Distinguished Stakeholders,

With respect to global economy, the year 2019 indicates at a period of relatively increased risks and heightened unfavorable anticipations.

In 2018, protectionism in global trade exacerbated the trade wars between the US and China, and made the headlines as a threat hovering over global economic growth. Having realized rate hikes in 2018, the Fed downsized its balance sheet in accordance with the projections; these steps created effects that served to tighten global liquidity conditions and curb the growth rates of emerging countries, particularly those with a high saving deficit. As global liquidity was channeled mostly to secure markets in 2018, capital flows to emerging countries, with which Turkey belongs, were weak.

The World Economic Outlook released by the IMF in January 2019 underlined that the expansion of global economy slowed down. The IMF preserved its estimation of 3.7% global growth for 2018, and revised its 2019 growth projection as 3.5%.

The protectionist interventions in global trade negatively affected the exports performance of the Eurozone as well, leading to region-wide economic deceleration. In addition, the European Union continues to be pressured by various political tensions stemming mainly from the Brexit process, and from some of its members including Italy and France.

Growth of the Turkish economy adopted a sharp deceleration trend, and the economy is projected to display a low performance also in 2019.

After registering 7.2% and 5.3% growth rates in the first and second quarters of 2018, the Turkish economy began losing momentum amid the environment of soaring exchange, inflation and interest rates. Growth decelerated rapidly in the third quarter of the year to 1.6%. In the process, domestic demand declined, while industrial production decreased and employment was negatively affected.

When the risks in global economy, volatility in capital flows and the ongoing vulnerabilities in the Turkish economy are taken into consideration, 2019 is predicted to be a tough year for the national economy.

While the “New Economy Program” declared by the government in September 2018 set reconstitution of price stability and financial stability as the main goals, emphasis was also placed on economic stabilization to be experienced in this process and on budget discipline. We are of the opinion that the outcomes of the implementation of the declared program will come at the top of the factors that will determine the economic outlook in the period ahead.

Our sector is going through a rough period.

In 2018, the construction industry suffered from a sharper loss of momentum than the overall economy, and grew by a mere 0.1% in the first three quarters, taking 7.6% share out of the GDP in the same timeframe.

The problems that became evident in the economy in the second half of 2018 and the rise in housing loan rates led to 2.4% drop in housing sales on an annual basis. In an attempt to restrain the decline in housing sales, various actions were taken including reduction of the VAT and title deed charges imposed on housing sales, and low-rate housing loan campaigns.

It is believed that the stagnation experienced in the real estate market, sales and leases will persist also in 2019. Reinstatement of confidence and stability, along with a decrease in interest rates to reasonable levels are considered as the key elements to overcome the demand and financing issues suffered in our sector in the year ahead. On the other hand, public incentives to be provided to the sector will also be telling with respect to the performance of the sector.

Our goal is to share a more livable future.

Despite the overall economic hardships and stagnation in its operating environment, İş REIC effectively managed its real estate portfolio, and took the necessary actions amid variable market conditions on the back of its strong structure in 2018.

The main strategy of İş REIC is to increase sustainable income flow and profitability through a solid portfolio composition, and create high value for its stakeholders. Always developing projects that are compatible with the natural environment and the texture of the city, are focused on driving their locations toward improvement, and observe contemporaneity and convenience, İş REIC is committed to signing its name under new achievements while adhering strictly to its priorities also in the period coming.

On behalf of our Board of Directors and myself, I would like to thank all our stakeholders, who, I am confident that, will always stand by us as we carry our goals further and forward.

Yours sincerely,

Ömer Karakuş

Chairman