Throughout the year, we concentrated on assets with high rental income, redevelopment and appreciation potential. We made our financial structure more balanced and resilient through the steps we have taken to reduce indebtedness. Critical for us in 2025 was to go beyond making new investments and to generate lasting value through the right asset, the right business model and the right timing. We are confident that the steps we have taken will provide a solid ground in the coming period with respect to a more balanced growth and sustainable income.
Our financial and operational results attested to the accuracy of our strategy
During 2025, we made consistent and determined strides towards the strategic priorities we set. As we displayed a consistent performance on the operational side, we focused on making our revenue structure more foreseeable and sustainable. The high occupation rates and solid tenant structure of our portfolio guaranteed a stable course of our rental income throughout the year. In our housing projects, we achieved progress in line with our plans, in line with the delivery and sales timelines.
During the reporting period, we carried out successful asset sales in keeping with the strategy to free our portfolio of properties with relatively limited rental income and appreciation potential, and to allocate the cash flow generated to more lucrative assets with higher efficiency, ultimately strengthening our portfolio composition. We have significantly decreased our indebtedness on the back of these asset sales and strengthened our balance sheet composition. Furthermore, we realized strategic purchases that will secure efficiency in the long term.
In this framework, we sold our office building in İstanbul Financial Center in its entirety at the price of TL 5,600 million excluding VAT, and allocated part of the fund we generated for decreasing our debts and part of it for purchasing İzmir utility building, İzmir Şehitler plot and İçerenköy office buildings. As part of the same strategy, we sold Ankara İş Tower for TL 1,215 million excluding VAT in July 2025, and used a portion of the proceeds to purchase the Parmakkapı building on İstiklal Street in Beyoğlu, İstanbul from İşbank to increase our rental income.
Furthermore, we sold our plot with an area of 1,355 m2 located in Balmumcu for USD 24.24 million excluding VAT in November 2025.
Using the cash generated on the real property during the reporting period, our financial debt declined from TL 5,606 million at year-end 2024 to TL 1,012 million by December 2025. While our financing cost which was TL 3,542 million in 2024 went down to TL 1,260 million at the end of 2025 in parallel with the decreasing need for borrowing; the disposals mentioned above significantly helped our Company attain a stronger balance sheet composition, bestowing the capability to allocate funds comfortably to our projects.
Our Company’s total assets reached TL58.2 billion as of 2025
While our portfolio is substantially made up of commercial properties, these assets constituted approximately 96% of the total portfolio. Our property investments consisted of office spaces by 62.7%, shopping malls by 16.5%, 13.7% by projects, 4.6% by inventories and 2.5% by plots.
Our rental income included within the revenues increased by 21% year-on-year to reach TL 1,767 million. Within the revenues in the amount of TL 3 billion 127 million as of 31 December 2025, 57% was derived on rental income and 41% on the housing sales from Litus İstanbul and Manzara Adalar projects. In the same period, we booked TL 1 billion 637 million in gross profit and TL 1 billion 221 million in operating profit.
Our market capitalization on Borsa İstanbul reached TL 20.1 billion as of 31 December 2025.
We stand out with our high-quality and balanced portfolio composition
As of 2025, İş REIC’s portfolio has a balanced composition comprised mainly of offices, shopping malls, projects and inventories. While commercial properties constitute the backbone of our portfolio, housing projects take on a complementary role from the standpoint of sales revenues and long-term appreciation.
While our ongoing projects warrant high occupancy rates and user satisfaction levels, cost, timing and quality management are painstakingly handled in our projects in progress. In new projects, on the other hand, we adopt a diversified portfolio approach according to location, demand and usage scenario instead of going for one type of asset. This approach increases our portfolio’s resilience in the face of market volatilities.
From out of ongoing projects, we have completed the construction of Litus İstanbul. Within the frame of the ongoing sales process of the project, we sold 60 of 98 housing units. We have initiated the sales process for 61 housing units in the first phase of our 165-villa Kasaba Modern project located in Ömerli, İstanbul, and completed the sales of 15 villas.
In December 2025, Artaş İnşaat put on sale Avrupa Residence - Şişli 2, a project co-executed with Artaş İnşaat on the basis of revenue sharing model which is developed on the plot of the former Profilo Shopping Mall and arrived at the construction phase; accordingly, we started collecting our share from the sales revenues.
For the project that will be developed on the Tuzla plot, we signed a Revenue Sharing for Plot Interest Agreement with Yapıtaş Gayrimenkul (Akgün Group) and Misek İnşaat partnership in July 2025. For this project, the revenue shares of İş REIC and the contracting partnership were determined as 35% and 65% respectively. The project in Tuzla is slated for going on sale during 2026 following the completion of the necessary preparations.
Besides our ongoing projects, we are planning a five-star city hotel investment on our Group’s plot in Kadıköy with our business partner Tecim Yapı.
Our sector remains dynamic
During 2025, the real estate sector experienced a period in which financing costs, supply/demand balance and the changes in users’ preferences have been telling. As selective demand gained the forefront in commercial properties, the decoupling between the segments got even more pronounced on the housing side. A market structure characterized by earthquake-resilience, the right location and the right concept was formed particularly on the office and retail segment. In the housing segment, on the other hand, demographic dynamics kept the demand alive despite the borrowing conditions; however, the supply corresponding to the said demand remained limited. We believe that flexibility, right timing and asset quality were the main elements that determined success in the sector rather than scale.
According to TurkStat data, housing sales increased by 14.3% on a year-on-year basis to reach approximately 1.7 million units in 2025. In the commercial property segment, turnover indices in shopping malls preserved their uptrend. Shopping mall revenue productivity index per square meter nominally increased by 29% annually in the fourth quarter of 2025 and reached 4,268 points; turnover per leasable area (in square meters) was registered as TL 20,426. On the part of offices, occupancy rates were stable particularly in İstanbul. In the İstanbul office market, total supply went up to 7.4 million m2 with the gradual integration of İstanbul Financial Center in the market.
Sustainability is a natural part of our business
To İş REIC, sustainability is not a concept that is only about environmental criteria; instead, it refers to a holistic approach that spans all the way from design to operation, portfolio management to corporate governance. We aspire to create long-term sustainable value with our projects that we develop with a focus on environmental compatibility, construction safety, energy efficiency, and design for longevity principles. International green building certifications, use of renewable energy, water and waste management practices take place within our portfolio’s standard components. Our inclusion in BIST Sustainability Index and our being a signatory to the United Nations Global Compact serve as concrete evidence of this approach.
We support the United Nations “Affordable and Clean Energy” goal and use I-REC certified green electricity both in the major properties in our portfolio and also in our head office. We take concrete steps to reduce our carbon footprint. We also publicly released our 2024 Sustainability Report drawn up in alignment with TSRS and consolidated our corporate transformation journey in this area.
As we step into 2026, we boast a robust balance sheet and high cash generation capability
On the back of our effective financial management approach and robust balance sheet composition, we ended 2025 on solid financial grounds. We are looking at 2026 as a year in which we will manifest our identity as a developer in a more articulated manner, we will be undertaking new investment projects, and our cash generation capability will be felt more strongly.
We are targeting a cash inflow of approximately USD 62 million from the ongoing sales of the housing units in our Litus İstanbul project, which our Company developed as the direct investor, and approximately USD 82 million that corresponds to our Company’s share from the sales of 105 villas from the first two phases of our Kasaba Modern project.
We are anticipating that our cash generation capacity will increase significantly in 2026 thanks to the projects we developed based on the revenue sharing model, as well as the projects that our Company developed itself. The commencement of sales in the Avrupa Residence Şişli 2 project already started supporting our cash inflow, where we are a partner with a 40% revenue sharing model, delivering us a minimum revenue share amounting to USD 65 million. Furthermore, we are projecting that our cash inflows from housing sales will continue at a growing extent provided that Tuzla Residential project sales starts in 2026; in this project, our Company has a 35% share in revenue, corresponding to a minimum projected revenue of USD 94 million.
Given all these projects, we are anticipating that our Company will attain a cash generation potential of approximately USD 300 million in 2026 and thereafter. This potential will grant our Company strategic flexibility with respect to increasing our dividend payment capability and capitalizing on new plot and project development opportunities.
We will grow with projects bearing the “Solid Signature”
In 2026, the sector’s agenda will likely be determined by the terms of financial access and cost management, ESG and sustainability criteria, demand for high-quality office spaces and flexible use models, the impact of global geopolitical risks upon investment decisions, the increasing prevalence of new segments such as logistics and healthcare, and the reflections of demographic tendencies on the sector. In the residential segment, we think that demand/supply balance will keep affecting the rent and price balances, whereas the needs of diverse sectors such as tourism, logistics and healthcare will become more prevalent/gain higher prominence.
Along this line, we are formulating our roadmap for 2026 and thereafter with the goal of expanding our portfolio qualitatively, focusing on assets possessing location advantage, high transformation and development potential, strong sustainable rental income capability and the possibility to develop high-return yielding projects, relying on our robust balance sheet composition and disciplined approach to investment.
We are capitalizing on our experience derived on our former investments in tourism and planning investments in city hotels. In addition to tourism, the healthcare sector will be another priority investment area that we will consider with a selective approach as we pursue new real estate projects for rental income generation.
All our investment decisions will continue to be determined mainly by location, tenant profile, long-term cash flow and transformation potential. We are also targeting to increase geographical diversity and to act with a growth approach that is not restricted with İstanbul but covers various big cities. We believe that this approach will add to our portfolio’s resistance and strengthen its risk vs return balance.
As our existing projects proceed according to plans, we are aiming to realize the transformations that will create value in our portfolio through our new investments. We will continue to implement projects bearing the “solid signature”, which maintain our robust balance sheet composition, generate consistent income based on a disciplined and selective approach, reinforce our long-term value proposal for our stakeholders, and will make a difference in our sector.
I would like to extend my heartfelt thanks to our principal shareholder, our Board of Directors, our shareholders, employees and business partners with whom we will walk together down our elaborate roadmap that thrills us, for their support and trust.
Sincerely,
Ö. Barlas Ülkü
CEO
