Banks are becoming the new owner of Shopping Malls in Turkey
Transfer of 30 shopping malls was accelerated.
Shopping malls with investment loan debts of more than 15 billion dollars cannot convert their debts. It is stated that 30 shopping malls are in the process of transferring ownership to banks. As of the past year, shopping malls, whose number has reached 440, and the leasable area approached 13.1 million square meters, are facing the risk of being owned by banks.
The shopping malls, which support 6.5 billion TL within the scope of lease support for their brands, have become unable to pay their debts with the effect of the increasing exchange rate. It is stated that in the sector with 15 billion dollars of debt, nearly 30 shopping malls face the risk of transfer to banks.
Emphasizing that banks may be the largest shopping mall owners soon, sector representatives demanded a year of interest-free deferral of debt, also returned to TL support to sustain the sector, which employs nearly 1 million.
According to the information, domestic investors generally use around 20-25 percent equity in their shopping mall investments. In loan applications, institutions that guarantee their lease agreements receive loans with terms of 6-7 years.For foreign investors, maturity exceeds ten years. As of October 2018, rental payments switched to TL. It is being stated that the number of shopping malls that received foreign currency loans before the implementation was around 200, most of them continued to get paid. As of this year, the amount of the debt is near 15 billion dollars.
With a rough calculation, the credit burden of the shopping malls, whose revenues have returned to TL, has increased by 25 percent due to the increase in exchange rates since October 2018. Considering the falling incomes during the pandemic period, many shopping malls became unable to roll over their debts. The transfer of the shopping malls that cannot fulfill their debt obligations to banks has also accelerated.
Avi Alkaş, Vice Chairman of Shopping Centers and Investors Association (AYD) Board of Directors and Chairman of the Board of Alkaş, emphasized that the foreign currency credit burden in the last two years has become crushing due to the increase of foreign exchange rates.
Alkaş said, “Unless a significant portion of the 440 shopping malls in the sector cannot regulate their relations with banks, the biggest shopping mall owners are now banks. After the transfer, banks will become the sole owner of shopping malls. It has also been noticed that this trend has become widespread over the years”. Stating that today, due to increasing expenses and decreasing incomes, there are notable conflicts in the shopping mall economy. Alkaş said, “Shopping malls are factories without chimneys. It employs thousands of people. Shopping malls are also highly significant for registered economy and employment. Many brands were able to open up to foreign markets by improving their competitive capabilities in shopping malls. Therefore, it is a fact that shopping malls are indispensable for our international brands.”
Altaş continued as follows: “We, as shopping center investors, provided rental support of 6.5 billion TL to brands. Retailer bankruptcies seen in the EU and the U.S. have not occurred in Turkey. Now we want only one thing to survive. Let debts postponed without interest for a year and the support provided in return to TL. Otherwise, the pandemic will last longer unless we cannot return to normal within three months, and the bank turnover will increase. ”
According to the information provided by Altaş, the number of shopping malls in danger within this scope is around 30. On the other hand, as of the end of 2020, while the turnover of shopping malls remained at 70 percent of the pre-pandemic period, their rental income decreased by 40-50 percent compared to the previous year. Considering that the sector’s turnover in 2019 is around 160 billion TL, meaning the said turnover will decrease by 48 billion TL in 2020.
Altaş stated foreign exchange debt makes this even worse for the companies. Altaş said, “Before October 2018, rental payments were made in dollars. Like every prudent trader, we borrowed in dollars because our income was in dollars. The amount of this debt is about 15 billion dollars. Our liabilities are increasing with the increase in exchange rates, as our income is TL and our debts remain in foreign currency.”
Translation: Cem Cetinguc