Dear Shareholders,

2016 was a year in which serious developments took place both in Turkey and the world. The fact that Donald Trump was elected president in the USA and England's decision to leave the European Union with a referendum were two developments that marked 2016. Moreover, the developments in the Middle East and mainly in Syria and the terrorist incidents in the world in general were also developments that had global impacts in 2016. Turkey experienced serious major incidents such as the coup attempt of July 15th, the terrorist incidents and the Euphrates Shield Operation military intervention carried out in Syria.

The fact that the USA President Trump started to implement protective economic policies as soon as he assumed office created distress in the world as a whole. As a first action Trump decided to withdraw from the Trans-Pacific Partnership and to renegotiate the free trade agreements. He gave signals that he would raise the customs walls in order to attract investments and particularly those in the automotive sector to the USA and issued a decree for the construction of a wall along the Mexican border. When assessed together with England's decision to leave the European Union, these developments increase the fragility regarding global economy.

In the light of these developments, while the world economy grew at a rate of 3.1 % in 2016, the growth rate of developed economies was around 1.6 %. The growth rate of developed economies proceeded below potential levels, namely in the USA 1.6 %, the Euro Zone 1.7 %, England 2 % and Japan around 0.9 %. Although developing economies showed a growth rate of 4.1 % in 2016, the growth rate of China attained 6.7 %.

It is estimated that world economy will recover some in 2017 and will attain a rate of approximately 3.4 %. It is also estimated that the growth rate in the USA economy will be greater than in 2016 and that of the Euro Zone and China will be closer to the rates of 2016.

2016 has been a difficult year for Turkish economy. While the growth rate was around 2 %, the unemployment rate attained 12.1 %. The foreign trade deficit decreased at a rate of 11.7 %, current deficit reached US$ 32.6 billion. The ratio of the current deficit to the GNP fell below 4 %. Despite all the unfavorable conditions, the budget deficit was TL, 29,3 billion and its ratio to the GNP was 1.14 %. Inflation at CPI level was 8.53 %.

When taking into consideration developments such as the increasing protectionism trends in the world in general, decrease in capital flow to developing countries and the fact that international rating agencies dropped Turkey's grade to below investment grade, we estimate that Turkish economy will show a growth rate of 3 % in 2017. The negative effect of the increase in foreign exchange rates on inflation will begin to be seen in 2017, and unemployment will continue to be a major problem. The USA Central Bank, FED, seems to have decided to increase interest rates in 2017. In that case, inevitably, the monies of the developing countries will lose more value against the US dollar and the borrowing cost from international markets will increase.

The construction sector continued to be the leader of Turkish economy in 2016, too. Despite all the negative conditions, the housing sales increased by 4 % attaining approximately 1.4 million units due to the drop in housing loan rates and VAT rates. However, the stocks in housing continued to increase despite these sales.

Our company continued to obtain rent income from the highly prestigious real estate in its portfolio and at the same time continued to sell the housing in its existing stock. We are intending to carry into effect the projects whose development works are continuing when the conjuncture is favorable

We would like to thank you our esteemed shareholders who have always supported us and all our personnel who have worked diligently.

With these thoughts and feelings we would to extend our respects and regards to your esteemed committee.

Board of Directors