Board of Directors Annual Report 2011
Contents Introduction 02 SAF GYO in Brief 06 Key Indicators 10 Vision, Mission From the Management 12 Message from the Chairman 14 Board of Directors 18 Message from the General Manager 20 Executive Management and Committees Activities 24 Sector Developments in 2011 26 Projects Corporate Management 36 Risk Management Policies 38 Information Policy 40 Ethical Principles 42 Corporate Governance Principles Compliance Report 50 Amendments made to the Articles of Incorporation during the Year 55 Dividend Distribution Policy 56 Summary Appraisal Reports Financial Tables and Notes 65 Financial Tables and Independent Auditors Report as of December 31, 2011
The diamond of the real estate industry One of the shining jewels of the real estate industry, thanks to its robust financial position, high profitability and well experienced shareholders, SAF GYO is currently developing office buildings and residential projects of ever increasing value.
SAF GYO in Brief SAF GYO has become one of the top valued companies traded on the ISE resulting from its very first project, Akasya Acıbadem. Sağlam Gayrimenkul Yatırım Ortaklığı A.Ş. was established in 2005 to make investments in real properties, real property based capital market instruments, real property projects, real property based rights and capital market instruments as specified in the Communiqué on Principles for Real Estate Investment Trusts, issued by the Capital Markets Board (CMB) and to carry on other activities permitted by the Communiqué. Sağlam Gayrimenkul Yatırım Ortaklığı A.Ş. with its net asset value of TL 75,183,397. - and Saf Gayrimenkul Geliştirme İnşaat ve Ticaret A.Ş. with its discounted cash flow value of TL 1,115,133,125.- adopted a resolution on the merger of the two entities at the Extraordinary General Assembly Meeting held on October 31, 2011. As a result, the Company s paid-in capital increased to TL 886,601,669.- and the registered capital limit to TL 2,000,000,000.-. During this merger process, Article 2 of Sağlam Gayrimenkul Yatırım Ortaklığı A.Ş. Articles of Association was amended and the Company s amended trade name is now Saf Gayrimenkul Yatırım Ortaklığı A.Ş. Established upon the merger of two companies, Saf Gayrimenkul Yatırım Ortaklığı A.Ş. rankes as the second largest real estate investment trust traded on the ISE, on terms of market value. As of December 31, 2011, the Company s market value was TL 1,179,180,219. With its strategy to contribute to the ever increasing importance of the Turkish real estate sector with high quality projects, SAF GYO has become one of the most reputable companies of the sector in a short period of time. The Company s Akasya Acıbadem project, built on 121,000 m² land in the Acıbadem area of Istanbul with total sellable area of 206,100 m², consists of three stages: Akasya Göl (Akasya Lake), Akasya Koru (Akasya Grove) and Akasya Kent (Akasya Town). The project comprises 1,349 housing units; of this total, the Göl stage contains 459 units, the Koru stage 432 and the Kent stage 458 units. 891 units of the first two stages have been sold out and was handed over to the owners. Some 352 units of the Kent stage were sold in a short period of time and it is anticipated that these units will be handed over during September 2013. Besides these housing units, construction of the shopping mall is underway; the mall will be the largest shopping mall on the Asian side of Istanbul, has 81,000 m² leasable area in the Kent Stage and has qualified for Breem Certification. The Company s portfolio also contains Fecir Business Centre with an indoor area of 19,836 m 2 ; Rozi Factory Premises with an indoor area of 30,202 m 2 ; Antalya BTM Building with indoor area of 4,230 m²; Altunizade BTM Building with an indoor area of 3,454 m²; and offices with indoor area of 1,125 m² located in the Mecidiyeköy Business Centre. Drawing on the significant sector experience and know-how of its major shareholders, SAF GYO has become one of the leading real estate investment trusts, closely followed by customers who not only seek to acquire top quality residences but also to make investments. With new projects it intends to launch in the near future, the Company aims to raise the quality level in the sector. 2 SAF GYO 2011 Annual Report Introductıon
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SAF GYO in Brief SAF GYO was formed as a union of strengths bringing the most powerful companies of the sector together under one roof. SAF GYO A.Ş. Shareholding Structure Name of Shareholder Group A Group B Total shares (units) Stake % Sinpaş Group 0 145,388,515 145,388,515 16.40 Avni Çelik 0 1,694,427 1,694,427 0.19 Sinpaş Yapı End. ve Tic A.Ş. 82,262,789 82,262,789 9.28 Sinpaş Gayrimenkul Yat. Ort. A.Ş. 61,431,299 61,431,299 6.93 Eksim Group 0 62,261,901 62,261,901 7.02 AGE Investment Holding B.V. 53,989,108 53,989,108 6.09 Abdullah Tivnikli 8,272,793 8,272,793 0.93 Ülker Group 400,000 234,275,032 234,675,032 26.47 Yıldız Holding A.Ş. 213,650,417 213,650,417 24.10 Murat Ülker 200,000 6,800,000 7,000,000 0.79 Ahsen Özokur 200,000 6,800,000 7,000,000 0.79 Gözde Girişim Sermayesi Yatırım Ortaklığı A.Ş. 4,081,842 4,081,842 0.46 Ülker Çikolata San. A.Ş. 2,942,765 2,942,765 0.33 Mahmut Mahir Kuşçulu 4 4 0.00 İsmail Bacacı 4 4 0.00 Akkök Group 0 299,016,602 299,016,602 33.73 Akiş G.Menkul Yatırımı A.Ş. 58,142,186 58,142,186 6.56 Atlantik Holding A.Ş. 19,380,706 19,380,706 2.19 Ali Raif Dinçkök 83,054,595 83,054,595 9.37 Ömer Dinçkök 62,295,125 62,295,125 7.03 Raif Ali Dinçkök 20,931,162 20,931,162 2.36 Ayça Dinçkök 8,306,017 8,306,017 0.94 Gamze Dinçkök Yücaoğlu 8,306,017 8,306,017 0.94 Mutlu Dinçkök 8,306,017 8,306,017 0.94 Alize Dinçkök Eyüboğlu 2,608,089 2,608,089 0.29 Nilüfer Çiftçi 19,380,671 19,380,671 2.19 Aslan Badi 8,306,017 8,306,017 0.94 Doğu Batı Group 0 116,284,234 116,284,234 13.12 Doğu Batı San.Ürünleri A.Ş. 8,306,017 8,306,017 0.94 Rıfat Hasan 44,852,490 44,852,490 5.06 Mair Kasuto 29,901,660 29,901,660 3.37 Nesim Özmandıracı 33,224,067 33,224,067 3.75 Public offered 28,975,385 28,975,385 3.27 Total 400,000 886,201,669 886,601,669 100.00 4 SAF GYO 2011 Annual Report Introductıon
SAF GYO Affiliates Ottoman Gayrimenkul Yatırım İnşaat ve Ticaret A.Ş. Ottoman Gayrimenkul participated in a tender held on September 12, 2007 for a building site of 15,500 m², owned by Emlak Konut Gayrimenkul Yatırım Ortaklığı A.Ş., located in the Zeytinburnu area of Istanbul, recorded under city block number 774 and parcel number 52, and acquired this land for TL 87,000,000 + VAT. After development plan implementations, this land was recorded under city block number 774 and parcel number 57, with total area of 13,534 m². Ottoman Gayrimenkul Yatırımları İnşaat ve Ticaret A.Ş. completed the concept design works for the development of the building site, located next to the coastal road along the Marmara Sea in 2010 and was granted the building license in October 2010. 355 units 38,219 m 2 Ottomare Suites Project consists of 355 housing units with a total sellable area of 38,219 m². The Ottomare Suites project, developed on the building land, consists of 355 housing units with a total sellable area of 38,219 m². The units were offered for sale during last quarter of the year 2010 and 86% of the units have been sold to date. 5
Key Indicators SAF GYO has become one of the leading players in the sector in a short period of time and reached a market value of TL 1,179,180,220 as of end-2011. 2011 2010 2009 2008 2007 Equity Development 437,021,444 54,249,197 51,059,236 50,299,085 58,952,984 Summary Income Statement Sales Revenues 585,198,037 8,525,544 8,629,923 3,698,549 1,563,146 Cost of Sales (-) (283,323,216) (1,386,956) (1,409,540) (742,949) (353,757) Gross Profit/Loss 301,874,821 7,138,588 7,220,383 2,955,600 1,209,389 Marketing, Sales & Distribution Expenses (-) (5,144,221) Overhead Expenses (-) (3,717,262) (1,776,551) (1,468,038) (1,573,166) (1,253,051) Other Operating Revenue 2,559,051 1,698,235 162,174 21,736 - Other Operating Expenses (-) (7,485,281) (315,699) (4,999) (181,678) Operating Profit/Loss (13,787,713) (78,316) (1,621,563) (1,556,429) (1,434,729) Financial Gains 61,250,601 9,234,305 11,197,410 23,243,903 6,488,052 Financial Expenses (-) (13,295,442) (13,104,616) (16,036,079) (33,296,973) (4,161,202) Ongoing Activities Pre-Tax Profit/Loss 336,042,267 3,189,961 760,151 (8,653,899) 2,101,510 Ongoing Activities Tax Income/Expense (6,553,922) Profit/Loss for the Period 329,488,345 3,189,961 760,151 (8,653,899) 2,101,510 Asset Allocation Participation Stock 14,400,000 3,600,000 2,386,428 2,053,042 100,000 Cash and Capital Market Instruments 125,438,410 8,124,156 7,985,461 8,229,111 38,198,926 Parcel/Land 0 20,880,000 21,606,866 15,730,000 Factory Building/Sales Outlet 57,760,000 71,970,000 69,500,000 65,940,000 12,090,000 Office Building 19,378,500 19,500,487 19,215,000 27,848,676 12,720,000 Residence 946,106,679 540,891 610,000 Akasya Shopping Mall Project 936,338,281 Total Portfolio Value 2,099,421,870 103,194,643 119,966,889 126,218,586 79,448,926 ISE Share Performance and Market Value ISE Share Performance 1.33 0.89 0.88 0.43 1.18 Paid-in Capital 886,601,669 56,000,000 56,000,000 56,000,000 56,000,000 Market Value 1,179,180,220 49,840,000 49,280,000 24,080,000 66,080,000 6 SAF GYO 2011 Annual Report Introductıon
Net Profit for the Period Sales Revenues 329.5 585.2 In 2011, SAF GYO posted net profit of TL 329.5 million. Sales revenues of SAF GYO reached TL 585.2 million in 2011. 2007 2008 2009 2010 Equıty Development (TL) 58,952,984 50,299,085 51,059,236 54,249,197 2007 2008 2009 2010 Sales Revenues (TL) 1,563,146 3,698,549 8,629,923 8,525,544 2011 437,021,444 2011 585,198,037 Net Profıt (TL) ISE Share Performance (TL) 2007 (8,653,899) 2009 2010 2008 2,101,510 760,151 3,189,961 2007 2008 2009 2010 0.43 0.88 0.89 1.18 2011 329,488,345 2011 1.33 Paıd-ın Capıtal (TL) Market Value (TL) 2007 2008 2009 2010 56,000,000 56,000,000 56,000,000 56,000,000 2007 2008 2009 2010 66,080,000 24,080,000 49,280,000 49,840,000 2011 886,601,669 2011 1,179,180,220 7
Key Indicators Offering a highly profitable portfolio backed by its robust financial position, in 2011 SAF GYO generated a 49% return to investors on the ISE. Projects Locations Total Indoor Area Appraisement Market Value (VAT excluded) Appraisement Rental Value (VAT excluded) Komili Factory Premises Kocaeli/Gebze 30,202 m² TL 42,545,000 TL 305,000 Mecidiyeköy Business Centre Istanbul/Mecidiyeköy 1,125.49 m² TL 3,740,000 TL 24,000 Antalya BTM Building Antalya/Kepez 4,230 m² TL 5,335,000 TL 34,000 Altunizade BTM Building Istanbul/Acıbadem 3,454 m² TL 9,880,000 TL 76,000 Fecir Business Centre Istanbul/Acıbadem 19,836 m² TL 15,640,000 TL 128,934 Akasya Göl Project Istanbul/Acıbadem 98,663 m² TL 307,578,731 - Akasya Koru Project Istanbul/Acıbadem 100,422 m² TL 250,729,519 - Akasya Kent Project-Residence & Shopping Mall Istanbul/Acıbadem 396,639.92 m² TL 1,324,136,711 - * Detailed Summary Appraiser s Report on assets of SAF GYO is presented on page 56 of this Annual Report. INDEX 63,278 64,435 61,284 60,000 69,250 63,046 63,269 62,296 53,946 59,963 SHARE PRICE ISE-100 56,061 REIT SAF GYO 5 54,518 51,267 4 SAF GYO 2011 ISE PERFORMANCE 40,000 44,138 38,523 42,006 45,823 41,573 40,208 38,960 33,298 36,057 35,734 32,462 29,849 3 ISE 100: -22.33% 20,000 1.59 1.13 1.52 1.62 1.47 1.33 2 REIT: -18.16% 0.94 0.82 0.89 0.93 0.84 0.91 1 Saf GYO: 49.44% 0 0 31/01/11 28/02/11 31/03/11 30/04/11 31/05/11 30/06/11 31/07/11 31/08/11 30/09/11 31/10/11 30/11/11 31/12/11 8 SAF GYO 2011 Annual Report Introductıon
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Vision To maintain its position as one of the leading, reliable companies in the Turkish real estate market with projects of world standards which create value for the national economy and give momentum to changes and development in the market. Mission To attain consistent growth by closely monitoring development areas in the real estate market and to provide return to its investors by achieving high levels of profitability. 10 SAF GYO 2011 Annual Report Introductıon
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Message from the Chairman 2011 was a successful year for Saf GYO as the first and second stages of the Akasya Acıbadem Project were delivered. Dear Shareholders, The reason that the long depression which prevailed between 1873 and 1896 did not yield global effects was that most of the countries had not fully completed the industrial revolution. The great depression in 1929 did not affect the whole world because one third of all countries were ruled under socialist regimes at that time. But the rules of the game changed toward 2008 s and global trade and capital movements reached peak levels. The great recession, the financial crisis that emerged in the USA in this period, affected all economies and the world met global crisis for the first time. The FED intervened in the USA-originated crisis through monetary expansion policies. As things seemed to ease down, the cradle of civilization Greece has suddenly become the cradle of crisis, followed by Italy, Spain, Portugal and Ireland. The debt crisis that emerged in these countries reached its peak level in 2011 and resulted in austerity policies applied in these countries and slowing of the global growth rate. While the global economy was affected by uncertainties, the Turkish economy attained a high growth rate backed by strong domestic demand, and continued to reduce the unemployment rate to a level where it stopped being a problem and did not compromise budget discipline although general elections took place in the same year. The Turkish Central Bank (TCB) reduced interest rates in August and loosened the monetary policy as the debt crisis in the Euro zone got deeper, while the improvements in the employment market and an increase in capital inflow caused the current deficit to rise. In this environment, the Turkish Central Bank was forced to yet again apply contractionary monetary policies during the last quarter of the year. An increase in interest rates and a decline in loan volume as result of TCB s policies, a downward trend of demand in the housing sector and the density of supply in the sector are among most important factors to watch in the year 2012. The Turkish real estate industry has been able to offer more attractive opportunities to investors by gaining significant importance particularly during last decade, despite the prevailing recession in the global housing markets. In 2011, a rise in consumer confidence to pre-crisis levels along with high growth reinforced the dynamism in the housing and employment markets; as a result the real estate investment trust sector enjoyed 10% growth and an increase in employment of 1.9 million persons. In addition, we anticipate that the sector will realize 6-7% growth in 2012, considering that the decelerating yet high level of strong domestic demand has protected the national economy against foreign demand originated shocks, and that the TCB declared that all monetary policy instruments will be used for expanding purposes in case of any slowdown in economic activity as well as taking into account the urban transformation project, 2B and the law of reciprocity. The Istanbul Stock Exchange witnessed the merger process of SAF Gayrimenkul Geliştirme İnşaat ve Ticaret A.Ş., seen as the diamond of the real estate sector in 2011, and Sağlam Gayrimenkul Yatırım Ortaklığı A.Ş., which was offered to the public in 2007 and maintained its sustainable growth until recently. Upon the merger of the two companies, we increased the paid-in capital to TL 886.6 million from TL 56 million and have become real estate investment trust traded on the ISE with the second highest market value. Investors who purchased real property from our Company enjoyed return on their investments up to 100%. We believe the value of the shares of the Company will improve in line with this trend. 12 SAF GYO 2011 Annual Report From the Management
2011 was marked as a successful year when we delivered the housing units of the first and second stages of the Akasya Acıbadem Project and reflected the results in our financial statements. 2012 will be the year when we concentrate on the last stage of our Akasya Acıbadem Project. 80% of the last stage units have been sold and the construction work for almost 396,000 m 2 covering common spaces and parking lots are underway. Upon completion of the Akasya Shopping and Wellness Centre, the future center of attraction on Istanbul s Asian side, it will generate substantial rental income for the Company. We will concurrently continue to earn rental income from other real properties in our portfolio while working on the development of the Ottomare Project of our affiliate Ottoman Gayrimenkul Yatırım İnşaat ve Ticaret A.Ş. For the next period, it is expected that liquidity will be at high levels due to expansionary monetary policies implemented in developed countries and that cash inflow into Turkey as well as other developing countries will continue. The TCB s announcement of using all monetary policy instruments for expansion in case of a slowdown in economic activity, the cancellation of the rule of reciprocity as regards to real property acquisition by foreign citizens in Turkey, treasury lands that are no longer considered as forested areas coming on the market and ongoing studies of various laws which would facilitate the urban transformation process are strong hints indicating that the national economy will maintain its growth in 2012. Our priority within this period will be the completion of the ongoing Akasya Acıbadem Project as well as the evaluation of the alternative investment options if appropriate market and funding conditions can be attained. It is our sincerest wish that 2012 will be a fortunate year for all our shareholders, employees, customers, suppliers and all other stakeholders. Sincerely, Avni Çelik Chairman Civil Engineer 13
Board of Directors The composition of SAF GYO Board of Directors has been subject to changes as a result of the merger process. The Members of Board who served in certain periods during the year can be found below. From January 1, 2011 to June 17, 2011: Name & Surname Murat Ülker Cahit Paksoy Mahmut Mahir Kuşçulu Mehmet Atila Kurama Nazım Özdemir Rıfat Hasan Position Chairman of the Board Vice Chairman of the Board Board Member Board Member Independent Board Member Independent Board Member From June 17, 2011 to October 31, 2011: Name & Surname Ali Ülker Mehmet Atila Kurama Ahmet Özokur Ataman Yıldız İbrahim Taşkın Mahmut Mahir Kuşçulu Position Chairman of the Board Vice Chairman of the Board Board Member Board Member Board Member Independent Board Member From October 31, 2011 to December 31, 2011: Name & Surname Avni Çelik Raif Ali Dinçkök Ahmet Özokur Gamze Dinçkök Yücaoğlu Güner Öztek Mahmut Mahir Kuşçulu Mahmut Sefa Çelik Murat Ülker Osman Baydoğan Özlem Ataünal Rıfat Hasan Sabi Ruso Position Chairman of the Board Vice Chairman of the Board Board Member Board Member Independent Board Member Independent Board Member Board Member Board Member Independent Board Member Board Member Board Member Independent Board Member 14 SAF GYO 2011 Annual Report From the Management
Avni ÇELİK Chairman of the Board, Civil Engineer Avni Çelik was born in 1950 in Alaca and graduated from the State Engineering and Architecture Academy, Department of Civil Engineering. Since 1968, he has been actively involved in industrial and business life, including his graduate studies, for over 40 years. He started initiatives in 1974 when he established Sinpaş Yapı Endüstrisi ve Ticaret A.Ş., followed by Seranit Granit Seramik Sanayi A.Ş., Mikronize Mineral End. A.Ş., Prodek Yapı Dekorasyonu San. Tic. A.Ş. and other companies and finally the Sinpaş Group. Mr. Çelik is a civil engineer and a member of the Istanbul Chamber of Commerce, the Istanbul Chamber of Industry and the Chamber of Civil Engineers and founder and/or member of Board of Trustees of the Çorum Foundation for Education, the Istanbul Trade University and the Boğaziçi Foundation. He has served as Chairman at Sinpaş REIT from its inception. Raif Ali DİNÇKÖK Vice Chairman of the Board Raif Ali Dinçkök was born in 1971 in Istanbul and graduated from Boston University, Department of Business Administration in 1993. After his graduation, he joined Akkök Group of Companies. He served in the Procurement Department of Ak-Al Tekstil San. A.Ş. between 1994 and 2000 and as Coordinator at Akenerji between 2000 and 2003. He is serving as a Member of Board of Directors and the Executive Committee of Akkök Sanayi Yatırım ve Geliştirme A.Ş. and as a Member of Boards of the Akkök Group Companies. Ahmet ÖZOKUR Board Member Ahmet Özokur graduated from Indiana University and completed his post graduate degree at the European Business School, Business Administration and Marketing Departments. In 2004, he started his career as a member of the Executive Board at Hızlı Sistem A.Ş. In 2005, he was appointed General Manager of Datateknik and became CEO of Datateknik IT Group in the same year. Following the acquisitions and mergers realized in 2006, Datateknik IT Group has become a full integrated group as a leading and innovative enterprise involved in system integratorship, distribution of computer components, software production and distribution, development of interactive applications and production and distribution of Exper branded products. In 2008, Datateknik IT Group was restructured within the Yıldız Group and then Mr. Özokur was appointed assistant to the Holding s Board of Directors and then as Project Leader at Yıldız Holding Real Estate Investments and as an Executive member at Beta Marina İşletmeciliği A.Ş. in the same year. Since January 4, 2010, he has served as General Manager of Sağlam Gayrimenkul Yatırım Ortaklığı A.Ş. Mr. Özokur is interested in water sports and is married with two children. Gamze DİNÇKÖK YÜCAOĞLU Board Member Born in 1981 in Istanbul, Gamze Dinçkök Yücaoğlu graduated from Harvard University, Departments of Economics and Psychology in 2004. She started her career at Akenerji Elektrik Üretim A.Ş. Between 2004 and 2006, she served in the finance, accounting and budget departments. She served as Deputy General manager for Finance and Accounting between 2006 and 2009. Since June 2009, she has served as Director for Financial Audit and Risk Management and served also at the Boards of Directors of the Akkök Group Companies. Güner ÖZTEK Independent Board Member Güner Öztek graduated from St. Joseph High School in 1951 and then from Ankara University, Faculty of Political Sciences. She served in the Prime Ministry Private Secretariat and in various diplomatic positions between 1971 and 1972 and then served in the Turkish Embassy in Kuwait between 1986 and 1991, as Administrative Affairs Assistant at the Undersecretariat of Ministry of Foreign Affairs between 1992 and 1995, at the Turkish Embassy in the Kingdom of Belgium, then served as Permanent Representative at WEU and as a Member of Foreign Policy Advisory Board of the Ministry of Foreign Affairs. Ms. Öztek is currently serving as Independent Board Member at SAF GYO and as lecturer at the Yıldız Technical University. She is fluent in French and English. Mahmut Mahir Kuşçulu Independent Board Member Mahmut Mahir Kuşçulu graduated from the Istanbul High School for Boys and then from Istanbul University, Faculty of Economics and earned his post graduate degree in marketing in the USA. As from 1970, Kuşçulu served as executive and Board Member at the family-owned enterprises Tamcam A.Ş. and Arsal Cam Sanayi. In 1982, he established Kutaş Dış Ticaret ve Pazarlama A.Ş., followed by Erdem Dış Ticaret A.Ş. in 1985 and served in the management and administration of both companies. Mr. Kuşçulu has served on the Professional Committees of both the Istanbul Chamber of Commerce and the Istanbul Chamber of Industry for last two decades and is a member of the Istanbul Chamber of Commerce Board. He is married with two children. 15
Board of Directors Mahmut Sefa Çelik Board Member Mahmut Sefa Çelik was born in 1975 in Ankara and graduated from Yıldız Technical University, Faculty of Civil Engineering in 1998. Then he served as Planning Engineer at Sinpaş Yapı End. A.Ş. Aqua City construction site between 1998 and 1999, as Site Manager of Infrastructure and Landscaping at the Aqua City construction site between 1999 and 2002, as Export Manager and Executive for Construction Works at Seranit Granit Seramik San. A.Ş. Istanbul & Bilecik between 2003 and 2005. He has served as Deputy General Manager of Project, Planning and Administrative Leave Processes at Sinpaş Yapı End. A.Ş. Mr. Çelik is married with two children. Murat Ülker Board Member A graduate of Boğaziçi University, Faculty of Administrative Sciences, Department of Business Administration, Murat Ülker started his professional career in 1982. In 1984, he joined the Group as the Control Coordinator and attended various professional courses (AIB and ZDS) abroad and underwent training at the Continental Baking Company, USA. For two years, Mr. Ülker worked in Middle Eastern countries in the export sector. He visited around 60 factories and plants in the USA and in Europe that operate in the biscuit, chocolate and food sectors, to gain professional experience. Mr. Ülker joined several IESC projects and realized many new projects based on the vertical integration principle. Mr. Ülker served as deputy General Manager for Business Organizations, as General Manager, as a Member of the Executive Committee and at various companies of the Group and was appointed Chairman of Yıldız Holding in 2000. Mr. Ülker is married with three children, is fluent in English and German and enjoys sailing and to traveling with his family members. Özlem Ataünal Board Member A graduate of the Üsküdar American Girls College and then from Uludağ University, Faculty of Economic and Administrative Sciences, Özlem Ataünal served as Kozyatağı Branch Manager and head of Customer Relations Department at the Head Office of İktisat Bankası T.A.Ş. between 1989 and 1994, then as Budget and Finance Manager at Akenerji Elektrik Üretim A.Ş. between 2000 and 2005. She has served as Holding Finance Director at Akkök Sanayi Yatırım ve Geliştirme A.Ş. and as a member of the Board and a Member of Executive Committees at various Group companies since 2005. Osman Baydoğan Independent Board Member Born in 1953 in İzmir, Osman Baydoğan graduated from Aegean University, Faculty of Business Administration in 1979. He served as Chief of Financial and Administrative Affairs at the Adıgüzel HEPP construction of Bahattin Gören Construction Company between 1979 and 1980. Upon the completion of the project, he served as Chief of Financial and Administrative Affairs at the Aliağa Petkim construction of Tekfen İnşaat ve Tesisat A.Ş. between 1980 and 1983. After completion of his military service, Baydoğan served in Sezai Türkeş Fevzi Akkaya STFA Holding for two years as Internal Auditor and then joined Albaraka Turk Private Finance Institution as Deputy Manager of Financial Affairs at its inception. Having served in this position for nine years, Baydoğan served as Accounting Manager for two years and as Risk Monitoring Manager for 2.5 years at the same company. Mr. Baydoğan has served as Financial Coordinator at Eksim Dış Ticaret A.Ş. since 1998 and is serving as a Member of Board at Altınapa Değirmencilik A.Ş. and as an Independent Board Member at Körfez GYO and SAF GYO. Rıfat HASAN Board Member Rıfat Hasan was born in 1941 in Istanbul, graduated from Robert College in 1961. He is currently serving as a Member of Executive Board at Akmerkez Gay. Yat. A.Ş., as Chairman at Inteks San. Tic. A.Ş., as Vice Chairman at Doğu Batı San. Ür. İhr. ve İth. A.Ş., as a Board Member at Saf G. Menkul A.Ş., as a Board Member at Sağlam GYO A.Ş., as Vice Chairman at Taç. Yat. Ort. A.Ş. and Chairman at Akdünya Eğitim San. Tic. A.Ş. In addition, Mr. Hasan is a shareholder of Akiş Gay. Yat. A.Ş. Rıfat Hasan is married with three children and is fluent in English and French. Sabi Ruso Independent Board Member Born in 1932 in Istanbul, Sabi Ruso graduated from Istanbul University, Faculty of Law and served as an independent lawyer between 1957 and 2007 and as a member of the Istanbul Bar Association. Mr. Ruso is married with two children and is fluent in French and English. 16 SAF GYO 2011 Annual Report From the Management
İhsan Gökşin Durusoy Management Consultant İhsan Gökşin Durusoy was born in 1964 in Denizli and earned his post graduate degree from Boğaziçi University, Department of Industrial Engineering in 1987 and started his career as Production Engineer at Arçelik. Having served as Financial Affairs and Data Processing Officer at İzmir Demir Çelik A.Ş. between 1988 and 1989, Mr. Durusoy joined Ak-Al Tekstil Sanayii A.Ş. of Akkök Group in 1989 as Chief of Budget Planning. Then he served as Budget Planning Manager and Strategic Planning Director, respectively. In 2007, Mr. Durusoy was appointed Deputy General Manager at Akiş, established to realize unique and large-scale real estate projects. Durusoy has served as General Manager and Board Member at Akiş Gayrimenkul Yatırımı A.Ş. since 2009. Mahmut Kayacık Management Consultant Mahmut Kayacık was born in 1976 in Köyceğiz in the province of Muğla, graduated from Boğaziçi University, Department of Political Science and International Relations in 1999 and joined the Taç Yatırım Ortaklığı A.Ş. as Financial Analyst same year. In 2002, he earned his post graduate degree from Marmara University, Social Sciences Institute, Department of International Economics with the thesis Option Markets and Use of Options for hedging Purpose. Mr. Kayacık joined Bizim Menkul Değerler A.Ş. in early 2003 and served in the Portfolio Management and Corporate Finance Departments. In early 2008, he joined Yıldız Holding and served as Assistant to the Head of the Real Estate Investments Group and then joined Sağlam Gayrimenkul Yatırım Ortaklığı A.Ş. in May 2009. Mr. Kayacık was appointed Yıldız Holding A.Ş. Real Estate Group, Deputy General Manager in 2011 and he is currently serving as a Member of the Executive Committee at Saf Gayrimenkul Yatırım Ortaklığı and a Member of Executive Committee at Starcity Outlet Centre. As holder of Advanced, Derivative Instruments, Corporate Governance Rating and Real Estate Appraisal Expert licenses issued by the Capital Markets Board, Mr. Kayacık is interested in reading and travelling. Mr. Kayacık is married with three children. Meral KANETİ MOLİNAS Management Consultant Meral Kaneti Molinas was born in 1963 in Istanbul and graduated from Robert College and then from Boğaziçi University, Department of Industrial Engineering in 1984. She started her career at Profilo Telra in 1986 and completed the International Management Program at the Istanbul University same year. She started at Profilo as an Industrial Engineer and served in various positions for 23 years. During the Company s expansion and the relocation of the factory, she established the integrated supply chain system. In addition, she served as Director of Budget, Planning and Control Department and the Management Information Systems Department, reporting to the General Manager and Board of Directors. After her career at Profilo ended in 2007, Ms. Molinas was appointed and is currently serving as Real Estate Project Coordinator at Doğu Batı A.Ş. She has also served as a Board Member at Akdünya Eğitim A.Ş. since 2009. Ms. Molinas is married with two children and is fluent in English, in French and Spanish. Note: In 2011, SAF GYO Board of Directors convened 24 times with the participation of the majority of the members. 17
Message from the General Manager The profit of SAF GYO totaled TL 329,488,345 in 2011, surpassing the Company s targets set for projects. Dear Stakeholders, 2011 was the year when the growth in the world economy, primarily in developed economies, has again lost ground. All financial markets with well integrated national economies throughout the world were shaken with the uncertainties that prevailed in the global economy. The ever deepening debt burden in the Euro zone countries and the spread of the Greek debt crisis to Portugal, Italy and Spain as well as the earthquake that hit Japan in March and the drop of the USA s credit rating in August were the factors impairing the environment of trust in markets. Despite all these adverse events affecting the global economy, Turkey managed to attain a high growth rate as result of adhering to financial discipline and the successful steps taken by the Turkish Central Bank as regards to monetary policy. According to data for the first three quarters of the year, the gross domestic product increased by 8.2% over the previous year. The growth of the national economy positively affected the employment figures, and the unemployment rate was reduced to 9.1% in November 2011 from 11% in November 2010. In 2011, the relative weakness in the national economy was observed in inflation rates. For 2011, the targeted consumer price index was set as 5.5%, yet it was realized as 10.43%, well above the targeted figure. The increase in the inflation rate also brought about an increase in interest rates. While the interest rates on government bonds was rising to double-digit figures, the interest rates applied by the banks for housing loans increased rapidly toward the year end and reached around 14%, which were in the area of 9.5% at the beginning of the year. The increase in interest rates observed during the last quarter of the year, brought the growth in housing loans almost to a standstill. The housing loan volume increased 20% during the first 10 months of the year, but then remained stable during last two months. An increase in the interest rates of housing loans, coupled with the housing supply concentrated in certain regions, resulted in a slowdown in the housing sector in 2011. On the other hand, the commercial real estate market maintained its strong momentum in parallel with the growth in the economy. Increasing population, improvement in employment levels, strong domestic demand and economic growth above expectations increased the interest of the world s leading retailers in Turkey. At the same time, the increase in household income and expenditures, the rise in consumer confidence to pre-crisis levels and the desire for expansion of the organized retail sector continued to fuel the demand for shopping malls. The number of shopping malls in Turkey increased to 300 and the leasable area per thousand persons to 100 m 2 and in aggregate to 7.5 million m 2. The turnover amount of TL 412 m 2 in 2010 increased by 14% and reached TL 468 in 2011. SAF Gayrimenkul Yatırım Ortaklığı A.Ş., established upon the merger of Sağlam GYO with SAF Gayrimenkul in last part of 2011, has become one of the top valued companies traded on the ISE. As a result of this merger, shareholders of both companies enjoyed high returns. The shareholders of Sağlam GYO that pursued a mostly rent-oriented investment strategy until recently have now become shareholders in the Akasya Acıbadem Project, the largest and most prestigious project being built on the Asian side of Istanbul while the shareholders of SAF Gayrimenkul, a non-public offered company, have become shareholders in a real estate investment trust - a public offered, transparent corporation with high liquidity volume and which is able to take advantage of various tax incentives. 18 SAF GYO 2011 Annual Report From the Management
During the last quarter of 2011, the construction of the first and second stage units of the Akasya Acıbadem Project have been completed to a large extent and 891 housing units were delivered to customers. With delivery of these units, the Company s sales revenues increased to TL 585,198,037 and net profit for the period was TL 329,488,345. Our Company has become the first real estate investment trust traded on the ISE that has attained such a level of profit. After completing construction of 199,000 m 2 for the first and second stages of Akasya Acıbadem Project, construction for last stage of the Project with a total construction area of 396,600 m 2, and total sellable residence/office area of 68,600 m 2 and leasable shopping mall area of 801,000 m 2 are underway. At the end of 2011, the overall completion rate of Akasya Kent, the last stage of the Project, is expected to be 19% and 2012 will be the year for the Company to focus on the last stage of the Akasya Acıbadem Project. Sales of residences and offices in the last stage of the Project are ongoing and as of end 2011 pre-sales of 352 out of totally 458 units have taken place. The Project is also attractive for potential leaseholders and we received almost 2,500 applications for leasable areas in the shopping mall. At the completion, this Project will be one of the most remarkable shopping and wellness centers not only in Istanbul but also in the whole country. Another project in the Company s portfolio is the Ottomare Project in Zeytinburnu, realized by Ottoman Gayrimenkul Yatırım İnşaat ve Ticaret A.Ş., where we hold a 10% participating share. Pre-sales and construction works of 355 units with a sellable area of 38,200 m 2 are ongoing. Other real estate in the Company s portfolio including the Komili Factory Building, Antalya BTM Building, Altunizade BTM Building, the office areas at the Fecir Business Centre and the Mecidiyeköy Business Centre are currently yielding regular rental income for the Company. As SAF GYO, our first priority in the coming period will be to realize the ongoing projects as committed. The results of 2011 operations and the profitability level attained have greatly strengthened our financial position; as a result, we are able to fund future investments in the ongoing stage three of our Akasya Acıbadem Project with our own resources. Upon completion of these investments and realization of the Akasya Shopping & Wellness Centre, cash outflows will be concluded and the Company will begin to gain important rental income which will lead to regular cash inflow. We intend to distribute a certain portion of this income among our shareholders while using the remaining portion for new investment opportunities. Oray Şükrü Demirel General Manager 19
Executive Management and Committees ExecutIve Management Oray Şükrü Demirel General Manager Oray Şükrü Demirel was born in 1963 in Istanbul and graduated from Kabataş Boys High School and then from the Istanbul Technical University, Faculty of Electrical-Electronics, Department of Electrical Engineering in 1987. Mr. Demirel earned his Executive MBA degree from Manchester Business School in 2002. He started his professional career in 1987 as an engineer at Bufer Elektrik and then went to Ottawa and Toronto in Canada between 1989 and 1992 and served as field engineer at SET Construction and as Life Underwriter at Metropolitan Life. Mr. Demirel served at Pimaş of the ENKA Group between 1992 and 2001, as Sales and Marketing Manager for the last five years of his employment at the Company. Mr. Demirel served as Deputy General Manager of Sales and Marketing at ITO kilit IR Ingersoll RAND, then was appointed General Manager at Gezer Deri of the Gezer Group in 2002. He served as General Manager at Sinpaş Yatırım ve İşletme A.Ş. and has served as General Manager at SAF GYO A.Ş. as from 2009. Mr. Demirel is married with two children. Ali Ulvi Dikbaş Production Coordinator Born in 1960 in Kütahya, Ali Ulvi Dikbaş graduated from the Istanbul Technical University, Faculty of Civil Engineering in 1983 and completed his post graduate studies at the Istanbul Technical University, Institute of Sciences in 1986. Mr. Dikbaş started his career as Site Chief at Temson Zemin A.Ş. and then served as Technical Office Chief at IGL-STFA Road Project between 1985 and 1987. Having completed his military service as Planning and Supervising Engineer at the Turkish General Staff between 1987 and 1988, Mr. Dikbaş served as Deputy Manager of Control at the construction of Akmerkez Shopping Mall Office Residence Project of Akmerkez Etiler Adi Ort. between 1988 and 1994 and as Project Manager at INCO A.Ş. between 1994 and 2003. He was appointed Project Manager at Ant Yapı in 2004 and then served as Project Manager at the construction of ASTORIA Shopping Mall Residence in 2005 and at the construction of SAPPHIRE Shopping Mall Residence Project in 2006. Mr. Dikbaş was appointed as Project Manager at the construction of the Akasya Acıbadem Project of SAF GYO in 2007 and is currently serving as the Production Coordinator at the same Project. Serhan Kolaç Financial Affairs Manager A graduate of Kocaeli University, Department of Business Administration in 2002, Serhan Kolaç served as Accounting and Finance Manager and Deputy Financial Affairs Manager at Polat İnşaat Malzemeleri A.Ş. of the I. Polat Holding A.Ş. between 2003 and 2007. During his assignment, he also served as project leader at Ege Seramik İç ve Dış Ticaret A.Ş., Polat Turizm Otelcilik Ticaret ve San. A.Ş., Polat Maden San. ve Tic. A.Ş., Polat İnşaat San. ve Tic. A.Ş. and other Group companies for the ERP Project of I. Polat Holding and earned the title Independent Accountant and Financial Advisor in 2007. Mr. Kolaç has served as Financial Affairs Manager at SAF GYO since 2007. Audıt Commıttee Sabi Ruso Born in 1932 in Istanbul, Sabi Ruso graduated from Istanbul University, Faculty of Law and served as an independent lawyer between 1957 and 2007 and as a member of the Istanbul Bar Association. Mr. Ruso is married with two children and is fluent in French and English. Osman Baydoğan For the CV of Mr. Osman Baydoğan, please refer to page 16 of this Annual Report. 20 SAF GYO 2011 Annual Report From the Management
Dr. Halil Cem Karakaş Born in 1974, Dr. Cem Karakaş earned his graduate degree from the Middle Eastern Technical University, post graduate degree from the Massachusetts Institute of Technology and PhD degree from Istanbul University. He started his career at the Strategic Planning Group of Koç Holding and served as CFO at the Erdemir Group between 2006 and 2010. Dr. Karakaş served as Business Development Director at the OYAK Group and as a member of the Board of various companies and has served as CFO at the Yıldız Holding A.Ş. since 2010. Dr. Karakaş is interested in diving, skiing and tennis; is fluent in English and is married with two children. Corporate Governance Commıttee Mahmut Mahir Kuşçulu For the CV of Mr. Mahmut Mahir Kuşçulu, please refer to page 15 of this Annual Report. Güner Öztek Güner Öztek graduated from St. Joseph High School in 1951 and then from Ankara University, Faculty of Political Sciences. She served at the Prime Ministry Private Secretariat and in various diplomatic positions between 1971 and 1972 and then served at the Turkish Embassy in Kuwait between 1986 and 1991, as Administrative Affairs Assistant at the Undersecretariat of Ministry of Foreign Affairs between 1992 and 1995, at the Turkish Embassy in the Kingdom of Belgium, then served as Permanent Representative at WEU and as a Member of Foreign Policy Advisory Board of the Ministry of Foreign Affairs. Ms. Öztek is currently serving as Independent Board Member at SAF GYO and as lecturer at Yıldız Technical University. She is fluent in French and English. Mehmet Topak Mehmet Topak has served as Financial Affairs and Investor Relations Manager at SAF GYO since 2010. He served as Financial Affairs and Investor Relations Director at FFK Fon Finansal Kiralama A.Ş., a company of Yıldız Holding A.Ş. Group, between 2006 and 2010. Mr. Topak is a graduate of Dokuz Eylül University, Department of Business Administration and holder of Capital Markets Advanced License, Credit Rating License and Corporate Governance Rating License. Mr. Topak is currently serving as Independent Accounting and Financial Advisor. He is married with one child. 21
Activities The Company realizes prestigious and high-yield projects in urban areas 22 SAF GYO 2011 Annual Report Activities
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Sector Developments in 2011 Projects, differentiated in terms of quality and design will continue to be demanded by both consumers and investors. Real Estate Investment Trusts, as capital market institutions operating subject to the Capital Markets Board (CMB) Communiqués, are obliged to offer at least 24% of their shares to the public no later than three months after establishment, pursuant to the amendment to a communiqué effective as of January 1, 2010. Pursuant to the applicable legislation, Real Estate Investment Trusts are corporate structures subject to principles of transparency and accountability. As publicly traded companies, REITs offer important advantages to investors as well as to the sector as a whole. By offering their shares to the public, companies operating in this sector can reinforce the funding resources enabling them to develop large-scale real estate projects. The investors, however, become indirect shareholders in the projects through their respective participation in REITs which they cannot realize with their individual savings. The successful performance achieved recently by the Turkish economy as well as the globally recognized experience and knowhow of local construction and contracting companies paved the way for rapid development in the real estate investment sector. Despite the uncertainties that prevailed in the global economy, the Turkish real estate and construction sector played a leading role in the growth of the Turkish economy in 2011. In 2010, the sector broke a historical record recording 17.1% growth; in 2011, it was one of the sectors of Turkey providing the highest added value and employment levels with 10% growth. Providing jobs to 1.9 million persons, the real estate and construction sector is expected to maintain its momentum backed by Turkey s dynamic and mostly young population and its robust economy. The fact that the law on reciprocity is to be enacted in the near future to facilitate real property sales to foreign citizens and urban transformation projects being implemented in metropolises, primarily in Istanbul, are two other factors which will accelerate the sector s performance. However, many companies without sufficient experience entered the real estate and construction sector, leading to the risk of a supply surplus. Based on this fact, experts argue that the market will have a fragmented form in the near future. It is anticipated that the real estate projects that are unique in terms of quality and design will continue to be preferred by the consumers as to create added value, but projects realized without analyzing the location and consumer trends may encounter demand problems in the market. 24 SAF GYO 2011 Annual Report Activities
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Projects Innovative mixed-use projects for mainly offices and residences are realized in metropolitan districts. Prestigious Projects and High Rent Yielding Real Estates SAF GYO s Akasya Project is realized on 12,000 m 2 area in Acıbadem, Istanbul using a green concept. The Göl and Koru stages have been completed in a very short period of time and all construction work, except landscaping, has been completed. Other high rent yielding real estate in SAF GYO s portfolio are the Komili Factory Building in Gebze, Kocaeli; 10 independent units with 1,125.49 m 2 usage area in the Mecidiyeköy Business Centre at Şişli - Istanbul; the Antalya BTM Building located in Kepez in Antalya; the Altunizade BTM Building located in Üsküdar, Istanbul; and the Fecir Business center located in Arnavutköy, Istanbul. 26 SAF GYO 2011 Annual Report Projects
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Akasya Acıbadem Project Focusing on quality of life, Akasya Acıbadem is fully integrated with transportation routes on the Asian side of Istanbul. Incorporating both the splendors of the city as well as nature, Akasya Acıbadem offers its residents world class standards and many social facilities. Total Land Area (m 2 ) 121,000 Total Sellable Area (m 2 ) 206,109 Akasya, the most prestigious project of SAF GYO s, is built in Acıbadem, Istanbul at the intersection of important roadways. Built on 121,000 m² of usable area using a green concept, the project has rapidly become one of the major real estate projects with its world class standards in terms of aesthetics and quality of life, followed by potential residence and office customers as well as by investors with interest. The Project consists of three stages. The units of the Göl and Koru stages have been completely sold out in a short time, the construction work has been completed on schedule and the residences in two stages were delivered to customers in 2011 and all the manufacturing work was completed, except for the landscaping. Construction of the Kent stage comprising the largest shopping mall on Istanbul s Asian side is ongoing. Some 352 units of 458 housing units of the last stage, launched as the so-called Limited Collection, were sold during 2011. The completion rate of the last project stage has reached 19%. Delivery of the residence units is scheduled for September 2013, and the shopping mall is planned to open in March 2013. As a quality of life oriented project, Akasya is integrated with the subway infrastructure which is under construction and with nearby highway routes. Thus, it aims to offer a living space within the urban area yet free from any noise and stress for the residence and office owners. SAF GYO has also built an elementary school within the Project. As a company aware of its social responsibilities, designed the Akasya Project as a self-sufficient living space. 28 SAF GYO 2011 Annual Report Activities
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Akasya Acıbadem Project The aim is to provide a living space within the urban area yet free from any noise and stress for the residence owners and office workers. Akasya Acıbadem Project Land (m²) 121,000 Number of Residences Sellable Area Building Area Leaseble Area Göl Stage 459 66,310 m² 98,663 m² Koru Stage 432 71,195 m² 100,422 m² Kent Stage 458 68,604 m² 396,640 m² Akasya Acıbadem Shopping Mall 81,000 m² Total 1,349 206,109 m² 595,725 m² 81,000 m² 30 SAF GYO 2011 Annual Report Activities