Valuation of Project Update

RNS Number:1300X
Ottoman Fund Limited (The)
24 May 2007


For immediate release                                                24 May 2007

                                        
                            The Ottoman Fund Limited
                                        
                          Valuation and project update



Following the recent announcement of its end-February interim results, The
Ottoman Fund Limited ("Fund"), which invests in the development of local housing
and holiday homes in the major cities and coastal resorts of Turkey, is pleased
to provide a general update for investors.


Highlights


   *Proceeds from the Fund's launch in December 2005 (#139m net of launch
    costs) are now fully allocated. Of this, c.65% has been invested in the
    Fund's three land-site acquisitions and the provision of development finance
    at Alanya. The remaining funds are allocated to the build-out and marketing
    of the three development projects (Riva, Golturkbuku and Kazikli). A number
    of new investments are under review and further land acquisitions may be
    made depending on leverage opportunities and rates of sales.


   *Recent third-party valuations of land acquired by the Fund indicate an
    increase of 23% since acquisition as a result of the benefits of peripheral
    land aggregation, and planning and zoning improvements achieved by the
    Manager. This represents an uplift of c.14.5p per share.


   *According to recent project valuations carried out by Kuzey Bati, an
    international associate of Savills ("KB Savills"), the current estimated
    potential sales revenue of the Fund's three development projects is $634m*.


   *Land acquisition and KB Savills estimated development and construction
    costs for these developments total $363m, resulting in an aggregate KB
    Savills estimated potential project profit of $271m* (based on current
    zoning and planning). These existing projects are expected to be completed
    over the next 4 years via phased development and sales, with construction
    financed through a mixture of remaining capital, debt and off-plan sales.


   *These updated land valuations and potential project profits are set-out
    in the table below:



Project     Cost of    Valuation     %   Construction Sales     Gross profit
            land                  uplift costs (est.) revenue   (pre tax and
                                                      (est.)    sales comm.)
                                                                (est.)
                                  

Golturkbuku    $38.6m     $43.5m    13%       $37.6m     $142m           $65.8m
Riva          $111.2m    $140.3m    29%      $138.3m   $400.2m          $150.7m
Kazikli
(50%             $10m    $12.35m    24%       $27.7m    $92.4m*          $54.7m*
share)
    Total    $159.85m   $196.15m    23%      $203.6m   $634.6m          $271.2m




*As referred to below, Colliers International also provided a sales valuation
for Kazikli. As this was marginally lower than that of KB Savills, the Colliers
sales valuation has been used in calculating the figures in this announcement.


Development projects


Golturkbuku, Bodrum


Progress on the Fund's first land investment on the Bodrum peninsula has been
promising. In addition to the original 166,825m(2) site, the Fund (via a local
subsidiary) has recently agreed to purchase two strategically important adjacent
plots with a combined land area of 18,350 m(2) for $5.23m ($285/m(2)). 10% of
the purchase price has been paid with the balance payable upon the transfer of
the title deed (by no later than 31 July).


Master-planning and architectural designs have been completed by Wimberley
Allison Tong and Goo (WATG), the leading international hospitality, leisure and
entertainment designers. WATG's past projects include The Venetian
Resort-Hotel-Casino, Las Vegas; Atlantis Paradise Island, Bahamas; The
Ritz-Carlton, Bali; Hotel Bora Bora, French Polynesia and Disney's Grand
Floridian Resort and Spa.


Detailed application plans for the construction license are ready for
submission. On-site excavations and construction of internal roads and a sales
office have commenced. First phase sales are expected to commence shortly.


Discussions have been held with a number of leading hotel and spa operators and
the Fund expects to announce its selection in the near future.


KB Savills have recently valued the enlarged site at $43.5m, 13% above an
acquisition cost of $38.6m.


In addition, KB Savills have carried out a valuation of the project on current
density and zoning permissions. Based on their estimated sales valuation of
$2,667/m2, KB Savills have estimated potential gross project profits (before
local taxes and sales commissions) of $65.8m. Approximately 85% of the project's
revenue will be derived from the sale of residential units with the remainder
from the operation and eventual sale of the hotel and spa.


Riva, Istanbul


The original 917,900m2 site was purchased in September 2006 for $110m. Given the
size, importance and prime position of this area, the overall master-planning
for the region by the Istanbul municipality is on-going. The Manager's local
team are closely involved with other land-owners and developers in the area and
there appears to be satisfaction at the municipality level with the proposals
from leading US town-planners currently under consideration. The Manager expects
that full zoning for the region will be in place within 6 months.


The Fund is carrying out a process of land aggregation of neighbouring plots and
since January has purchased a further 13 plots with total land area of 9,083m(2)
for $2.6m (c.$280/m(2)).


In line with its existing planning permissions, the Fund intends to commence
sales and construction of its first phase of development within three months,
following approval of the detailed plans for this phase by the local
municipality.


KB Savills have recently carried out a revaluation of the enlarged site at
$140.3m, 29% above the prevailing acquisition cost.


In addition, KB Savills have carried out a valuation of the project. Based on
their estimated sales valuation of $1,928/m2, KB Savills have estimated
potential gross project profits (before local taxes and sales commissions) of
$150.7m.


Kazikli, Bodrum


This most recent addition to the Fund's development portfolio is also reporting
good progress. The Fund's joint venture partner, Ado Group, is coordinating the
planning approval process and working with local architects. The joint venture
has obtained zoning for the majority of the site. In addition it has secured an
increase in the permitted density of building from 49,000 m(2) to 74,000 m(2),
an increase of 51% in buildable area.


The Manager is evaluating proposals from project management companies and
international architects. Construction is expected to commence towards the end
of the summer.


Colliers International have previously revalued the Fund's share of the site at
$12.35m, 24% above the acquisition cost of $10m. This valuation pre-dated the
increase in permitted density and a new valuation has been commissioned to
reflect this and will be announced in due course.


The Manager has had the project valued by KB Savills and by Colliers
International (as to sales values) on the basis of the increased density and
zoning permissions. Using the mid-point of the lower sales valuation of Colliers
of $2,500/m2, the Fund's potential share of gross project profit (before local
taxes and sales commissions) is estimated at $54.7m.


Development finance - Alanya


As announced in the recent interim results, local valuers Elit have provided a
sales valuation which would indicate that the Fund's potential share of revenue
at the Alanya site would be $18.5m against a total investment of $12.7m.
However, sales at the site remain subdued, which the Manager believes stems from
a combination of increased supply and lower pricing of developments in the
immediate area. Although the site remains one of the best in the vicinity it is
increasingly clear a more aggressive stance on pricing will be required.


Political situation


As referred to in the interim results, the Fund and the Manager continue to
monitor the present political uncertainty in Turkey closely to ascertain what
impact this might have on the Fund. Attention will focus on the outcome of the
forthcoming July elections but the Fund is well-positioned to move forward in
any of the likely outcomes.


List of contacts

Development Capital Management 020 7355 7600
Roger Hornett
Ertan Sevinc
Tom Pridmore

Buchanan Communications 020 7466 5000
Charles Ryland
Isabel Podda

Numis Securities 020 7260 1000
Iain McDonald
Bruce Garrow




                      This information is provided by RNS
            The company news service from the London Stock Exchange

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