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Frequently Asked Questions
Real Estate Investment Trusts (REITs) are the capital market institutions that are regulated by the Capital Markets Board under the Capital Markets Law. They can invest in real estates, real estate projects, real estate-based rights, and capital market instruments, can be established with the purpose of realizing certain projects or investing in a specific real estate, and can engage in other permitted activities.
REITs are subject to the "Communiqué on the Principles Regarding Real Estate Investment Trusts" numbered III-48.1 of the Capital Markets Board. Their incomes are exempt from corporate tax (Corporate Tax Law, Article 5/1-d-4).
They can purchase, sell, rent, lease out and promise to purchase or sell all kinds of real estates such as lands, plots, residences, offices, shopping malls, hotels, logistic centers, warehouses, parks, hospitals, etc., with the purpose of generating profit from purchasing and selling or obtaining rental income.
Similar to other shares traded on the stock exchange, the values of the Real Estate Investment Trust shares are determined within the free market, based on supply and demand relation.
Regulated by the Capital Markets Board within the framework of the Capital Markets Law, a real estate investment trust is a type of private portfolio management company operating by investing in real estates, real estate-based projects and real estate-based capital market instruments. REITs cannot undertake construction works themselves or cannot acquire staff or equipment for this purpose. In case the control works are carried out internally, the personnel employed for this purpose are exempted from this scope.
Real estate investment trusts can be established for investing in a specific project or real estate or for operating in a certain field, or they can be established without such a limitation in their purposes, as long as they operate within the purpose of managing a portfolio consisting of the specified assets and rights.
They can purchase and sell capital market instruments, carry out stock exchange, money market and reverse repo transactions, open drawing acccounts and term deposit accounts in Turkish Lira or foreign currency.
They can purchase and sell offices, residences, business centers, shopping malls, hospitals, hotels, commercial warehouses, commercial parks or other similar real estates with the purpose of generating profit from their purchase and sale or rental income. They can furnish properties such as hotels, hospitals or other similar real estate that require certain minimum equipment to become operational before leasing them out.
They can purchase lands and plots for generating profits from their purchase or sale or for developing projects through establishing construction servitudes.
After acquiring ownership rights of real estates with rights of construction having established for developing projects, they can sell them to generate profit.
They can sell the real estate having preliminary contract for sale annotated in the land registry to generate profit.
They can invest in real estate-based projects that meet all the requirements specified in the relevant legislation to generate profit from real estate development or rental income.
They can establish and exercise usufruct rights on real estates, establish timeshare servitudes, become obligor of right of construction on the lands owned for the purpose of generating commercial profits.
Reserving the provisions of specific regulations, they can undertake projects to be developed through Build-Operate-Transfer model by establishing right of construction for themselves or others, provided they meet the requirements specified in the relevant legislation.
They can invest in real estate-based projects under the contract terms without aiming for obtaining the ownership of the property or establishing construction servitude, provided that they meet the requirements specified in the relevant legislation and that they are collateralized in a way to be approved by the Board.
Subject to meeting the requirements specified in the relevant legislation, they can jointly invest in real estate-based projects through construction servitude, provided there are no restrictions on the discretion of the REIT on their shares in the contract between the joint owners.
They can purchase and sell real estates abroad, provided that they acquire their ownership.
They can invest in companies established abroad if their area of activity is only real estates, or in real estate-based foreign capital market instruments.
They can lease real estates from third parties and lease them out for generating rental income on the condition that the special contractual provisions are suitable.
They can carry out swap and forward transactions, write options and enter into futures contracts, except for those based on goods, for risk management purposes.
They cannot invest in gold, precious metals, other commodities and futures contracts based on these.
They cannot invest in capital market instruments that are not traded on stock exchanges or over the counter organized markets, except for investment fund shares; purchase and sale of capital market instruments must be carried out through stock exchanges.
They cannot carry out short selling transactions with capital market instruments; they cannot perform trading on margin or borrow capital market instruments.
They cannot carry out transactions that exceed the purpose of hedging using derivative instruments.
They cannot incur expenses such as commission fees, etc. that exceed 3% of the asset value during the acquisition and sale of assets into and from the portfolio, excluding taxes, duties and similar other expenses that are legally obliged to be paid.
They cannot invest in assets and rights subject to any restrictions on assignability.
They cannot collect deposits or carry out transactions or activities that result in the collection of deposits as defined in the Banking Law.
They cannot engage in commercial, industrial or agricultural activities.
Except for portfolio management activities on their own accounts limited to the investment areas permitted, they cannot engage in capital market activities.
They cannot undertake construction works of real estates themselves or employ personnel and acquire equipment for this purpose in any way.
They cannot provide services such as project development, project control, financial feasibility, follow-up of legal permits, etc. to other individuals and organizations.
They cannot provide loans.
They cannot commercially operate hotels, hospitals, shopping malls, business centers, commercial parks, commercial warehouses, residential complexes, supermarkets and other similar real estates or employ personnel for this purpose in any way, except those permitted by the legislation.
They cannot engage in continuous short-term purchasing and selling of real estates.
They cannot make payments for expenses or commissions that are not grounded on documentation or that are significantly differ from fair market prices.
They are obliged to invest at least 51% of their total assets in real estates, real estate-based rights and real estate projects.
They can invest up to 49% of their total assets in capital market instruments, reverse repo and Settlement and Custody Bank (Takasbank) money market transactions, and up to 10% of their total assets in Turkish Lira or foreign exchange currency drawing accounts/participation accounts within these assets for investment purposes.
They can invest up to 49% of their total assets in foreign real estates, real estate-based capital market instruments and companies established abroad having real estates as their sole area of activity.
The proportion of lands and plots that are in their portfolio, but have not been subject to any project development activities for five years since their acquisition cannot exceed 20% of their total assets.
At least 75% of the total assets of REITs established for operating in certain fields or investing in certain projects must consist of assets specified in their titles and/or articles of incorporation.
It is essential for general-purpose real estate investment trusts to diversify their portfolios by sector, region and real estate types and manage them in the long-term.
Contractor
They are the natural or legal persons who undertake to carry out the construction works of real estate projects included in the portfolio of real estate investment trusts.
Operating Company
They are companies that operate, for commercial purposes, hotels, hospitals, shopping malls, business centers, commercial parks, commercial warehouses, residential complexes, supermarkets and other similar real estates either owned or leased by the trust within the framework of a contract drawn up with the REIT.
Consulting Company
They are companies that can provide services to the REIT for developing real estate portfolio and exploring alternative investment opportunities including project development and control services within the framework of a contract drawn up with the REIT.
Real Estate Valuation Company
They are the companies included in the list for company that can provide valuation services for real estates, real estate-based rights and real estate projects in accordance with the capital market legislation.
Real estate investment trusts provide funds for the financing of large-scale real estate projects such as business centers or shopping malls. Companies need to undertake a significant financial burden to carry out such large-scale projects. This often results in financing through loans meaning an interest burden for companies that mostly have insufficient equity. Such projects can be financed with funds raised from the public against the issuance of real estate investment trust shares. Thereby, the financing burden of the company significantly reduces.
Investors investing in the shares of a real estate investment trust have the following rights arising from the Turkish Commercial Code:
- Right to receive a portion, in proportion to their share, of the profits obtained by the REIT, in case of profit distribution,
- Right to receive liquidation share, in case of liquidation of the REIT,
- Right to acquire new shares to be issued by the REIT due to capital increases made from its own resources, free of charge,
- Right to preference in acquiring new shares in case of capital increase by the REIT,
- Right to participate in, speak and make proposals at General Assembly Meetings,
- Right to vote at General Assembly Meetings,
- Right to be informed, examine and inspect the activities and accounts of the REIT.
Investors can get the necessary information from the following sources during and after the initial public offering of real estate investment trusts:
Articles of Incorporation
It is a document prepared in accordance with the Turkish Commercial Code and the Capital Markets Board legislation regarding the establishment of the company, and it includes the trade name, purpose and scope of activity, duration, authorized bodies, etc. of the company. The company acquires legal entity status upon the registration of the articles of incorporation.
Registration Statement
It is a public disclosure instrument aimed at providing information such as the purpose of the company, its duration, trade name, registration date and number, amount and ratio of the shares to be offered to the public, activities and investments of the company, its financial statements and privileged shares, etc. to the investors who will become shareholders of the company by purchasing its shares during initial public offering.
Offering Circular
It is an announcement published to invite investors who will become shareholders of the company by purchasing its shares to the public offering.
The registration statement and offering circular are available for inspection by the investors at application points and are also published on the Public Disclosure Platform (www.kap.gov.tr) and the company's website.
Financial Statements
Real estate investment trusts prepare and disclose their financial statements within the framework of the regulations on financial reporting of the Capital Markets Board.
Activity Reports of the Board of Directors
Real estate investment trusts prepare activity reports of the board of directors on a quarterly basis. These reports include, at minimum, a summary of the valuation reports prepared for the assets in the portfolio, a summary of the developments in the last three months, the current status, completion rate and duration of the projects and additional explanations such as the realization status of the forecasts and problems, detailed information on leased out assets in the portfolio, the comparative financial statements of the REIT for the relevant accounting period and information on the control of portfolio limitations.
The activity reports of the board of directors are disclosed to the public at intervals specified in the regulations of the Board on financial reporting. The said report is also made available for inspection by the investors at the headquarters of the REIT and on the website. In addition, they are sent to the shareholders upon their request and at their own expense. The activity reports of the board of directors are retained by the REIT for a minimum of ten years.
All the information and documents specified above can also be accessed through the "continuous information forms" available on the websites of the real estate investment trusts.
Special Circumstances Disclosure
The company disclosures regarding the matters that need to be disclosed to the public in accordance with the regulations of the Board can be accessed through the following website: http://www.kap.gov.tr/?submenuheader=1 .
Real Estate Investment Trusts can be established as a new joint stock company under the Turkish Commercial Code, or an existing joint stock company established before with another purpose may be "transformed" into a real estate investment trust by amending the articles of incorporation in compliance with the regulations of the Capital Markets Board. In both cases, the establishment or transformation of the real estate investment trust must be approved by the Board. Following the approval of the Board, an application is made to the Ministry of Customs and Trade for permission for establishment/amendment of articles of incorporation. Upon receiving the Ministry's permission for establishment/amendment of articles of incorporation, real estate investment trusts form their company portfolio using the capital of the REITs after the registration of the establishment/general assembly decision regarding the amendment of the articles of incorporation.
The company was transformed into a real estate investment trust under the name of “MHR Gayrimenkul Yatırım Ortaklığı AŞ” on January 12, 2023, following its application to the Capital Markets Board. It completed its transactions for initial public offering on October 18, 2023, and its shares commenced trading on the stock exchange with 25% free float rate.
The authorized share capital of the company is 3,000,000,000 TRY, and its paid capital is 827,000,000 TRY.
You can access the shareholding structure of our company through the following web address: https://mhrgyo.com.tr/kurumsal/ortaklik-yapisi .
3. Principles of Profit Distribution
As a principle, profit distribution is decided considering market expectations, our long-term strategy, capital requirements of our company, investment and financing policies, profitability and cash position, as long as relevant regulations and financial capabilities allow. The proposal for profit distribution by the Board of Directors is discussed at the general assembly. The decisions on whether profit is distributed, how and when will profit be distributed are taken at the general assembly meeting.
The Board of Directors may distribute at least 20% of the distributable profit in cash and/or as bonus shares within the framework of the profitability status of the company, relevant regulations and the strategy of the company and in accordance with the capital markets legislation and other relevant legislation. Dividend can be distributed to the shareholders in cash or as bonus shares by adding the profit to the capital, or in a certain proportion of cash and a certain proportion of bonus shares.
Profit distribution transactions are carried out within the statutory periods specified in the legislation.
The dividend is distributed equally to all existing shares as of the date of distribution, regardless of their issuance and acquisition dates.
Unless the contingency reserves that are required to be allocated pursuant to Turkish Commercial Code are allocated and the dividend determined for the shareholders in the articles of incorporation or in the profit distribution policy are allocated, decisions cannot be made to allocate other contingency reserves, transfer the profit to the next year, and distribute profit to the members of the board, employees of the REIT and individuals other than the shareholders, and unless the dividend determined for shareholders are paid in cash, dividends cannot be distributed to such individuals.
Profit distributions are paid commencing after the general assembly meeting, as of the end of the fiscal period, at the latest, in which the general assembly meeting where the decision for profit distribution is taken is held. The general assembly determines the date of profit distribution. General assembly or the board of directors, if authorized, may decide on the distribution of dividends in installments in compliance with capital markets legislation.
The board of directors may distribute advance dividends, provided that they are authorized by the general assembly and that they comply with the capital markets regulations.
In case the Board of Directors proposes to distribute dividends below the rates specified above or not to distribute any dividends to the general assembly, the grounds for this proposal will be disclosed to the shareholders.
4. Principles of Dividend Distribution
The principles of profit distribution are regulated in Article 31 titled "Distribution of Profit and Reserves" of the Articles of Incorporation of the Company:
“The company's profit for the period is seen in the annual financial statement and calculated by deducting the general expenses of the company, various amount required to be paid or allocated by the company such as depreciation and taxes required to be paid by the legal entity of the Company from the incomes of the Company determined at the end of the fiscal year. The profit for the period is distributed as follows after deducting losses from previous years, if any:
General Legal Reserves
a) 5% is allocated as legal reserves.
First Dividend
b) From the remaining amount, by adding donations made during the year, if any, the first dividend is distributed in accordance with the Turkish Commercial Code and the capital markets legislation.
c) The General Assembly has the right to decide on the distribution of profit to members of the bord of directors, employees, workers, servants, foundations established for various purposes and similar individuals and institutions after the above deductions are made.
Second Dividend
d) The General Assembly is authorized to distribute, in part or in full, the remaining amount after deducting the amounts specified in paragraphs (a), (b) and (c) from the net profit for the period as the second dividend, or to allocate as voluntary reserves in accordance with article 521 of the Turkish Commercial Code.
General Legal Reserves
e) One tenth of the amount determined by deducting 5% of the paid capital from the portion determined for distribution to the shareholders and other individuals participating in the profit is added to the general legal reserves in accordance with the second paragraph of article 519 of the Turkish Commercial Code.
Unless the reserves that are required to be allocated by law are allocated and the dividend determined for the shareholders in the articles of incorporation are distributed in cash and/or as shares, decisions cannot be made to allocate other reserves, transfer the profit to the next year, and distribute profit to the members of the board, employees, workers, servants, foundations established for various purposes and similar individuals and institutions.
The dividend is distributed equally to all existing shares as of the date of distribution, regardless of their issuance and acquisition dates.
5. Principles of Advance Dividend Distribution
According to Article 33 titled "Advance Dividend" of the Articles of Incorporation of the Company, “the General Assembly may decide on the distribution of advance dividend to shareholders within the framework of the regulations of Capital Markets Board and other relevant legislation. Provisions of the relevant legislation are applied in the calculation and distribution of the advance dividend amount."
Our company is managed by a board of directors consisting of at least 5 (five) and at most 9 (nine) members meeting the qualifications specified in the Turkish Commercial Code and capital markets legislation who are elected by the general assembly for a period of 3 (three) years at maximum. The number and qualifications of the independent members to serve on the board of directors are determined in accordance with the regulations of the Capital Markets Board regarding corporate governance.
The fiscal period of our company starts on the first day of January and ends on the last day of December.
The independent audit firm of our company is Güreli Yeminli Mali Müşavirlik ve Bağımsız Denetim Hizmetleri AŞ .
To get valuation services for each asset in our company portfolio that requires valuation, agreement is made with TSKB Gayrimenkul Değerleme AŞ, and to get valuation services for assets that may be included in the portfolio within 2024 and that will require valuation, agreements are made with TSKB Gayrimenkul Değerleme AŞ and Akademi Gayrimenkul Değerleme ve Danışmanlık AŞ.
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Ebru BOZDOĞANGİL
Investor Relations Director / Member of Corporate Governance Committee
Ömer Can GÖRKEN
Commercial Real Estate Director