Adalar 14,552 Gaziosmanpaşa 488,258 Arnavutköy 206,299 Güngören 307,573 Ataşehir 395,758 Kadıköy 521,005 Avcılar 395,274 Kağıthane 421,356 Bağcılar 749,024 Kartal 443,293 Bahçelievler 600,162 Küçükçekmece 721,911 Bakırköy 221,336 Maltepe 460,955 Başakşehir 316,176 Pendik 625,797 Bayrampaşa 269,774 Sancaktepe 278,998 Beşiktaş 186,067 Sarıyer 289,959 Beykoz 246,352 Silivri 150,183 Beylikdüzü 229,115 Sultanbeyli 302,388 Beyoğlu 246,152 Sultangazi 492,212 Büyükçekmece 201,077 Şile 30,218 Çatalca 63,467 Şişli 318,217 Çekmeköy 193,182 Tuzla 197,657 Esenler 458,694 Ümraniye 645,238 Esenyurt 553,369 Üsküdar 535,916 Eyüp 356,512 Zeytinburnu 292,407 Fatih 428,857 Total 13,854,740 Source : Turkstat Two thirds of the population (61%) resides in the European Side that also contains the CBD of İstanbul, Maslak, Levent, and Zincirlikuyu areas. The social economic structure differs within the city. Upper level groups in terms of education, profession, income level and family structure are observed to be located along the Bosphorus, mainly in the Beşiktaş, Şişli, Beyoğlu, Sarıyer districts on the European Side; Kadıköy and Üsküdar districts on the Asian Side. B. Transportation Transportation to İstanbul is provided by airways, railways, highways and seaways. TEM (Trans European Motorway) and D-100 (E-5) highways connect Asia and Europe via Bosphorus Bridges and provide access to Ankara and other European cities. 11

14 There are two airports in İstanbul. Atatürk International Airport is located in Yeşilköy on the European side of the city, approximately 25 km from the city centre (Taksim). Sabiha Gökçen International Airport, started to operate in 2001, is located in Kurtköy on the Asian Side, 50 km away from city centre. İstanbul has three ports, namely İstanbul Port (Karaköy), Haydarpaşa Port and Ambarlı Port. Haydarpaşa and Ambarlı are freight, container and Ro-Ro ports, while İstanbul Port is a cruiser port. Public transportation system within city limits of İstanbul comprises of various railway systems, funicular, bus network and maritime services. İstanbul maritime system operates on the shores of Bosphorus and Marmara Sea. Ferryboats, car ferries and catamarans operate between 70 terminals. Metrobus BRT (Bus Rapid Transit) system between Söğütlüçeşme on the Asian Side and Beylikdüzü on the European Side provides transportation following the E5 Road via Bosphorus Bridge. Metrobus line is 51.5 km long and has 46 stations. The railway transportation system of İstanbul comprises of various suburban network, light railway system, metro and funicular systems: Railway transportation in İstanbul can be summarized as below. Railway System Type Length Passenger (km) Capacity Şişhane Atatürk Oto Sanayi Metro ,000 person/day Kadıköy - Kartal Metro 22 70,000 person/hr Aksaray Atatürk Airport Light Railway ,000 person/day Kabataş - Zeytinburnu Tramway ,000 person / day Zeytinburnu - Güngören - Bağcılar Tramway ,000 person / day Topkapı - Habibler Tramway ,000 person / day Tünel - Karaköy Funicular ,000 person / day Taksim Kabataş Funicular ,000 person / day Taksim - Tünel Nostalgic Tramway 1.6 5,000 person / day Kadıköy - Moda Nostalgic Tramway 2.6 2,500 person / day Maçka - Taşkışla Cable Car ,000 person / day Eyüp Piyer Loti Cable Car ,160 person / day Sirkeci - Halkalı Subway Train 30 13,000 person / hour Haydarpaşa - Gebze Subway Train 42 13,000 person / hour Marmaray is the major transportation project of İstanbul aiming to link the European and the Asian sides railway systems with an undersea rail tunnel across Bosphorus. The project includes 1.4 km İstanbul Strait crossing by a tunnel from Yenikapı on the European side and Üsküdar on the Asian side. 41 stations and the upgrade of 63 km of suburban lines will create a 76.3 km high capacity line 12

15 between Gebze and Halkalı Intermediate stations will be built at Sirkeci and Üsküdar. An interchange station with İstanbul metro and light rail will be built at Yenikapı. Marmaray is expected to start operating in Major projects under construction are: Taksim - Yenikapı Metro 5.2 km; across the Golden Horn on a bridge and underground through the old city. Otogar (City bus terminal in Esenler) - Kirazlı 5.8 km LRT Line Kirazlı - Olympic Village Metro 21.7 km with 16 stations C. Economy Throughout history, İstanbul has been a strategic intersection between Europe, Asia and the Middle East, allowing trade to flourish. İstanbul boasts a young population, a dynamic private sector, regional connections and a developing infrastructure. It has been one of the major seaports of Turkey for imports and exports of traditional commodities such as textiles, tobacco, glass and leather. The city is the dominant force in the Turkish economy providing 27.65% of gross value added (GVA) activities. İstanbul takes the first place with USD billion GVA in Based on the current data, the share of İstanbul increased from 21% to 27.65% in Turkey s gross value added (GVA) activities, between 2001 and (2008 is last data available) In terms of total gross value added, İstanbul ranked first place. The share of industrial sector is 27.1% in total Turkish industrial sector, while share of services sector is 31.4% in total Turkish services sector in According to 2009 data İstanbul s share of people working in industrial and service sectors is 30.9% of Turkey total. Also wages and payments of these people comprise 39.3% of Turkey total. İstanbul has the highest share in foreign trade with 44% and 52.5% of export and import of goods and services in Turkey, respectively volume of exports is recorded as USD 61,433 billion while volume of imports amounted to USD 124 billion. Many of Turkey s manufacturing industries and commercial sectors are concentrated around İstanbul, with large developments to the borders of the city on the European and Asian sides. The original industrial zones of İstanbul were concentrated within the city. Currently, large scale manufacturing plants are located on the TEM Highway and towards the outskirts of the city. 13

16 The city never played a dominant role in agricultural activities, but it is the biggest consumer of agricultural goods in the country. 43 % of the bank deposits are collected in İstanbul, the financial capital of the country. 39% of the credits are also used in the city. Headquarters of major local banks and insurance companies are located in İstanbul. Along with the industry, insurance and banking companies, major corporations and multinational firms in the city steer the nation's economic life. As end of 2012, İstanbul accommodated 57.6% of all FDI firms in terms of number of firms. Of these firms 37.2% are active in retail sector, 15.6% in manufacturing and 15.5% in real estate. İstanbul plays an important role in tourism sector with meeting, conventions, exhibitions and congresses in the last couple of years. İstanbul accommodates approximately 9 million foreign visitors per year. Economic Indicators İstanbul Turkey GDP per capita (USD, 2008) 14,591 9,384 Unemployment rate (%, 2012) Total export volume (billion USD, 2011) Total import volume (billion USD, 2011) Total bank deposit (billion USD, 2012) Total banking loan (billion USD, 2012) Source: TURKSTAT. D. Hotel Market Overview Most of the hotels are located in the CBD, Historical Peninsula and Airport regions in İstanbul. Especially five-star hotels are located in the main business areas, like Şişli and Beşiktaş while three and four-star hotels are located in the historical and cultural areas like Eminönü, Beyoğlu and Fatih. Besides, Bakırköy accommodates different hotel segments, like business and congress hotels, due to easy access to the Airport. Business hotels which meet corporate accommodation or congress tourism demand are located in the financial and commercial centre of İstanbul, Taksim Levent Maslak axis. International hotel chains, five-star hotels are located in this area. Bakırköy is also one of the attractive areas not only for five star business and congress hotels, but also for three and four-star budget hotels for short stays with reasons of business or while awaiting a connecting flight. However, foreign visitors prefer to stay in the historical centre. 14

17 In the past few years new hotels were built also on the Asian side close to Sabiha Gökçen Airport and industrial areas. Main locations for these hotels are Kozyatağı and Pendik. As end of 2012, there are 410 tourism operation licensed accommodation establishments while there are 130 tourism investment licensed establishments in İstanbul. Number of establishments by categories is given as below: Tourism Investment Licensed Tourism Operation Licensed No of Estab. No of Rooms No of Beds No of Estab. No of Rooms No of Beds 5 Star 44 11,663 24, ,640 27,714 4 Star 34 4,439 8, ,445 20,888 3 Star 24 1,861 3, ,390 10,417 2 Star ,558 2,978 1 Star Special Estab ,341 6,940 Boutique Hotel ,250 Others , ,042 2,845 Total ,445 40, ,451 73,836 Source : İstanbul Directorate of Culture and Tourism January 2013 Luxury boutique and 5 star hotels, located on the Bosphorus are comparable to the subject project. Information about the comparable hotels is summarized in the table below. 15

18 Existing Çırağan Palace Kempinski Four Seasons Bosphorus Les Ottoman Swissotel the Bosphorus Shangri-La Radison Blu Bosphorus A jia Location Çırağan Cad. Çırağan Cad. Muallim Naci cad. Bayıldım Cad. Hayrettin İskelesi Çırağan Cad. Çubuklu Cad. Beşiktaş Beşiktaş Kuruçeşme Maçka Sok. Beşiktaş Ortaköy Kanlıca, Asian Rate 5 star 5 star 5 star 5 star Boutique Hotel Room Number + Type Restaurants Bars Meeting Facilities 11 palace suites, 20 hotel suites, 282 rooms Laledan Restaurant Gazebo Lounge, Tuğra Restaurant, Bosphorus Grill Çırağan Ball Room 10,292 sq m 912 seating capacity. Also meeting rooms with areas ranging between 57 sqm and 4,500 sq m - Total area 16,800 sq m 170 rooms, 25 suites Aqua Restaurant Pool Grill Lobby Bar and Lounge 1000 sq m ball room with reception cap. 1000, 740 seating. 10 meeting rooms with areas between 52 sq m and 550 sq m - Total 2, suites with areas ranging between 51 sq m and 148 sq m Yalı Restaurant Su Yanı Restaurant Bosphorus Pool Bar Has Bahçe 1500 sq m outdoor area with seating cap. of cocktail 3 banquet halls with total capacity of 250 seats. 537 rooms 63 suites Miyako, Gaja, Oasis, Chalet restaurants, Cafe Swiss, Swiss Gourmet, Les Ambassadeurs Bar, Lobby Lounge Fuji Ballroom with 1008 seating capacity Also 27 meeting rooms with areas ranging between 31 sqm and 522 sq m Total 4,800 sq m 169 rooms 17 suites IST TOO Restaurant, Palace, Istanbul Bar m2 ball room and meeting rooms. 107 rooms 13 suites 7 studios Starboard Restaurant Cruise Lounge Bar Zuma Restaurant Pupa Terrace 7 meeting rooms with a total capacity of 190 theatre style Pupa Terrace enables banquet space for 100 pax. 10 rooms 6 suites A jia Restaurant 900 sq m outdoor space by the sea enables 755 pax banquet style and 1000 pax reception style. 4 rooms inside has 312 sq m of meeting and banquet space. 16

19 Amenities Çırağan Palace Kempinski Pool, indoor pool, spa, fitness center, Turkish Bath, Four Seasons Bosphorus Pool, spa, fitness center with 3,500 sq m area. Business services Les Ottoman Spa, Gym 500 sq m Swissotel the Bosphorus Amrita Spa & Wellness 4,000 sq m Tennis courts Shangri-La m2 spa and fitness center Radison Blu Bosphorus Wellness and Beauty Center, fitness center A jia Max-Min Room Rates* Special Notes $600 - $2.064 $700 - $2.315 $ $ $300 - $800 $640 - $900 $431 - $611 $400 - $580 Comprises of 2 buildings of which one is a renovated historical building. (*) Room rates do not include 8% VAT. The building is a 19th sentury Ottoman palace known as Atik Paşa Yalısı. The building is a replica of the former mansion built in 1790 which was burned down. This is a renovated Ottoman Mansion by the sea (Yalı) of the 1800s on the Asian side 17

20 E. Residential Market Overview Waterfront villas (yalı) located on the Bosphrous are among the top selling price residential properties in Istanbul. The main reasons are their prime locations and the majority of them are unique historical houses. They are located on the immediate waterside and some of them have their own piers. Asking and selling prices for waterfront villas are between US$ 5 million and US$ 125 million. Unit sale prices are in the range of US$ 12,000/sq m - US$ 20,000/sq m. Luxury villa projects was developed in Beykoz District, especially close to the 2 nd Bridge exist. These housing projects have some facilities like swimming pools, tennis courts, fitness centers and social areas. Information about the luxury villa projects, located in Beykoz District are summarized in the table below. Project Location Developer / Investor Unit Area (m 2 ) Sale Price (US$) Unit Sale Price (US$/m 2 ) Unit Number Min Max Min Max Min Max Çubuklu Vadi Çubuklu Yüksel İnşaat & Fiba Gayrimenkul $ $ $5.146 $8.681 Beykoz Konakları Beykoz Tepe İnşaat $ $ $5.542 $6.076 Beykonak Evleri Beykoz EA İnşaat $ $ $3.750 $7.642 Acarkent Beykoz Acarlar İnşaat Villa $ $ $2.911 $7.273 Studio - Apartment $ $ $2.857 $1.875 Beykoz Vadi Konakları Beykoz Mert İnşaat $ $ $2.619 $2.462 Günyüzü Konakları Beykoz Mutlu İnşaat $ $ $2.391 $

21 V. DESCRIPTION OF THE PROPERTY A. Location, Access and Environs Paşabahçe Property, which compose of block/parsel no: 195/7, 200/3 and 209/9, located on the coast of Bopshorus within the boundries of Beykoz District, on the Asian Side of İstanbul. Paşabahçe Property The main access to the Property is provided by Barbaros Street and Paşabahçe İskele Streets. Distance to the exist of Fatih Sultan Mehmet Bridge is approximately 6 km, to Bosphorus Bridge is 22 km and to the 3 rd Bridge is 33 km. Paşabahçe Property Distance from the Property to business districts are as follows; approximate distance to Kavacık is 6 km, to Büyükdere is 13 km, and to Maslak is 16 km. 19

22 In addition to these, distance to Atatürk Airport is approximately 40 km and to Sahiba Gökçen Airport is approximately 42 km. Avrupa Yakası nda Sea transportation is available by privately operated ferries between İstinye and Paşabahçe. Boats are operating between Yeniköy and Beykoz. Paşabahçe Pier is located next to the Property. B. Physical Description Total land area of the Paşabahçe Property is 71,909 sq m. 195/7 200/3 209/3 20

23 Paşabahçe Property compose of 3 parcel as follows; Net Land Block / Parcel No. Area (m2) 195/7 54, /3 16, / Total 71, Quay 3,935 Based on zoning plans, redevelopment is only allowed for the largest parcel, which is 195/7. Other parcels are mainly green areas. However, 250 sq m of construction area, as redevelopmet of an existing buildig is allowed for 209/3. Long term leasehold agreement of the quay area, having 3,935 sq m area, was transferred to Torunlar REIC. The remaining occupancy permit will be for 45 years, until Facade of the Property to the Bosphorus coast is approximately 300 meters. Topography of the site has slopes. Height difference between the sea level to the highest level is 46 meters. C. Site History Site was Paşabahçe Tekel Factory. Old industrial buildings in the site will be demolished. We have not carried out any investigation into past uses, either of the property or any adjacent land to establish whether there is any potential for contamination from such uses or sites, and have therefore assumed that none exists. 21

24 D. Legal Description 1. Deed Registry Records The property consists of 3 parcels. Information of the title deed registry is summarized in the below. Province : İstanbul District : Beykoz Neighborhood : Paşabahçe Plan Block Parcel Land Area No. No. No. (m2) Type , Land Masonry warehouse and fruit garden , Masonry water storage Total 70, Ownership Freehold right of the three parcels; 195/7, 209/3 and 200/3 are owned by Torunlar Gayrimenkul Yatırım Ortaklığı A.Ş. Leasehold right of the pier/quay area was transferred to Torunlar REIC dated on , with document number Information is summarized below. Province : İstanbul District : Beykoz Neighborhood : Paşabahçe Locality : Sahip Molla Pier/Quay Area (m2) : 3,935 Type : Filled area Use : Pier and dock area Lessor : Ministry of Finance Lessee : TTA (Tütün,Tütün Mamulleri, Tuz ve Alkol İşletmeleri A.Ş.) Lease Term : 49 years Start Date : Expiry Date : Lease Price : Free of charge New Lessee : Torunlar Real Estate Investment Company 22

25 3. Encumbrances & Annotations According to the land registry information, annotations, statements and easements that are registered on the properties are as follows. Easement: There is an easement on behalf of Directorate General of Coastal Safety for the lighthouse, built on 16 sq m of land area on the block/parcel no. 195/7. Dated on with document number Statement: Water storage, located on block/parcel no. 200/3, was built by trespassing the road. Mortgage: There is a mortgage, registered over block/parcel no. 195/7, 200/3, and 209/3. Holder of the right Türkiye İş Bankası A.Ş. Date Doc. No Term Until release Amount 347,900,000 TL Interest Rate 15% Variable Degree 1 st 4. Zoning The Property is located on the coast of Bosphorus, in Paşabahçe Neighborhood of Beykoz District, İstanbul. A special law, which is 2960 numbered Bosphorus Law, is applicable for the lands along the Bosphorus in İstanbul. The Bosphorus area is regulated by Boğaziçi İmar Müdürlüğü (Bosphorus Zoning Directorate) of the Metropolitan Municipality of Istanbul. Based on the dated and then digitalized on , 1/1000 scales Bosphorus 1 st Zone (Öngörünüm) Zoning Application Plan, the zoning guidelines for the subject lands, located in the closest zone to the Bosphorus are as follows: For the block/parcel no. 195/7: Permitted land uses: Tourism and accommodation area in the coastal zone, partially recreational area and partially road area. Density: FAR is 0.50, and construction area is calculated over %70 of the land area. Maximum building height is 11 meters. 23

26 Existing trees and cultural and natural assets will be preserved. Law 2634 for the Encouragement of Tourism and its guidelines will be applicable. Maximum 2 basement floors could be constructed, in the condition that functions and floor heights will be approved by Bosphorus Zoning Directorate. Except these basements, additional basement floors could be built for car park areas, provided that any cultural and natural assets will not be destroyed. For the block/parcel no. 209/3: Permitted land uses: Recreational area and partially road area. Base Floor Area: BAR is 0.05, and maximum building area is 250 sq m. Maximum building height is 4.50 meters. For the block/parcel no. 200/3: Permitted land uses: Residential area and partially road area. But undeveloped areas will remain as green area; therefore the parcel will remain as green area. 24

27 Block/ Parcel No. Gross Land Area (m2) Construction Area incl. to FAR* (m2) FAR BAR Max. Building Height (m) Setback Distance (m) Gross Const. Area incl. to FAR ** (m2) 195/7 54, , , /3 16, / Total 71, , , (*) Construction area calculated over %70 of parcel area for 195/7. (**) Gross/Net Ratio is 20%, based on the information provided by the client. If the existing building is pulled down, construction area of the new building is 250 sq m in block/ parcel no. 209/3. E. Planned Development Located on the Bosphorus, the site has a premium location in Istanbul. Based on the information provided by the client, a mix-use project includes a boutique hotel, and waterfront villas and waterside houses is planned to be developed. Hotel will have 68 rooms. The houses will be placed in the site to have maximum benefit from the Bosphorus view. F. Special Assumption Based on the notice, issued by the Ministry of Environment and Urban Planning, and dated on , the Ministry took precautions to prevent residential uses on the tourism areas. However, there are objections going on regarding to this regulation. The subject lands were sold by the Prime Ministry Privatization Administration with a tender process. Torunlar REIC offered the highest bid for these lands. Residential uses were included to calculate the offered land value. The ownership was transferred to Torunlar REIC dated on , which is before the mentioned regulation. Therefore, we used a special assumption in this valuation report that the residential uses will be permitted in the project. 25

28 VI. VALUATION A. Comments / Explanation / Methodology Market Value of the Property is estimated with Income Capitalization Approach to Valuation Discounted Cash Flow Method (DCF). Income capitalization approach measures the present value of the future benefits of property ownership. Income streams are converted into a present value estimate through discounting ( discounted cash flow analysis ). DCF analysis has been carried out for 7 years of holding period followed by capitalization of the estimated net operating income at the point of expected reversion. We have assumed the sale of the Property at the end of the 8 th year, based on capitalization assumed to be applicable at that point in time, to the next year s revenues. The market value of the project is based on the project information provided by the client. This project includes a boutique hotel and waterside houses. The valuation has been carried out with DCF method over 7 years; 3 year of development, and 5 years of holding period for the hotel. Houses are sold by the beginning of construction. B. Assumptions and Input Variables In arriving at our opinion of Market Value of the Property we have adopted the following main input variables summarized in the following part. Construction Areas Uses Const. Areas (m 2 ) Luxury Boutique Hotel : 9,392 Residential Areas : 25,200 Car Park Area : 13,008 Total Const. Area : 47,600 Detailed Construction Areas Luxury Boutique Hotel 9,392 Total Number of Rooms : 68 Standard Room Size (m 2 ) : 55 Under Ground Const. Area (m2) : 4,000 Above Ground Const. Area (m2) : 5,392 Residential Areas 25,200 Car Park Areas 13,008 Total Construction Area 47,600 26

29 Construction Program Year Total Residential Areas 30% 35% 35% 100% Hotel Areas 30% 35% 35% 100% Closed Carparking 45% 35% 20% 100% Infrastructure, Landscaping etc. 40% 30% 30% 100% Soft Costs (*) 50% 30% 20% 100% (*) Soft Costs - other services and costs include project management, design/engineering, general administrative expenses, legal advisory and other professional works. Construction Unit Costs (US$/m2) Residential Areas : $1,300 / sq m Hotel Areas : $2,600 / sq m Closed Car Parking : $470 / sq m Infrastructure, Landscaping : 17% of const. cost etc. Soft Costs : 15% of const. cost Revenues Boutique Hotel - Revenues Number of Rooms : 68 rooms Ave. initial Room Rate : US$ 450/day Room Rate Annual Increase : Annually 3% Stabilized Occupancy : 68%, starting 35% Room Rev / Total Rev : 50% F&B Rev / Total Rev : 45% Other Rev / Total Rev : 5% Residential Areas Total Sale Area Sale Program : 25,200 sq m : 4 yrs for waterfront villas, 5 yrs for waterside houses Ave. Initial Unit Sale Price : Waterfront Villas : US$ 16,000 / sq m Waterside Houses : US$ 12,000 / sq m Annual Increase Rates : 5% during const. period, 10% after const. completion Expenses Boutique Hotel - Expenses Departmental Expenses / Total Gross Income : 35% Operating Expenses / Total Gross Income : 25% Management Fee : 3% of gross income and 9% of GOP 27

30 Reserve for Replacement : 3% Property Tax & Insurance / Total Gross Income : 0.5% Residential - Expenses Marketing and Advertisement Costs : 2% Resale Value Boutique Hotel Capitalization Rate : 8% Land Value Cash Flow Period : 7 years Developer s IRR : 20% Land Value US$ 234,500,000 C. Conclusions Having regard to the above factors together with the assumptions described above, we are of the opinion that the market value of the subject Property is: In the condition that residential areas are developed is; US$ 234,500,000 (Two hundred thirty four million and five hundred thousand US Dollars) based on Income Capitalization Approach. (Exhibits pp ) 28

31 VII. EXHIBITS Functions Luxury Boutique Hotel (m2) 9,392 Total Number of Rooms 68 Standart Room Size (m2) 55 Under Ground Const. Area (m2) 4,000 Above Ground Const. Area (m2) 5,392 Hotel Area incl. to FAR 4,500 PAŞABAHCE PROJECT Development Expenses & Program Residential Areas (m2) 25,200 Residential Areas incl. to FAR 19,750 Gross Const. Area incl. to FAR 24,250 Car Park Area (m2) 13,008 Total Construction Area (m2) 47,600 Under Ground Const. Area (m2) 24,700 Above Ground Const. Area (m2) 22,900 Construction Program Year 1 Year 2 Year 3 Total Residential Areas 30% 35% 35% 100% Hotel Areas 30% 35% 35% 100% Closed Car Parking 45% 35% 20% 100% Infrastructure, Landscaping etc. 40% 30% 30% 100% Soft Costs (*) 50% 30% 20% 100% Construction Costs Year 1 Year 2 Year 3 Total Residential Areas $1,300 /sqm $9,828,000 $11,466,000 $11,466,000 $32,760,000 Hotel Areas $2,600 /sqm $7,325,760 $8,546,720 $8,546,720 $24,419,200 Closed Car Parking $470 /sqm $2,751,192 $2,139,816 $1,222,752 $6,113,760 Infrastructure, Landscaping etc. 17% Cons.Costs $4,303,921 $3,227,941 $3,227,941 $10,759,803 Soft Costs 15% Cons.Costs $4,746,972 $2,848,183 $1,898,789 $9,493,944 TOTAL $28,955,845 $28,228,660 $26,362,202 $83,546,707 TOTAL CONSTRUCTION COSTS $83,546,707 Unit Construction Cost (US$/m2) $1,755 *(Soft Costs - other services and costs include project management, design/engineering, general administrative expenses, legal advisory and other professional works) 29

32 PAŞABAHCE PROJECT Sale Area Sale Area (m2) Waterfront Villas 9,200 Waterside Houses 16,000 Total Sale Area 25,200 Residential Sale & Potential Revenues Sale Program Year 1 Year 2 Year 3 Year 4 Year 5 Total Waterftont Villas Sale Speed 10.87% 25.00% 39.13% 25.00% 100% Estimated Sale Area 1,000 2,300 3,600 2,300 9,200 Waterside Houses Sale Speed 15% 25% 30% 25% 5% 100% Estimated Sale Area 2,400 4,000 4,800 4, ,000 Ave. Initial Unit Sale Price (US$/m2) Annual Increase Rates Waterfront Villas $16,000 During Construction 5% Waterside Houses $12,000 After Const.Completed 10% Unit Sale Prices (US$/m2) Year 1 Year 2 Year 3 Year 4 Year 5 Average Unit Sale Price Waterfront Villas $16,000 $16,800 $17,640 $19,404 $17,693 Waterside Houses $12,000 $12,600 $13,230 $14,553 $16,008 $13,358 Total Sale Revenues Total Waterfront Villas $16,000,000 $38,640,000 $63,504,000 $44,629,200 $0 $162,773,200 Waterside Houses $28,800,000 $50,400,000 $63,504,000 $58,212,000 $12,806,640 $213,722,640 Total Revenues $44,800,000 $89,040,000 $127,008,000 $102,841,200 $12,806,640 $376,495,840 Marketing & Advertsiment Costs Sale Revenues@ 2.0% ($896,000) ($1,780,800) ($2,540,160) ($2,056,824) ($256,133) ($7,529,917) Net Sale Revenues $43,904,000 $87,259,200 $124,467,840 $100,784,376 $12,550,507 $368,965,923 30

33 PAŞABAHCE PROJECT Luxury Boutique Hotel Project Potential Revenues / Expenses Years Max. Room Selling Capacity 24,820 24,820 24,820 24,820 24,820 24,820 24,820 Average Occupancy Rate for Rooms 35.00% 50.00% 60.00% 65.00% 68.00% 68.00% 68.00% Sold Rooms / year 8,687 12,410 14,892 16,133 16,878 16,878 16,878 Average Room Rate /day (excl.vat) $ $ $ $ $ $ $ Rev Par (from rooms) $ $ $ $ $ $ $ Total Rev Par $ $ $ $ $ $ $ Years Hotel Revenues Rooms Revenues $3,909,150 $5,752,035 $7,109,515 $7,933,034 $8,548,149 $8,804,594 $9,068,732 F&B Revenues $3,518,235 $5,176,832 $6,398,564 $7,139,731 $7,693,334 $7,924,134 $8,161,859 Other Revenues $390,915 $575,204 $710,952 $793,303 $854,815 $880,459 $906,873 Total Gross Revenue $7,818,300 $11,504,070 $14,219,031 $15,866,068 $17,096,299 $17,609,188 $18,137,463 Expenses Departmental Expenses ($2,736,405) ($4,026,425) ($4,976,661) ($5,553,124) ($5,983,705) ($6,163,216) ($6,348,112) Operating Expenses ($1,954,575) ($2,876,018) ($3,554,758) ($3,966,517) ($4,274,075) ($4,402,297) ($4,534,366) Total Expenses ($4,690,980) ($6,902,442) ($8,531,418) ($9,519,641) ($10,257,779) ($10,565,513) ($10,882,478) Gross Operating Profit (GOP) $3,127,320 $4,601,628 $5,687,612 $6,346,427 $6,838,519 $7,043,675 $7,254,985 Base Management Fee ($234,549) ($345,122) ($426,571) ($475,982) ($512,889) ($528,276) ($544,124) Adjusted GOP (AGOP) $2,892,771 $4,256,506 $5,261,041 $5,870,445 $6,325,631 $6,515,399 $6,710,861 Incentive Management Fee ($260,349) ($383,086) ($473,494) ($528,340) ($569,307) ($586,386) ($603,978) Income Before Fixed Charges $2,632,422 $3,873,420 $4,787,548 $5,342,105 $5,756,324 $5,929,014 $6,106,884 Fixed Costs: Property Tax & Insurance ($39,092) ($57,520) ($71,095) ($79,330) ($85,481) ($88,046) ($90,687) Net Operating Income (NOI) $2,593,330 $3,815,900 $4,716,452 $5,262,775 $5,670,842 $5,840,968 $6,016,197 Reserve for Replacement (FF&E Rezerve) ($234,549) ($345,122) ($426,571) ($475,982) ($512,889) ($528,276) ($544,124) Adj. Net Operating Income (ANOI) $2,358,781 $3,470,778 $4,289,882 $4,786,793 $5,157,953 $5,312,692 $5,472,073 31

34 PAŞABAHCE PROJECT Schedule of Prospective Cash Flows Years Total (7 years) Estimated Net Revenues Luxury Boutigue Hotel $0 $0 $0 $0 $2,358,781 $3,470,778 $4,289,882 $4,786,793 $5,157,953 $14,906,233 Capitalization Rate 8% Terminal Value $64,474,417 $64,474,417 Waterside Houses $0 $43,904,000 $87,259,200 $124,467,840 $100,784,376 $12,550,507 $368,965,923 Total Gross Revenue $0 $43,904,000 $87,259,200 $124,467,840 $103,143,157 $16,021,285 $4,289,882 $69,261,209 $5,157,953 $448,346,573 Construction Costs Residential Areas $0 ($9,828,000) ($11,466,000) ($11,466,000) ($32,760,000) Hotel Areas $0 ($7,325,760) ($8,546,720) ($8,546,720) ($24,419,200) Closed Car Parking $0 ($2,751,192) ($2,139,816) ($1,222,752) ($6,113,760) Infrastructure, Landscaping etc. $0 ($4,303,921) ($3,227,941) ($3,227,941) ($10,759,803) Soft Costs (*) $0 ($4,746,972) ($2,848,183) ($1,898,789) ($9,493,944) Total Construction Costs $0 ($28,955,845) ($28,228,660) ($26,362,202) ($83,546,707) Land Value ($46,900,000) ($59,563,000) ($55,342,000) ($51,121,000) ($46,900,000) ($259,826,000) Net Project Revenues ($46,900,000) ($44,614,845) $3,688,540 $46,984,638 $56,243,157 $16,021,285 $4,289,882 $69,261,209 $5,157,953 (Pre-tax Cash Flow) Cumulative Cash Flow ($46,900,000) ($44,614,845) ($43,211,460) $3,773,178 $60,016,335 $76,037,620 $80,327,502 $149,588,711 $154,746,665 Developer's IRR 20.00% Land Value $234,500,000 32