Turkish REITs & Real Estate Market

Cenk Arson, Rönesans Gayrimenkul Yatırım A.Ş.

MIPIM, March 2012

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Agenda

I. Rönesans Gayrimenkul Yatırım A.Ş.

II. REITs in Turkey

III. Fundamental Market Drivers

I. Office Market

II. Retail Market

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Rönesans Gayrimenkul Yatırım A.Ş.

Istanbul

Izmir

Ankara

Malatya

Adana Gaziantep

Istanbul

Antalya

Samsun

Şanlıurfa

K. Maraş

St. Petersburg

St. Petersburg

Surgut

Novosibirsk

Yaroslavl

Properties under development

Land

Retail

Office

Mixed use

■ Commercial real estate developer and investor.

■ Focuses on two markets; Turkey and Russia and on two asset classes; retail and office.

■ 13 yielding assets with a total GLA of c411,000 sqm(1).

■ 34 properties in portfolio, 21 in Turkey and 13 in Russia.

■ 11 projects under development.

■ Total GAV: US$2.3 bn(2), owned GAV: US$1.7 bn(2).

■ EPRA NAV: US$1,285 mn(2).

(1) As of Dec 31, 2011, (2) As of Sep 30, 2011, excludes two assets acquired in 4Q11.

Portfolio Value by Development Status (9M11)Portfolio Value by Development Status (9M11)

Development Pipeline

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Concept: Optimum Outlet Expected GLA: 54,950 sqmCompletion year(1): 2012RGY: 99.99%Latest Milestones:98% pre-leased, opening on March 30, 2012

Optimum İzmir Ronesans TowerIstanbul

Concept: Retail and hotelExpected GLA:94,180 sqmCompletion year(1): 2014RGY: 99.99%Latest Milestones:Concept design completed

Küçükyalı Shopping Centre & Hotel

Concept: OfficeTotal GLA: 11,851 sqmCompletion year(1): 2013RGY: 89.04%Latest Milestone: Project finance in place, construction works started in 1Q12

Kahramanmaraş

Concept: Shopping mallTotal GLA(2): 57,500 sqmCompletion year(1): 2013RGY: 49.99%Latest Milestone:Project acquired in May 2011, project finance and building permit in place, construction works started in 4Q11

Samsun SC & Hotel

Concept: SC and HotelTotal GLA: 79,899 sqmCompletion year(1): 2013RGY: 49.99%Latest Milestones:Acquired in Feb 2011;Construction works started in 2Q11

Concept: Shopping mallTotal GLA: 64,789 sqmCompletion year(1): 2013RGY: 84.59%Latest Milestone:Construction works started in 2Q11

Renaissance Pravda

Concept: OfficeTotal GLA: 18,383 sqmCompletion year(1): 2012RGY: 89.04%Latest Milestone:Construction works started in 3Q11

Mecidiyeköy Office

Aura Surgut Renaissance Premium

Şanlıurfa

Concept: Shopping mallTotal GLA(2): 50,000 sqmCompletion year(1): 2013RGY: 99.99%Latest Milestone:Acquired in August 2011

Concept: OfficeTotal GLA: 40,447 sqmCompletion year(1): 2014RGY: 99.99%Latest Milestone: Building permit in place

2012

Concept: OfficeTotal GLA: 10,747 sqmCompletion year(1): 2012RGY: 99.99%Latest Milestone:Construction works started in 2Q11

2013 2014

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Agenda

I. Rönesans Gayrimenkul Yatırım A.Ş.

II. REITs in Turkey

III. Fundamental Market Drivers

I. Office Market

II. Retail Market

Turkish REIT Regulation

■ Regulation on Turkish Real Estate Investment Trusts (REIT) was passed in 1995.

■ Brings special tax benefits to REITs:

• Corporate tax exemption,

• 0% withholding tax on corporate earnings and dividends paid out,

• VAT exemption on security purchases to portfolio,

• Stamp duty exemption on real estate sales/purchase contracts and promise-to-sell agreements.

■ Investor Friendly:

• Transparency (Valuation & Transactions),

• Stronger corporate governance,

• Encourages IPOs and access to capital markets.

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Listed REITs

■ 24 listed REITs

■ Total Mcap: 13.1 bn(1), 3% of the total market capitalization on the ISE.

■ Aggregate NAV: 15.8 bn(2) as of June 30, 2011(3).

■ However, majority of REITs are small with an NAV of less than TL0.3 bn.

■ Emlak Konut REIT alone accounts for 44% and 35% of the total Mcap and NAV.

■ REIT IPOs gained pace after CMB lowered the minimum floatation ratio from 49% to 25% at YE09.

■ 9 REITs have listed their shares since then (6 in 2010, 2 in 2011 and 1 ytd in 2012) with a total IPO size of TL2.1 bn.

■ Moreover, 5 REITs are preparing to come to the market.

(1) Total Mcap excludes EGS REIT but includes Özak REIT, which was listed on Feb 15, 2012. The Mcaps are as of March 1, 2012 (2) Total NAV excludes EGS REIT and Özak REIT. (3) Due to a regulatory change, REITs ceased publishing their NAV tables after June 30, 2011. 7

Evolution of No. of REITs & NAV on ISEEvolution of No. of REITs & NAV on ISE

Source: CMB, ISE

(1) excludes Özak REIT which was listed in Feb 2012.

Listed REITs

Ranking of Listed REITs by NAV - (bn TL, as of June 30, 2011)*Ranking of Listed REITs by NAV - (bn TL, as of June 30, 2011)*

Source: ISE

*Excludes EGS REIT, which has a negative NAV as of June 30, 2011 and Özak REIT, which was listed on the ISE on February 15, 2012.Due to a regulatory change, REITs ceased publishing their NAV tables after June 30, 2011.

Total NAV: TL15.8 bn

Sector avg: TL0.7 bn

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Portfolio Composition of Listed REITs

■ Residential is the largest asset class with a 29% share followed by retail (25%).

■ Offices and hotels have a relatively smaller 8% and 5% shares

■ REITs have a sizable landbank, constituting 32% of their real estate portfolio.

Composition of Portfolio (June 30, 2011) Composition of Portfolio (June 30, 2011)

Source: CMB Monthly Reports

Real Estate Portfolio by Asset Type (June 30, 2011) Real Estate Portfolio by Asset Type (June 30, 2011)

Source: ISE

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Market Performance of REITs

■ REITs tend to outperform the broader market when the economy is growing and especially when the interest rates are falling.

■ Based on the June 30, 2011 appraisals, REITs’ average gross rental yields are 6.6% in retail, 8.1% in office and 9.3% in industrial segment.

■ REITs were a major underperformer during 2008 due to rising interest rates. But, they bottomed out in late 2008 and caught up with the overall market in 2009 thanks to the sharp reversal in interest rates, improving economic fundamentals and pent-up demand. REITs became an underperformer again from 2Q10. Yet, this changed after Emlak Konut REIT’s IPO in December 2010, which in view of its large size, triggered a considerable interest in the sector.

■ REITs beat the overall market by a slight 7% in 2011 and they are performing in line with the ISE-100 so far in 2012.

Source: ISE

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Agenda

I. Rönesans Gayrimenkul Yatırım A.Ş.

II. REITs in Turkey

III. Fundamental Market Drivers

I. Office Market

II. Retail Market

■ Istanbul is the only meaningful office market with the current stock of 2.9 mn sqm as of YE11.

■ 40% of this stock is located in the CBD and 60% in non-CBD.

■ New supply reached 326,000 sqm in 2011 following the 235,000 sqm and 250,000 sqm delivered in 2010 and 2009, respectively.

■ However, high quality office supply is still limited, especially in the CBD, as most of the existing stock is low quality office space converted from residential apartments.

Existing Office Stock by Submarkets (Istanbul)Existing Office Stock by Submarkets (Istanbul)

Source: Jones Lang LaSalle (JLL), January 2012

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European Office Stock Comparison (mn sqm) European Office Stock Comparison (mn sqm)

Source: Jones Lang LaSalle

I - Turkish Office Market - Stock

■ Ongoing shift from outdated offices to modern premises.

■ GDP growth,

■ FDI inflows,

■ Relocation and expansion needs triggered by sector consolidation and M&As,

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Major Drivers:

Real GDP Growth (YoY, %) Real GDP Growth (YoY, %)

Source: TurkStat

FDI Inflows FDI Inflows

■ Turkey was one of the world’s top performers in economic growth during 2011.

■ FDI inflows started to pick up in 2011 driven by Turkey’s relatively stronger standing vs. its peers in the current global environment.

■ Foreign interest may further escalate with a pending improvement in Turkey’s credit rating to investment grade.

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GDP Growth & FDI Inflows

Source: Turkish Ministry of Economy

Avg turnover per company in manufacturing sectorAvg turnover per company in manufacturing sector

Source: Eurostat, Turkstat, 2004 and 2005 Data

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M&A Activity and Consolidation (‘0

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UR

)

M&A Activity in Turkey (US$ bn)M&A Activity in Turkey (US$ bn)

Source: Deloitte, Annual Turkish M&A Review 2011

■ M&As & sector consolidation are another major driver of office demand in Turkey.

■ Turkey still lags far behind the developed European countries in terms of company scales and there is still significant scope for further consolidation in many sectors.

■ In 2011, total M&A volume in Turkey reached US$15 bn in 241 transactions despite the lack of big ticket privatizations.

■ Foreign investors accounted for 74% of the total deal volume vs. 36% in 2010.

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Agenda

I. Rönesans Gayrimenkul Yatırım A.Ş.

II. REITs in Turkey

III. Fundamental Market Drivers

I. Office Market

II. Retail Market

■ Growing and young population,

■ Urbanization,

■ An expanding middle class,

■ Changing shopping preferences towards modern retail outlets,

■ Growth in organized retail.

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II - Turkish Retail Market - Drivers

Age Profile ComparisonAge Profile Comparison

■ Turkey has the youngest and the second largest population in Europe.

■ 67% of the Turkish population is aged under 40 and only 7% above 65.

■ Turkey also has one of the highest population growth rates in Europe (1.1% p.a. vs. EU average of 0.4% p.a.).

■ The urbanization of the Turkish population continues, which bodes well for the retail market.

Source: Eurostat, TurkStat

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Urban Population (% of Total Population)Urban Population (% of Total Population)

Source: TurkStat, UN Urbanization Prospectus

Strong Demographics & Urbanization

Emerging Middle & Affluent Class

Middle & Affluent (MA) Class PopulationMiddle & Affluent (MA) Class Population

149

70

39 36 31 2921

13 11 10

13,183 13,57815,303

25,700

7,684

13,137

17,85615,575

11,910 11,035

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15,000

20,000

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30,000

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60

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120

150

180

China Russia Mexico Brazil India Poland Turkey Argentina Malaysia Indonesia

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MA class population (m) GDP per capita MA class

Source: Pramerica Real Estate Investors Research, December 2009.

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■ Turkey has the second highest middle and affluent class per capita GDP among emerging economies.

■ Fuelled by the normalization in the Turkish economy, MA population is increasing in both number and purchasing power.

■ Turkish MA population is projected to grow by 13 mn to 34 mn over the next 10 years.

Household Dynamics & Retail Turnover

Source: CBT, BRSA, TurkStat, ECB

Household Debt to GDP (1H11)Household Debt to GDP (1H11)

■ Turkey still has a low household indebtedness compared to EU countries.

■ As of 3Q11, Turkish household debt consisted of 36.2% consumer loans, 35.5% mortgages, 23.7% credit card payables and 4.5% auto loans.

■ Turkish retail market recorded significant growth over the last 6 years.

■ This was sustained even during the crisis years of 2008-2009.

■ However, despite this strong growth, organized retail still acounts for 40-42% of the overall retail market vs. 80-90% in developed countries, signalling more way to go for Turkey.

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Retail Market TurnoverRetail Market Turnover

Source: Trade Council of Shopping Centres & Retailers

Has The Market Been Oversupplied ?

GLA Evolution in Turkey (sqm)GLA Evolution in Turkey (sqm)

Source: Council of Shopiing Centres, Jones Lang LaSalle January 2012

CAGR (2005-2011): 24%

■ The growth in GLA accelerated from 2006 onward.

■ As of YE11, there are 302 shopping centers in Turkey encompassing a total GLA of 7.6 mn sqm.

■ Based on the existing stock and pipeline projects, Turkey is the seventh largest retail market in Europe and also has the second largest development pipeline among European countries after Russia.

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European Shopping Centre Pipeline (2H11/2012)European Shopping Centre Pipeline (2H11/2012)

Source: Cushman & Wakefield, September 2011

(mn sqm)

Retail Density

GLA per 1,000 CapitaGLA per 1,000 Capita

Source: Cushman & Wkaefield, September 2011

■ Turkey’s retail density stands at 104 sqm per 1,000 capita as of YE11.

■ Based on the current development pipeline, it is projected to reach 124 sqm by the end of 2013.

■ Ankara and İstanbul are the two leading cities in GLA per 1,000 capita with 236 and 232 sqm, respectively, which have already caught up with the EU averages.

■ While major cities have attained a certain level of saturation and there exists an oversupply in some parts of those cities, Turkey, as a whole, is still underpenetrated and lags behind most of the EU countries.

■ As of 3Q11, there is still no modern retail supply in 32 cities out of the total 81 cities in Turkey.

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Conclusion

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Strong Market Fundamentals

Supportive Regulatory Framework

Value opportunities for investors in Turkish

REITs