In January 2014, the Government of Turkey identified an opportunity to develop a new tourist attraction in the Salipazari and Karaköy areas of Istanbul, on the shores of the Bosphorus.
The development opportunity is a 1.2km long area of shoreline, comprising of a refurbished cruise ship port with associated quayside real estate, accommodating a luxury hotel, museum, public square, retail and commercial office space.
The relevant parcels of land were combined into a concession area, which was offered for competitive tendering by the Turkish Government. In February 2014, BLG Gayrimenkul Yatırımları ve Ticaret A.Ş. and Doğuş Holding A.Ş won the 30-year concession at a cost of €1.4bn, which required external financing in the form of a range of commercial lenders.
Salıpazarı Liman İşletmeciliği ve Yatırımları A.Ş., a joint venture between Doğuş and Bilgili, secured a €1bn 14- year project financing facility with 6 commercial lenders, carrying a 3-year grace period.
For a project of this nature, a 14-year maturity was quite challenging to secure, and the first time a number of lenders that participated with the deal extended their balance sheets for that tenor.
Additionally, the timing of the closing of the transaction – August 15, 2016, just one month after the coup attempt in Turkey – made it quite challenging to finalise given the added volatility in the market. That said, the transaction was notable for having demonstrated continued confidence in the Turkish markets through attracting new investors to the region.
The fact that the sponsors managed to secure the financing facility without any government guarantees, as most projects of this nature and size have done in the past, was also notable.