GE Real Estate Growing in Turkey

1
GE Real EstateGrowing in Turkey
March 23, 2007

• Jonathan Kern
• Chief Investment Officer, GE Real Estate

2
GE Real Estate a global real estate investor

• Present in 25 countries with 44 offices
  worldwide and growing

Nordic
Iberia
US
Italy
Australia
Korea
India
Turkey
1970
1986
1990
1995
1997
1998
1999
2000
2001
1972
2003
2005
2006
France
UK
Central Europe
Japan
China
Canada
Germany
Mexico
Sweden
Portugal
Mexico
Hungary
Czech Republic
Australia
Slovakia
New Zealand
India
Denmark
Bulgaria
Turkey
South Korea
Norway
Italy
France
Canada
United Kingdom
United States
Spain
Poland
Japan
Germany
China
T
Total
Global
T
Emerging
2006 Assets (bn) 53.8 27.8 52 5.90 11.0200
6 Net Earnings (bn) 1.8 1.2 67 0.17 9.5
3
Emerging Markets Growth
Size and Ranking of Largest Countries (Nom. GDP
05)
Entered
Plan to Enter
14
14
Still researching
Russia 0.8
Russia 0.8
China 2.2
4
4
Cen. Eur 0.9
Cen. Eur 0.5
9
16
Turkey 0.4
19
9
Sth Korea 0.8
Sth Korea 0.8
11
11
Mexico 0.8
Mexico 0.8
13
13
India 0.8
India 0.8
12
12
SE Asia 0.5
17
Financial Projection(MM)
10
10
Brazil 0.8
Brazil 0.8
Central Europe Poland, Czech Rep., Hungary. SE
Asia Philippines, Thailand, Singapore, Malaysia.
4
Criteria for Foreign Investment
GE Real Estate Criteria
Ability to grow quickly
Ability to achieve/acquire scale large enough to
be meaningful
?
Stable Political Environment
Industrialized economy in a stable political
environment
?
Transparent legal framework that recognizes and
protects owners (local foreign) property
rights
Established Rule of Law
?
Developed Financial Markets
Reasonably active capital markets that allow us
to raise funds locally
?
Tactical Feasibility
Flexibility and standards to operate as a foreign
investor with access to credible local partner
?
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Why we like Turkey

• Strong GDP growth at 5.2 in 2006
• Inflation under control (9.6), stabilizing
  currency
• Attractive demographics 50 lt 30-yr
• 75 MM population second largest in Europe

Positive country prospects

• AKP government holds large majority
• Political economic reforms Independent CB
• Potential EU accession and meeting IMF targets
• Moodys Ba3 (sta.) SP BB- (pos.) Fitch BB-
  (pos.)

Stable political environment

• Rising demand for quality real estate supply
  low
• Per capita retail GLAs below EU averages
• Leases can be denominated in EUR, USD
• Established REIT regime for over 10 years

ExpandingRE market
6
Dogus-GE REIT/GYO our primary investment vehicle
in Turkey
Future for GERE in Turkey
Why Garanti GYO ?
Ownership structure
Before

• Prior GE experience with Dogus Group
• - NBCU, GE Consumer Finance
• Successful track record of Garanti GYO
• - Experienced development team
• Strengths of Dogus relevant to RE
• - Real Estate, construction, lodging, banking
• Access to existing portfolio
• - Well positioned diversified assets
• Doguss vision to grow Real Estate
• - Desire to position as 5th business line
• GEREs vision to grow in Turkey
• - Garanti REIT stake acquired by GE Cons Fin.

Renamed Dogus-GE REIT/GYO as of March 22, 2007
Investment focus

• Residential for sale development
• Retail development
• Selective investment in office
• Istanbul and other key cities

Targeting 400-500MM vehicle over the next 'few'
years.
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Investing environment retail office
GLA per 1000 population -2005
Future demand drivers

• International retailers seeing Turkey as a high
  potential new market
• Lowest shopping center penetration in Europe (GLA
  per 1,000 people at 25 in 2005)
• Economic development/ increased GDP per capita
• Increasing mobility of the population (i.e. car
  ownership)

Retail
Istanbul CBD Class A office trends
Future demand drivers

• Growing MNCs and local firms demanding Class A
  office space where it matters
• Fractioned ownership structure of older vintage
• Limited availability of existing assets and land
  for development in CBD
• Expecting rents ?, vacancies ?, land prices ?

Office
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Investing environment residential
Strong demographics driving demand
Future demand drivers

• Annual housing requirements 300,000 units in
  Istanbul
• Significant supply shortage given rising demand
  for new houses in major cities
• Improved middle class economic conditions
• Increasing urbanization of population
• Demographic fundamentals
• Easier residential credit, mainly driven by lower
  interest rates/CPI under control
• New mortgage law passed further open up
  consumers accessibility to credit
• Land hard to come by for large projects

Scarce land developing the perimeters
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Turkey vs other emerging markets
Bubbles GDP size
High
Russia
China
Argentina
SE Asia
Turkey
Relative Risk
Brazil
India
Poland
Mexico
S. Korea
Hungary
Low
Source GERE assessment
Relative size of opportunity
Low
High
Plan to enter
Still researching
Entered
10
What concerns us
Will the best of times end?
Strong GDP growth Abundant capital
Virtual absence of risk premia Real estate
becomes core asset class
Global Issues
Still a long road ahead?
Solid recovery, but - Real interest
rates still high - Unemployment still high -
Slow down of EU momentum /- Upcoming elections
National Issues
Local Issues
How deep is demand?
Ripples or thunder storms?
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but we are in Turkey for the long-run

• Strong secular democracy for over 80 years
• Established rule of law strong ownership rights
• Direction towards EU reforms institutions
• Independent Central Bank
• Strong demographics growing middle class
• Fast growing economy huge potential
• Real estate historically a safe haven

Well cemented foundation that we trust
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QA
Caution Concerning Forward-Looking Statements
This document contains forward-looking
statements that is, statements related to
future, not past, events. In this context,
forward-looking statements often address our
expected future business and financial
performance, and often contain words such as
expect, anticipate, intend, plan,
believe, seek, or will. Forward-looking
statements by their nature address matters that
are, to different degrees, uncertain. For us,
particular uncertainties that could adversely or
positively affect our future results include the
behavior of financial markets, including
fluctuations in interest and exchange rates and
commodity and equity prices the commercial and
consumer credit environment the impact of
regulation and regulatory and legal actions
strategic actions, including acquisitions and
dispositions future integration of acquired
businesses future financial performance of major
industries which we serve, including, without
limitation, the air and rail transportation,
energy generation, media, real estate and
healthcare industries and numerous other matters
of national, regional and global scale, including
those of a political, economic, business and
competitive nature. These uncertainties may cause
our actual future results to be materially
different than those expressed in our
forward-looking statements. We do not undertake
to update our forward-looking statements.