Turkey's Sinpas Predicts Five-Year Uptrend After Share Slump

  • Sinpas GYO to double unit deliveries as 2014 projects kick in
  • Office and shop rentals to generate regular cash flow: CEO

Sinpas GYO, Turkey’s third-worst real estate stock last year, will double home deliveries this year and expand its commercial property business as mortgage sales slow, according to Chief Executive Officer Seba Gacemer.

Sinpas Gayrimenkul Yatirim Ortakligi AS, as the real estate investment trust, or REIT, is formally known, will double deliveries to customers to 1,050 from last year’s 522, Gacemer said in a Feb. 12 interview in Istanbul. That comes after the shares lost 23 percent last year, compared with a 1 percent gain for the 28-member REITs index on the Istanbul bourse.

“We’re poised for a five-year positive trend” following an expected loss in 2015, Gacemer said. “That will be reflected in profits and dividends.”

While the number of homes sold in Turkey, the Middle East’s largest economy, rose 11 percent last year, the share of mortgage sales is on the decline, dropping to 28 percent in December from 32 percent the previous year. The slowdown comes as buyers find it more expensive to borrow, with the average yearly rate on a mortgage loan jumping to 14.5 percent from 10.7 percent at the start of 2015, according to data compiled by Bloomberg.

Cash Flow

A greater focus on commercial real estate -- shops and office space -- would cut Sinpas’s reliance on customers sensitive to mortgage rates and boost “rental income for regular cash flow,” Gacemer said. The share of rental income in Sinpas’s sales last year was less than 1 percent as of the third quarter. The company’s Ankara GOP project, due to open this year, will feature both shopping and office units, she said.

Sinpas reported a loss of 43.7 million liras ($15 million) for the first nine months of 2015. The company may report a full-year loss of 26.2 million liras, according to the average of seven analyst estimates compiled by Bloomberg. The Turkish government in November scrapped a 2013 sale of land in Istanbul’s Atasehir to a joint venture that included Sinpas. The cash returned to auction winners from that cancellation will be reflected in fourth-quarter results, Gacemer said.

Sinpas is planning roadshows abroad to lure back investors, which may start in March or April, Gacemer said. The company’s shares dropped another 4.8 percent this year, compared with a 1.5 percent decline for the Turkish REITs index and a gain of 2.4 percent on the Borsa Istanbul 100. The shares closed unchanged at 0.59 lira on Thursday.

Income from three new projects, Istanbul Bomonti, Ankara GOP and Ankara Cankaya, won’t be realized until 2017 at the earliest, according to Kivanc Uysal, an analyst at Seker Investment in Istanbul.

“This year I expect to see a sluggish top-line,” Uysal, who has a “marketperform” rating, said by e-mail on Thursday.

Sinpas GYO targets 1 billion liras in sales this year and 550 million liras in deliveries, double last year’s figure, Gacemer said. The company has traditionally developed properties in Istanbul, Ankara and Bursa, but today it’s also interested in Izmir, Turkey’s third-biggest city, she said.

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