YAPI KREDİ KORAY REAL ESTATE INVESTMENT TRUST A.S. ACTIVITY REPORT 2011

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1 YAPI KREDİ KORAY REAL ESTATE INVESTMENT TRUST A.S. ACTIVITY REPORT 2011

2 CONTENTS OVERVIEW CORPORATE PROFILE & VISION PRINCIPAL SHARE HOLDERS & SUBSIDIARIES SECTOR DEVELOPMENTS INTERNATIONAL REACH AND AWARDS PROJECTS INTERNATIONAL REACH AND AWARDS STRENGTHS

3 OVERVIEW * Yapı Kredi Koray s main objectives are to achieve accurate analysis of market trends and customer expectations, to develop benchmark-setting projects at the real estate sector and at the same time to provide added value to its shareholders. * With its well-educated, dynamic management team, Yapı Kredi Koray has the capacity and the competence to undertake large-scale, distinctive real estate development projects, enabling great potential for growth. * Yapı Kredi Koray has gained the advantage by building world-standard complexes. Construction requires precise planning, expert material selection and experienced project management. On-time delivery of projects and excellent quality control are key factors leading to customer satisfaction. * Yapı Kredi Koray s core competencies are rooted in its professionalism and adherence to scientific analysis of customer preferences and market trends. Closely in touch with real estate markets, Yapı Kredi Koray endeavors to understand trends with regard to customer needs. By making use of its extensive knowledge of Customer Relationship Management and with the help of an advanced technological base, the Company strives to develop functional projects that meet customer expectations. * In addition to managing its real estate portfolio, Yapı Kredi Koray also desires a role in the project development side of the sector. The Company s capacity to create new concepts and to turn them into brand names will strengthen its position in the sector and create more demand for its future projects. * Specializing in commercial and residential projects, Yapı Kredi Koray s current investment portfolio includes residential units at Elit Residence, Bomonti Apartment, Levent Loft Garden, Ankara-Ankara project and office units at Kağıthane OfisPark, as well as the development projects at its Riva Lands and Narmanlı Inn and alongside with a new project at Ankara-Çankaya also have been developing. * Encouraged by the results thus far, Yapı Kredi Koray has set even more ambitious targets and has been developing projects and plans to be one of the best companies in real estate sector. The Company believes that its target is attainable since it already possesses elements such as the ability to select prime locations, produce unique architectural concepts and create functionality. Smart marketing strategies, adherence to Customer Relations Management principles and proven quality are other elements of success at Yapı Kredi Koray.

4 CORPORATE PROFILE An acknowledged leader of the real estate industry in Turkey. Since its establishment, Yapı Kredi Koray has focused its attentions on putting all of its experience,knowledge,and energies to work in the realization of projects that are people oriented and capable of satisfying the continuously expanding and changing needs of city life. Projects developed by Yapı Kredi Koray distinguish themselves through their superior qualities and applications that each represents first in the sector. Admired by its target groups, the company s projects have also drawn the attention of international organizations as well. Among the projects that the company has authored are Istanbul-Istanbul, Istanbul Zen,Istanbul Bis,Evidea,Ankara-Ankara,Neo Shopping and Lifestyle Center. Construction also began in 2006 on its Ankara Çankaya project located in one of Ankara s most prestigious districts. Yapı Kredi Koray s basic goal is to correctly analyze market expectations in order to realize original projects at international standards.every project that the company develops is as much focused on creating an enjoyable living space as on being a profitable investment. OUR VISION Yapı Kredi Koray aims to * Raise the levels of all of its business development, project management, sales,after sales customer relations, and financial management processes and organizational structures to those of Europe s premier real estate firms by creating a corporate culture that is focused on performance. * Become one of the most respected firms in the areas of real estate development and real estate value creation by entering into strategic partnerships with the world s best real estate management, marketing and design firms. * Create value for shareholders on a regular basis and always aims to provide a very good risk return performance OUR STRATEGY * As a real estate investment company,yapı Kredi Koray has the ability to read the macroeconomic picture very well and come up with the best possible balance between its resources and its investments. * Yapı Kredi Koray determines its strategies and portfolio composition in line with realistic expectations about the future so as to maximize its effectiveness under all economic conditions.

5 * Yapı Kredi Koray puts its competitive strengths in financial management,marketing and sales, and project management to work when drawing its strategic roadmap within framework of its own corporate vision. * Yapı Kredi Koray is continuously mindful of balancing risk and return in order to maximize the returns that it secures both on its equity and for shareholders. PRINCIPAL SHARE HOLDERS A Blending of two leading names in their respective business sectors, Yapı Kredi Koray was established in 1996 by Yapı Kredi Bank and Koray Group.The Company went public in June 1998 with a free float of 49%;currently its stock listed and traded on the Istanbul Stock Exchange (ISE) and structure of share holders are Yapı Kredi Bank (%26),Koray Group (525) and publicly traded part (%49) Both share holders have over 50 years of experience in real estate development, construction and finance. The combination of long-term sound experience of Yapı Kredi Bank and Koray Group has resulted in a number of major accomplishments in the Turkish real estate investment market. SUBSIDIARIES YKS Tesis Yönetim Hizmetleri A.Ş.: A facility-management services company responsible for the conduct of more than 30 projects, YKS Tesis Yönetim Hizmetleri A.Ş is a building management and services company in which Yapı Kredi Koray and the Koray Group control 51% and 49% stakes respectively. The company is the fourth biggest facility management firm in Turkey. Gelişim Gayrimenkul ve Yatırım Ticaret A.Ş.: A real estate development company, which seeks out investment opportunities in the real estate sector. Yapı Kredi Koray has set up the company on 14 th November 2008 and has got 99.99% stake of the company. Gelişim Gayrimenkul ve Yatırım Ticaret owns 223,823 square meter of land at Riva Göllü and 207,088 square meter of land at Riva East YAPI KREDI KORAY SHARE PERFORMANCE IN 2011 In a year in which the İstanbul Stock Exchange National 100 index declined 22.33% and the REIT Index also fell down 17.23%. Yapı Kredi Koray s share closed the year at the price of On 30th December 2011, Yapı Kredi Koray s unit share price closed the year at TL 1.36 on a weighted-average basis. YKGYO (ISE-100) - TL Year-end Share Price

6 Last Session Weighted-Average Price Market Capitalization 54,400,000 78,400,000 YKGYO (ISE-100) TL Highest Lowest 2011 Q Q Q Q SECTOR DEVELOPMENTS Turkey's economy in 2011 has been affected badly due to debt crisis especially in EU countries. In the coming year especially, developed countries economic growth will be linked to the progress of solving this problem. Developed countries interest rates will continue to stay historically low levels and this situation most probably provide advantage of reaching necessary liquidity to countries like Turkey in order to support their economic growth The ongoing economic crisis, which has been taken place in the middle of 2011 and continued through to the major economies like EU and Japan etc at the beginning of 2012.Slowing economic growth in developed countries will be expected gain momentum especially at the second half of 2012.The housing market will continue to recover in USA and expected to be followed by EU during the last quarter of 2012 We expect that Housing market will improve in 2012 due to high liquidity and low interest rates around the globe and not only first home buyers,also real estate investors will again consider to buy new houses, in order to benefit good market conditions. Real Estate sector has grown up rapidly in 2010 and 2011 in Turkey and expect to keeping up its momentum in the new year as well. After growing of double digit in last two years,we expect the sector to grow up about 7 percent in The sector has been supporting employment greatly in the country, also had an important mission in Turkey by reducing the current account deficit as well. Even though rapid growing in the housing market, we can t also talk about ballooning in the sector because housing prices are still around historic averages so we expect that the demand will be continuing in 2012 and new projects will be no difficulty to find necessary demand.

7 Regarding to new disaster and reciprocity laws, the new projects will be emerged and vitality and development of the sector is expected to continue in coming year as well. Yapı Kredi Koray s powerful vision and management competencies give it ability to spot and shape trends in real estate business. Unrivalled foresight about future settlement patterns, architectural styles, and individual needs allow the company to design and deliver the exact projects that its target groups want. As a result Yapı Kredi Koray has accelerated its searching to start new projects in order to get advantage of expected favorable market condition in PROJECTS İstanbul İstanbul: Inaugurated in 1999, İstanbul İstanbul is a unique blend of the Mediterranean and traditional Turkish Architectural styles. It was the first residential project to be planned, developed, built, and marketed entirely by a Privately owned real estate investment trust in Turkey. Awards: ULI Awards for Excellence finalist 2003, MIPIM Awards 2002 winner, CRM Oscars winner 2003 İstanbul Zen: The second project undertaken by Yapı Kredi Koray, İstanbul Zen was designed to achieve a harmonious blend of countryside repose and urban comfort far from the pressures and concerns of metropolitan living. Situated in the earthquake resistant Göktürk region, the project occupies m² of grounds near İstanbul İstanbul. İstanbul Bis: The third project undertaken by Yapı Kredi Koray, İstanbul Bis brings a brand-new look to the Kemerburgaz Göktürk region with its original architecture and landscaping. Evidea (Çekmeköy): Located at Çekmeköy on the Asian side of İstanbul, Evidea is a joint venture of Yapı Kredi Koray and Doğuş GE GYO in which each controls a 50% stake.the project offers a pleasant alternative to the urban life and including every finest details to provide an enjoyable way of of life Ankara-Ankara (Ankara): Yapı Kredi Koray's first residential project development at outside Istanbul, Ankara - Ankara brings a whole new point of view to our capital city. Having authored many unique and

8 award-winning projects with its people focused approach, Yapı Kredi Koray now appears with a project in the city of Ankara that fulfills every expectation. NEO Shopping and Lifestyle Center(Eskişehir): Neo, Eskişehir's first shopping and lifestyle center, is yet another first authored by Yapı Kredi Koray.With its unique architectural lines, enjoyable green spaces, and entertainment center, Neo is the first, only, and the most innovative example of its category in Turkey today. DEVELOPING PROJECTS Riva: Riva joined the ranks of İstanbul's newest settlement regions when a 16,000,000 m 2 tract of land was opened for development in early Market researches indicate the Riva as İstanbul's rising star and will be one of the most popular living areas on the Asian side of the city. Yapı Kredi Koray's Riva, project will be established in about 480,000 square meter area. The firm will intend to set up its own original projects, according to municipality s examination of its development plan. Yapı Kredi Koray has been planning to develop the project at Riva, which will have unique concept and different from others. Narmanlı Han: Built at the end of the 19 th century in Beyoğlu, one of Istanbul s historic neighborhoods, as service quarters for the Russian embassy, Narmanlı Han was expanded through various supplementary units until the early years of the 20 th century. Occupying a 2,643 square meter estate, Narmanlı Han today consists of five large buildings situated around an inner courtyard. So a s to provide a meeting place in Beyoğlu for the residents of Istanbul, the complex will be transformed into an urban center, containing a variety of facilities such as movie theater, a concert hall, an art gallery, shops, book and music stores, cafes, restaurants, studios and workshops. RENTAL INCOME PROPERTIES Elit Residence: Situated in Şişli, one of the central districts of Istanbul, with unrivalled access to all the amenities of metropolitan life, Elit Residence occupies 4,500 m 2 of grounds.designed by BSB London Architects, Elit Residence's elliptical form made a handsome and modern new addition to Istanbul's celebrated skyline when it was completed in Elit Residence was among the top three contenders in the residential projects category in the MIPIM competition held in France in Elit Residence has 30,000 square meter of enclosed space, of which 15,000 square meter is intended for residential use. Yapı Kredi Koray has 2 units at Elit Residence

9 Bomonti Apartman: Bomonti is showing a modern and elegant appearance thanks to new residential buildings, shopping centers and hotels being built one after an other. The area encloses some of Istanbul's historically and culturally priceless buildings. Bomonti is also the heart of the commercial and business facilities. On-going road, tunnel and infrastructure works will soon make Bomonti a well furnished center of attraction. Yapı Kredi Koray has 9 units at Bomonti Apartman Levent Loft Garden: Offers a unique life style with its elegant and inspiring architecture,located in Levent, major business districts of İstanbul and connected with a direct exit to the TEM highway.provides comfortable life style and pleasant environment to its residents and see the life from perspective of a privileged viewpoint. Levent Loft Garden provides rich variety of social facilities, while offering vibrant, dynamic and unique life style at istanbul s heart with unmatched access to metropolitan life. Yapı Kredi Koray has 5 units at Levent Loft Garden Kağıthane OfisPark: The concept and architectural projects are designed as a modern interpretation of existing neighborhood aura. Kağıthane OfisPark has won MIPIM Architectural Review Future Awards at the category of office projects in The complex has LEED certificate in the category of Core & Shell. Kağıthane OfisPark has contemporary and innovative design,and provides companies to opportunity to get at the heart of the city. Yapı Kredi Koray has purchased 2 office floors at Kağıthane OfficePark. INTERNATIONAL REACH AND AWARDS Yapı Kredi Koray represents Turkey on all global real estate platforms.with a mission to become internationally recognized business entity.yapı Kredi Koray supports numerous worldwide events and submits its projects to international awards competitions. The Company has been tyring to participate in main real estate events including MIPIM (Marche International des Professionnels de I mmobilier),uli(urban Land Institute),Barcelona Meeting Point,GRI (Global Real Estate Institute) and GYODER Turkish Real Estate Summit. The Elit Residence Project was nominated for the MIPIM Award in 2001 In 2002,Yapı Kredi Koray won this prestigious award with İstanbul-İstanbul project in the category of residential development. İstanbul-İstanbul project was finalist in the ULI Excellence Awards in Another achievement of Yapı Kredi Koray was the CRM award, presented by the CRM Institute Turkey:The Company s extensive efforts and client-focused approach

10 to CRM were acknowledged by the First Prize in the field of Client Relations in the 2003,CRM Institute Turkey Awards,regarded as CRM Oscars in the Turkish REIC sector. In 2006 Yapı Kredi Koray receives Best Real Estate Developer and Best Real Estate Investment Manager awards form Euromoney magazine in The latest addition to Yapı Kredi Koray s track record of achievements was ArkiPARK 08 New Housing Development award for Evidea Project All these awards represented a major success globally both for Yapı Kredi Koray and the Turkish real estate industry. MAIN STRENGTHS OF THE COMPANY Research-Based Development and Investment Strategy All markets in an emerging economy, whether financial, commodity or real estate, are both dynamic and volatile yet offer countless opportunities to vigilant companies. In order to keep track of current developments in the market place, Yapı Kredi Koray has developed advanced tools to monitor and evaluate prospective business opportunities in a timely manner. Using a specialized research team and advanced IT tools, the Company has developed the one of the largest real estate database in the sector. Project Planning and Development Know-how Since its establishment, Yapı Kredi Koray has progressed rapidly and dynamically and created highly specialized skills for today s market. The company has cultivated vast experience in planning and developing large-scale real estate projects. On its way to becoming the region s best known real estate developer, Yapı Kredi Koray plans to employ its extensive know-how in large- scale projects to undertake ground-breaking endeavors. Creation of Unique Projects The Istanbul Istanbul, İstanbul Zen, İstanbul Bis, Evidea, Ankara-Ankara, Neo Shopping Center and Ankara-Çankaya brought new dimensions to the business of real estate in Turkey. Each a pioneering and unique example in their category. Yapı Kredi Koray s projects will continue to shape and lead the way in the real estate development markets. Transparency Strictly adhering to principles of corporate governance, Yapı Kredi Koray conducts all of its business transactions in a transparent manner. The Company is admired by the business and investment community in Turkey and abroad for its compliance to rules of transparency. Several investment bankers have reported that Yapı Kredi Koray is among the pioneering publicly traded companies in Turkey by abiding fully with internationally acknowledged principles of corporate governance.

11 Customer Relations Management Experience Supported by a specialized team and a strong technological infrastructure,yapı Kredi Koray successfully implements principles of Customer Relations Management (CRM) to create added value for its clients. Yapı Kredi Koray was the first company to initiate the CRM principles in the real estate investment and development business in Turkey. Owing to its successful implementation of these principles,yapı Kredi Koray has earned the CRM Institute Award, regarded by most as the equivalent to receiving the Academy Award with all sectors combined.crm techniques create customer satisfaction, but also enable the Company to get significant feedback from the customers and thus improve efficiency and functionality. Use of Contemporary Information Systems Aiming to create vast numbers of satisfied property owners and establish brand loyalty among clientele, Yapı Kredi Koray has developed administrative and technical infrastructure systems geared to the future. Providing instant access to critical information and incorporating sophisticated reporting and project evaluation tools. Dynamic Organizational Structure The essence of Yapı Kredi Koray s success in its line of business depends largely on efficient management, composed of a highly motivated, experienced professional staff. Job descriptions are well defined and individual performance is evaluated within the frame work of the holding group. The management team at Yapı Kredi Koray is composed of a small group of closely-knit-dynamic and goal oriented executives. Competence in mobilizing international sources and access to the world s best architects and consultants comprise an important asset for Yapi Kredi Koray