JCR Eurasia Rating has evaluated the credit rating of Akdeniz İnşaat ve Eğitim Hizmetleri A.Ş. and its subsidiaries (Ağaoğlu Group) as high investment grade and it has affirmed the Long Term National Grade and outlook as “A-(Trk)/Stable” and the Long Term

JCR-Eurasia Rating, has evaluated the credit rating of Akdeniz İnşaat ve Eğitim Hizmetleri A.Ş. and its subsidiaries (Ağaoğlu Group) as high investment grade and it has affirmed the Long Term National Grade and outlook as “A- (Trk)/Stable” and Long Term International Local and Foreign Currency ratings and outlooks as “BBB-/Stable”. The credit ratings and their details are given in the table below:

Long Term International Foreign Currency

:

BBB- / (Stable outlook)

Long Term International Local Currency

:

BBB- / ( Stable outlook)

Long Term National Local Rating

:

A- (Trk) / (Stable outlook)

Short Term International Foreign Currency

:

A-3 / (Stable outlook)

Short Term International Local Currency

:

A-3 / (Stable outlook)

Short Term National Local Rating

:

A-1 (Trk) / (Stable outlook)

Sponsor Support

:

2

Stand Alone

:

AB

Rooted form a housing solutions provider construction company named Akdeniz İnşaat ve Eğitim Hizmetleri A.Ş. founded in 1981, Ağaoğlu Group increased the scope of its activities across the years and diversified its activities with energy and tourism investments. The Group expanded its nationwide reputation driven from large scale mixed use real estate development projects realized in the near term into a wide geography and the Gulf Region in particular. The continuity of the Group’s investments in the energy sector, supported with additional acquisitions and ventures, will help diversify the income streams in the following periods.

The Company’s assets displayed an increase owing to the housing units under development with the support of the ongoing construction projects. The Group’s competent domestic and international sales & marketing network helped the continuity of the strong sales throughout 2014. The sales trend was sustained in the first half of 2015 owing to the demand from domestic and foreign investors. The development of the land plot portfolio with ongoing acquisitions is evaluated as a positive factor with regards to the sustainability of growth and controlling land costs in the medium term. The financing of the majority of the Group’s activities with customer advances supports the liquidity position limits the need for external resources. Nevertheless, the financial debt of the Group increased modestly as the investment and growth phase of the Company persevered and the cash flows generated through the operational activities were supported by the funds from financing activities. The sustainability of the strong sales trend, the progress on the adoption of higher corporate governance standards, the share of customer advances in the total financing; despite of the pressures by several factors such as the political and economic uncertainties, weakening growth dynamics and the close relationship between the construction sector and macroeconomic performance, the volatility in the money markets and the global risk appetite and the anticipated interest rate increase of FED have been evaluated as the fundamental factors for the preservation of the rating and the outlook.

In addition to the generation of most of the revenues from domestic real estate development works, projects realized and planned with international partnerships and cooperation, the amelioration of the net foreign currency position in both nominal and fractional terms, the sales to the foreign investors and the competitive management structure are the primary foundations for the affirmation of the Group’s Long Term International Foreign and Local Currency ratings at the country ceiling of “BBB-”.

Akdeniz İnşaat’s utmost shareholder Ağaoğlu Family is thought to have the capacity and the willingness to provide financial support. In this regard, the Group’s Sponsor Support Grade is evaluated as (2), denoting an adequate level within the JCR-ER rating methodology. Akdeniz İnşaat’s capacity to meet its obligations through its internally generated resources without resorting to its shareholders is affirmed as (AB) within the Stand Alone Grade, indicating a high level.

For more information related to the rating results you may visit our internet site http://www.jcrer.com.tr or contact our analyst Mr. Özgür Fuad Engin.

JCR EURASIA RATING

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