Alarko Gayrimenkul Yatirim Ortakligi : Annual Report 31.12.2022

ALARKO GAYRİMENKUL YATIRIM ORTAKLIĞI A.Ş.

Annual Report 2022

March 31, 2023

General Assembly Meeting

2022 Fiscal Year

Registered Capital

TL 150.000.000

Issued Capital

TL 64.400.000

CONTENTS

•	Message from the Board of Directors	3
• Board of Directors and Auditors	4
•	Information Regarding Members of the Board	5
•	Meeting Agenda	7
• Annual Report of the Board of Directors	8
• General Information Regarding Our Activities	9
• Additional Information Regarding Our Activities	9
•	Financial Indexes	17
• Proposal for Profit Distribution	20
•	Report on Compliance with Corporate Governance Principles	21
•	Corporate Governance Information Form	28
• Sustainability Principles Compliance Declaration	34
• Independent Auditor's Report on Annual Report	36
•	Independent Auditor's Report	38
• Financial Statements Audited by Independent Auditors	43
	- Statements of Financial Position	44
	- Statements of Comprehensive Income	46
	- Statements of Changes in Equity	47
	- Statements of Cash Flows	48
	- Notes to the Financial Statements	49

MESSAGE FROM THE BOARD OF DIRECTORS

Dear Shareholders,

The economy began to recover at the close of 2021 when the COVID-19 pandemic, which had a significant impact on social and economic life, started to wane, and this trend continued in 2022. The rises in the general level of prices, which were previously believed to be temporary, took on a permanent character as a result of both the increase in demand brought on by this recovery and the persistence of issues in the supply process. Significant increases in inflation rates were caused by the unusual rise in energy costs brought on by geopolitical risks and the escalation of tensions into a hot war between Russia and Ukraine. As a consequence, we saw inflation rates in the world and in our country that had not been seen in many years.

Rising prices, particularly energy prices, have significantly reduced the purchasing power of low- and middle-income households. Governments have had to resort to various measures to mitigate this impact. These developments have made the fight against inflation a priority target for central banks once again. In anticipation of a brief increase in inflation, interest rate increases were kept modest beginning at the end of 2021, with aggressive rate increases gradually replacing them. Despite these rate hikes, by the end of 2022, inflation rates remained high, albeit with a pullback. It is anticipated that central banks, particularly those of advanced economies, will continue to raise interest rates in the first half of 2023, though at a more moderate pace. Tight monetary policies and rising interest rates have made it increasingly difficult to obtain affordable investment financing. All of these developments, combined with changes in geopolitical risks, will place downward pressure on growth rates in 2023.

Turkish economy continued to recover in 2022. Real growth was 7.5% in the first quarter, 7.7% in the second quarter, and 3.9% in the third quarter. The slowdown in growth that began in the third quarter continued in the fourth quarter, in line with international trends. The latest figures point to a real growth rate close to 5.5% for 2022. Again, in parallel with global developments, we witnessed a significant increase in inflation rates. Annual consumer inflation was 64.27%, while producer inflation reached 97.72%. While many central banks around the globe raised interest rates, the Central Bank of the Republic of Turkey maintained its policy of lowering interest rates. The policy rate was 9% by the end of 2022. Different policies were adopted to combat inflation and the rise in exchange rates. The success of these measures will be determined in 2023. Despite the slowdown in recent months, inflation is likely to remain higher than the desired level for at least some time in 2023.

Thanks to its strong asset and cash position, 2022 was a good year for our Company. Rental income from our assets has increased as the economy has recovered, particularly in the tourism sector. We expect this trend, especially the growth in the tourism sector, to continue in the coming years. In this background, we began a large-scale renovation and modernization investment in our tourism facility in Bodrum, which we included in our portfolio in the fourth quarter of 2021 in accordance with our long-term objectives. We have secured the necessary financing and made the necessary organization to complete this investment as quickly as feasible. We expect this facility to be a regular and significant source of income from 2025 onwards.

As always, we will look for favorable opportunities to strengthen our asset portfolio and make the best use of our assets in 2023.

Our Company successfully completed 2022 by adapting to rapidly and unexpectedly changing conditions. We would like to thank all of our employees who contributed to this process through their creative and selfless work, as well as our valued shareholders who have supported us in our endeavors.

With these feelings and thoughts, we greet you all with respect and love and wish you a healthy and peaceful year.

Board of Directors

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