DEMIRE Deutsche Mittelstand Real Estate AG

M&A Activity • Jul 13, 2007

News Details

Corporate | 13 July 2007 15:17

Correction: MAGNAT Real Estate Opportunities GmbH & Co.KGaA successfully enters Turkish Real Estate Market; Double-digit Return expected

MAGNAT Real Estate Opportunities GmbH & Co. KGaA / Miscellaneous

Release of a Corporate News, transmitted by DGAP - a company of EquityStory
AG.
The issuer / publisher is solely responsible for the content of this announcement.

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MAGNAT Real Estate Opportunities GmbH & Co. KGaA has successfully entered
the Turkish real estate market. In a consortium with two renowned
international project partners, the Immoeast AG and the Adama Holding
Public Ltd., MAGNAT has acquired a unique portfolio of properties in
Turkey. The transaction volume totalled EUR 136.5 million. With this
significant investment MAGNAT enters the Turkish real estate market. MAGNAT
expects the project to yield a double-digit return. Turkey is one of the
biggest and fastest growing Real Estate markets in Eastern- and
South-Eastern Europe.

The portfolio was purchased from Yapı ve Kredı Bankası
A.Ş.(YKB), a leading Turkish bank and member of UniCredit Group. The
bank had offered the subject portfolio of its non-core real estate assets
by means of a public tender. At the end of the tender procedure the bid of
the consortium in which MAGNAT, Immoeast and Adama each hold an equal
stake, succeeded against several international competitors. The final
purchase contract between the consortium and YKB was signed on July 11th
2007.

Almost 69% of the portfolio's total cost value is represented by properties
located in Istanbul, Turkey's economic capital, with the rest spread
throughout the country including a number of other key Turkish cities.
While geographically concentrated, the portfolio is very well diversified
in terms of the market's most attractive asset classes: its largest
components are mixed-use properties (33% of the total portfolio cost)
followed by residential (30%) and commercial (26%). A smaller number of
assets fall under other niche asset segments. In total, there are over 400
assets in the portfolio which amount to almost 250,000 square meter of
built area.

In terms of tenant mix, a large part of the portfolio is comprised of
sale-and lease-back properties rented to YKB and its subsidiaries (mostly
bank branches and back office premises), with long-term contracts in place.
These properties are typically located in business districts of major
Turkish cities, including such excellent locations as the Şişli
district and Levent Plaza in Istanbul. The rest of the portfolio is
comprised of assets with development potential for attractive medium-sized
residential and commercial projects.

The Portfolio will be managed by a local asset management team affiliated
with Turk Ventures Advisory Limited ('Turkven'), a leading independent
Turkish private equity fund. Turkven's team will be complemented by an
Instanbul-based senior consortium representative who will support Turkven
in managing the portfolio and identifying new opportunities for the
venture's growth.

Jan Oliver Rüster, CEO of MAGNAT comments on the successful losing: 'This
investment is a milestone for MAGNAT. Firstly we have won a highly
attractive submission in Turkey due to our excellent network of project
partners. Secondly we get a unique opportunity to enter the Turkish real
estate market with an attractive portfolio and with experienced and
renowned partners. We expect this project to yield a double-digit return.'

David Flusberg, Adama's co-founder and President, added: 'We are extremely
pleased to be working with world-class partners like Immoeast, Magnat and
Turkven, as we establish together a position in the dynamic and
fast-growing property markets of Turkey.'

Dr. Karl Petrikovics, Chairman of Immoeast, further noted: 'The YKB
portfolio is truly a special opportunity for investing in an emerging
market at low risks due to the long-term lease contracts with one of the
internationally most-respected Turkish companies. Having found partners
with much experience on the Turkish market is another big advantage for us.
Furthermore, Turkey is both geographically and in market terms a logical
addition to our core business in CEE, SEE and the former Soviet Union.'

+++ About MAGNAT:
MAGNAT is a real estate company with a focus on real estate development in
Eastern European countries. Seed investors were the Silvia Quandt family,
the two financial investors Themis Equity Partners and Heliad Equity
Partners, and the management. In the course of two capital increases in
2006 and a further capital increase in spring of 2007, a number of
institutional investors, amongst them Swiss Real Estate, invested in
MAGNAT.
With its opportunistic strategy, MAGNAT capitalizes on inefficiencies in
real estate markets. In contrast to traditional investment strategies,
MAGNAT not only benefits from rental income, but also and primarily from
attractive development yields and the comparable short time of capital
employed in its projects. All projects must meet an above-average yield
requirement.
Management focuses on real estate markets with interesting development
cycles, i.e. undervalued markets ('anti-cyclical investing') and markets
with high economic growth rates ('growth markets'). The regional focus is
currently on Central, Eastern and South-Eastern Europe, supplemented by
opportunistic, special situations in the German home market.
DGAP 13.07.2007

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