Akfen Gayrimenkul Yatirim Ortakligi : 01.07.2023-31.12.2023Third Quarterly Activity Report

Activity Report

Overview

5

Akfen REIT Portfolio 17

Financial Development

44

Overview of Akfen REIT 5

Vision / Mission 6

Strategy 7

Milestones 8

Developments in Q1 2023 10

Developments after the 3rd

Quarter of 2023 10

Organizational Structure 13

Shareholding Structure 14

Subsidiaries/Affiliates 15

Operational Map 16

Portfolio Table 18

Novotel and Ibis H.Istanbul 19

Ibis H. Istanbul Esenyurt 20

Novotel Istanbul Bosphorus 21

Ibis Hotel Tuzla 22

Ibis Hotel Bursa 23

Ibis Hotel Alsancak 24

Ibis Hotel Eskisehir 25

Ibis Hotel Ankara Airport 26

Ibis Hotel Adana 27

Novotel Trabzon 28

Novotel and Ibis Hotel Gaziantep 29

Novotel and Ibis Hotel Kayseri 30

Merit Park Hotel Kyrenia 31

Ibis Hotel Moscow 32

Ibis Hotel Kaliningrad 33

Ibis Hotel Yaroslavl 34

Ibis Hotel Samara 35

Samara Office 36

Bodrum Loft 37

Isparta Student Dormitory 38

Kütahya Student Dormitory 39

Söğütlüçeşme Project 40

Yalıkavak Project 41

Kıyıkışlacık Project 42

Hadımköy Factory 43

Summary Financial

Information 45

Investment Properties 46

Portfolio Table 46

Rental Incomes 47

Total Financial Debt 49

Related Party Balances 49

Affiliate Acquisition 50

Rent Expense 50 Operational and

Financial Performance 51 Accor Hotels

Operational Data 52

Share Performance 53

Portfolio Limitations 54

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OVERVIEW

AKFEN REIT Overview

Vision / Mission

Strategy

Milestones

2023 Developments after Q3

Developments after the 3rd Quarter

of 2023 Organizational Structure

Capital and Shareholding Structure

Subsidiaries / Affiliates

Operational Map

2

Overview of Akfen REIT

AKFEN REIT'S INVESTMENT PROPERTY PORTFOLIO VALUE IS TL 16.5 BILLION AS OF THE END OF THE THIRD QUARTER OF 2023*

With the "Contemporary City Hotels" project pioneered in the sector, Akfen REIT has reached a portfolio of 21 hotels, 1 holiday village, 2 dormitories and 1 office building in 16 years since 2007. Thus, Akfen REIT has become one of the leading hotel investors in Turkey, primarily with Accor expertise. The company, which started its operations in 1997 as Aksel Turizm Yatırımları ve Operatorlik A.Ş., was transformed into a real estate investment trust in 2006.

Opened to public on 11 May 2011, Akfen REIT has been traded on Borsa Istanbul AŞ (BIST) with the share code "AKFGY" since that date. As of the end of 2022, the free float rate is 44.55%. As of the end of the 9 months of 2023, the free float rate is 44.46%.

As of the end of the first 9 months of 2023, Akfen REIT share closing price was TL 4.99, (Closing market value: TL 6.49 billion/US$ 237 million). Akfen REIT is currently

It is traded on the Stars Market, entered the BIST100 in 2022 and started to be listed among the CMB's Group 1 companies in 2023. As of the end of the 3rd quarter of 2023, it started to be traded on the BIST Sustainability Index.

From Hotel Investments to Portfolio Diversification

Akfen REIT has developed Novotel and Ibis Hotel branded hotel projects in Turkey and Russia and has leased a total of 19 hotels, 15 in Turkey and 4 in Russia, to Accor Group, one of the world's largest hotel operators. Akfen REIT's portfolio also includes Merit Park Hotel in the Turkish Republic of Northern Cyprus (TRNC) and Bodrum Loft, a 5-star holiday village in Bodrum.

A transfer agreement has been signed between the Company and Merit Kıbrıs Turizm Ltd. for the transfer of Merit Park Hotel in April 2023. The purchase price is USD 70.000.000 + variable share price and will be collected in cash and in advance on the closing date of the share transfer.

As of 30.09.2023, the total number of rooms in 21 hotels owned by Akfen REIT is 3,720. Apart from the hotel portfolio, Akfen REIT has investments in an office building in Russia, two dormitory complexes consisting of 13 blocks in total in Turkey, tourism, residential and commercial real estate projects on an area of 124.072 m².

Akfen REIT has three ongoing projects: a commercial project in Istanbul Söğütlüçeşme, a villa in Bodrum Yalıkavak and a touristic project in Milas Kıyıkışlacık.

Akfen REIT's total real estate portfolio value reached approximately EUR 622 million as of the end of the third quarter of 2023.(*)

Strategic Partnerships and Long Term Leases

Akfen REIT, which became a strategic partner with Accor, one of the world's leading hotel chains, in 2005, has signed long-term lease agreements for 19 hotels opened in Turkey and Russia, generating regular and predictable rental income.

In the contracts made with Accor regarding Akfen REIT's hotels; there is a minimum guarantee condition for Akfen REIT's rental income. Rental income is determined as the higher of a certain percentage of turnover or adjusted hotel gross profit. This sharing; on the one hand, has a minimum income guarantee and on the other hand, has the potential to share the income increase to be provided by the performance of the hotels. Akfen REIT's 5-star hotel in TRNC is operated by Merit Kıbrıs Turizm Ltd. which is a subsidiary of Net Holding A.Ş., Bodrum Loft holiday village is operated by Akfen Turizm and dormitory complexes are operated by General Directorate of Credit and Dormitories ("KYK").

(*) It is shown by including the value of Merit Park Hotel, which is recognised under non-current assets classified as held for sale in the consolidated financial statements.

(**) Merit Park Hotel, the 5-star hotel of Akfen REIT in TRNC, is operated by Merit Kıbrıs Turizm Ltd. which is a subsidiary of Net Holding A.Ş. A share transfer agreement was signed between the Company and Merit Kıbrıs Turizm Ltd. in April 2023 regarding the transfer of Merit Park Hotel. The purchase price is "USD 70.000.000 + variable share price" and will be paid in cash and in advance on the closing date of the share transfer.

VISION

Akfen REIT, which carries out qualified projects in the real estate sector, has a net asset value of among the top REITs in Turkey in terms of its reliability in the sector. aims to maintain its position.

MISSION

Akfen REIT has adopted the mission of constantly increasing its regular rental income from its strong equity and qualified portfolio, while expanding its portfolio size and value to a higher level, and to provide information to its shareholders in a transparent manner in the process.

STRATEGY

Earlier dividend distribution with reduced debt and increased revenue

Growth in revenue and profitability through new investments without additionalfinancial burden

Evaluating more profitable and sustainable investment opportunities by exiting less profitable investments

Potential to make new investments, distribute dividends and repay loans early with rapidly declining net debt / EBITDA contribution and increased cash surplus due to operational profitability

Stronger balance sheet and income statement with rapidly growing assets and profitability, minimal currency risk and high EBITDA margin driven by low operational/overhead expenses

Increase in net asset value, potential to create more value in the future with the transition from premium to discountGrowing portfolio with sustainable cash flow through long-term contracts and new asset acquisitions expected to increase profitability in the long term

To be included in the BIST 50 index with increased trading volume and liquidity as a result of increased actual circulation

Milestones

2010

• • Company capital was increa-sed from TL 72 million to TL 138 million.

• • Akfen Holding bought back 32.46% of the shares held by Goldman Sachs.

• • Novotel Gaziantep (92 rooms)

• • Ibis Otel Gaziantep (177 rooms)

• • Novotel Kayseri (96 rooms)

• • Ibis Otel Kayseri (160 rooms)

• • Ibis O. Bursa (200 rooms)

  2007

  2011

  2015

  • • Goldman Sachs, became a partner in Akfen REIT by acquiring a minority stake.

  • • Novotel İstanbul (208 rooms)

  • • Ibis H. İstanbul (228 rooms)

  • • Ibis H. Eskişehir (108 rooms)

  • • Merit Park Hotel (286 rooms)

• • Akfen REIT went public on Borsa Istanbul under the code AKFGY

• • The company increased its paid-in capital from TL 138 million to TL 184 million with the public offering realized in May 2011.

• • The Company increased its share in joint investments in Russia from 50% to 95%

• • Ibis H. Yaroslavl (177 rooms)

• • EUR 220 million of project financing was secured from Credit Europe and Fibabanka for the refinancing of existing investments and the finan-cing of the last 5 Accor hotels with a maturity of 10 years.

• • Ibis H. Moskova (317 rooms)

2017

• • Shares corresponding to 2.3% of the company were bought back on the stock exchange.

• • Bulvar Loft taken over from Akfen Construction

• • Ibis H. Tuzla (200 rooms)

2018

• • Issued Convertible Bonds for the first time as a publicly traded company in Turkey (Nominal TL 170 million)

• • Akfen Holding's 1000 Group A and D privileged shares were transferred to Hamdi Akın.

• • Based on the 'Revenue Sharing Model' with the Bank of Provinc-es, the Bulvar Loft Project was completed by the end of 2018. The project, which includes 822 residences and 31 commercial areas, was built by Akfen İnşaat (99%) and Akfen GYO (1%).

2021

• • TL 238 million of convertible bonds were converted into shares and redeemed.

• • Three new assets worth 62.5 mil-lion Euros (Isparta and Kütahya Student Dormitories, Bodrum Loft) were purchased for 53 mil-lion Euros, with a 450 million TL allocatedcapital increase.

• • Revised lease agreements of 19 hotels with Accor, resulting in approximately 15% rent increase

• • EUR 177.7 mn of financial debt was refinanced with a 10-year maturity.

• • After EUR 55 mn 3rd capital increase,financial debt was re-duced to EUR 132 million.

• • BBB rating from JCR.

• • Acquired 51% stake of Fırat-can İnşaat, the owner of Söğütlüçeşme Project, for EUR 6.2 million.

• • All shares (6.2 million shares re-purchased by the company sold.

• • Euribor based interest rate on loans hedged with IRS transaction.

• • 44% bonus issue was realized and the captal was increased to to TL1,300,000,000

2019

• • Bulvar Loft Project was sold in bulk. The project generated TL 380 million in revenue

• • With the repurchases made during the year, the ratio of the repurchased shares to the company's capital reached 3.39%

2020

• • Within the scope of coro-navirus measures, 13 hotels stopped their activities for an average of 4 months.

• • 3 hotels were allocated to he-althcare workers for 2 month

• • Credit Europe and Fibabanka agreed to restructure their current 177.7 million Euro bank debt to a 10-year matu-rity after signing a protocol.

2022

• • Akfen REIT's authorized ca-pital ceiling was increased from TL 1 billion to TL 6.5 bil-lion.

• • Major shareholder Hamdi Akın sold his 10.29% stake (133,707,223 shares) in Ak-fen REIT. After-sales free flo-at ratio increased to 24.5%

• • Despite the fact that Ac-corGroup stopped its growth operations in Russia due to the Ukraine-Russia War, it continued its activi-ties in four Akfen REIT's ho-tels in Russia; tenants in Sa-mara Office also continued to work.

• • JCR Eurasia affirmed Akfen REIT's long-term national corporate credit rating of BBB. Upgraded to A.

• • Acquired 22,197 m² of land in Yalikavak, Bodrum, Muğla for TL 365 million in cash.

• • AkfenREIT started to be traded in BIST 100 under the share code of AKFGY. (1 July)

• • Akfen REIT terminated its share buyback program (September 29)

• • Akfen Holding's TL 129,990,000 and Akfen In-ternational Holding BV's TL 129,990,000 (20% of Akfen REIT) nominal TL 1 shares were sold at a price of TL 3.70.

• • Akfen REIT purchased 83,625 m² of land in Milas Kıyıkışlacık for 477 million TL.

• • Akfen REIT purchased the entire of Gökliman Invest-ment Inc., which owns an 83,625 m² land in Milas Kı-yıkışlacık, from Akfen Real Estate Port. Man. Inc. for a price of 477 million TL with a 40% discount.

2023 Developments as of the End of the 3rd Quarter

FEBRUARY

FORWARD INTEREST RATE SWAP CLOSED

FEBRUARY 16: The Interest Rate SWAPTransaction (Interest Rate SWAP) we executed with our lender (CreditEurope Bank NV) on November 10,2021, IRS) remaining balance of EUR 74 million has been settled and net of IRS transactions EUR 8.5 million profit was realized.

AKFEN KARAKÖY SHARE PURCHASE

FEBRUARY 16: 85.16% of the 8.53% shares of Akfen Karaköy held by third parties (7.25% of the total shares) was purchased by Akfen GT against Akfen GT's receivables from Akfen Karaköy's other shareholders with accrued interest until the date of share transfer, and 14.84% of the remaining shares(1.27%

of the total shares) was purchased by Akfen Holding for USD 1,500,000. Akfen GYO's direct and indirect ownership in Akfen Karaköy became 98.73%. Following the acquisition, Akfen REIT's direct and indirect ownership in Akfen Karaköy became 98.73%.

APRIL

BAFRA REAL ESTATE ESTABLISHED

APRIL 3: A new subsidiary, Akfen Bafra Real Estate and Investment Inc., was established with a capital of 50 thousand TL, and was participated in 100% of its total capital.

AMENDMENT TO CAPITAL AND SHARES ARTICLE

APRIL 12: Necessary applications were made to the Capital Markets Board and the Ministry of Trade for the amendment of Article 8 of the Company's Articles of Association titled "Capital and

CONTRACT SIGNED FOR THE TRANSFER OF MERT PARK HOTEL

APRIL 13: On 13.04.2023, Akfen REIT and Merit Kıbrıs Turizm Ltd. (the Buyer) signed a transfer agreement for the transfer of the hotel in TRNC, which has completed its investment and is operated under the name of Merit Park Hotel & Casino. The most suitable transfer of the hotel for the Company is the transfer of the hotel to our subsidiary Akfen Gayrimenkul Ticareti ve İnşaat A.Ş. (Akfen GT). Since the Hotel is to

be transformed into a special purpose company and the transaction is to be carried out in the form of a share transfer, Akfen GT will be transformed into a special purpose company in which there will be no activities and assets other than the Hotel, the conditions and principles of the realization of the conditions in the Agreement, the conditions and principles of obtaining all necessary legal permissions and the valuation to

LONG TERM NATIONAL CORPORATE RATING UPGRADED

APRIL 20: Our Long-Term National Corporate Credit Rating improved from A- (high credit quality) to AA- (very high credit quality) compared to the previous year,

Our Short-Term National Corporate Credit Rating increased from J2 (BBB) to J1+ (AA) compared to the previous year.

STARTING SHARE BUYBACK

APRIL 24: Due to the discounted share price compared to our net asset value (share price is TL 6.25 according to 31.12.2022 net asset value) and compared to the market, the Board of Directors started share buyback on 24.04.2023 in order to protect the interests of the shareholders by considering the share price and priceShares" as attached. and the new article amended at the General Assembly held on 19 April 2023 was approved by the shareholders

be made in accordance with the CMB legislation then, if the transaction is approved by the Company's Board of Directors

70.000.000 USD+Variable share price will be transferred to the Buyer. With the amount coming from the Transaction, approximately 30 million

Euro loan prepayment is planned and the rest will be used for ongoing and new investments.

movements. The duration of the buy-back program is 1 year, the maximum amount of funds that can be allocated is TL 200,000,000 and the maximum amount that can be subject to share buy-back is TL 200,000,000.

The number of shares is TL 65,000,000 (5% of the Company's issued capital).

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