Azrieli Group Releases Strong Results in Q1/2019

TEL AVIV, Israel, May 22, 2019 /PRNewswire/ --

Financial Highlights for Q1/2019

    --  NOI increased by 8%, totaling NIS 399 million, compared with NIS 371
        million last year.
    --  Same Property NOI up 6% compared with last year.
    --  FFO up 27%, totaling NIS 339 million, compared with NIS 266 million last
        year. FFO excluding senior housing up 12%, totaling NIS 288 million,
        compared with NIS 257 million last year.
    --  Net profit up 42%, totaling NIS 369 million compared with NIS 259
        million last year. Comprehensive income up 9% in the quarter, totaling
        NIS 301 million.
    --  During the quarter, the Group invested NIS 151 million in investment
        property, development, the construction of new properties and the
        upgrade and betterment of existing properties.

Eyal Henkin, CEO of Azrieli Group (TASE: AZRG): "The first quarter was characterized by continued growth in all of the operating parameters. The office sector in Israel and overseas continues to be strong with high double-digit growth. In the retail and malls sector, we are witnessing the fruits of our significant investments over the course of last year in strengthening the mix while expanding the entertainment and leisure offerings. The recent developments with respect to the online retail sector in Israel illustrate the importance of the investments that we have made, and continue to make, in adapting the malls to the constantly changing business environment. We believe that the characteristics of the Israeli market are similar to other major cities around the world where the prime leading properties continue to see high-level shopper traffic, which is also expressed in considerable growth in store revenues. We are continuing to vigorously develop several projects in parallel, which are expected to add leasable space of some 160 thousand sqm in the short-term, with a total investment of around NIS 2 billion. These projects, alongside longer-term projects, will constitute important growth engines for the continued development of the Group."

In order to discount this timing difference, the store revenue figure is reported for months 1-4 of each year.

Occupancy rates and store revenues

    --  The occupancy rate in the malls segment was 98% and in the offices
        segment in Israel 99%.
    --  During January-April (in order to include the effect of the Passover
        holiday which last year fell in March and this year in April), a 3.1%
        increase in store revenues was recorded in Azrieli malls compared with
        the same period last year. Similar growth was recorded also in the
        same-property store revenues.

Developments during and after the quarter

    --  Azrieli Sarona - as of the report release date, all of the office space
        has been leased-up, and 100% of the office space has been occupied
        (including an option for one floor that was granted to a significant
        tenant and expires at the end of 2019). At full occupancy the property
        is expected to NOI of NIS 200-210 million.
    --  Bond raising - in January 2019, the Company completed the offering of
        two new series and raised around NIS 1.5 billion. In the tender, demand
        of close to NIS 3 billion was recorded from a broad range of leading
        institutional bodies. The two new bond series (E and F) are
        index-linked, with duration of approx. 7 years and approx. 10 years,
        respectively. In Series E, the Group raised around NIS 1.2 billion at an
        interest rate of 1.77%, and in Series F, it raised around NIS 300
        million at an interest rate of 2.48%.
    --  The sale of Leumi Card - at the end of February 2019, the transaction
        was closed for the sale, together with Bank Leumi, of all of their
        holdings in Leumi Card (the Company's share is 20%) to the investment
        fund Warburg Pincus in consideration for NIS 2.5 billion. The Company's
        share in the proceeds is NIS 500 million (subject to adjustments).
    --  Bank Leumi shares - the sale of 0.5% of Bank Leumi shares in
        consideration for around NIS 180 million.

Balance Sheet (extended standalone) as of March 31, 2019

    --  The Group has cash, deposits and short-term investments in the sum of
        NIS 2,358 million.
    --  Net debt totaled NIS 8.4 billion.
    --  The value of investment property and investment property under
        construction totaled NIS 27.5 billion.
    --  Equity to assets ratio is 51% and net debt to assets ratio is 25%.
    --  Unmortgaged properties amount to NIS 22 billion.
    --  EPRA NAV per share was NIS 166 per share, compared with NIS 157 per
        share on March 31, 2018.

Conference call

The Company will hold its quarterly conference call, hosted by the Group's senior management, today (Wednesday, May 22, 2019) at 16:00 Israel local time (14:00 CET; 14:00 United Kingdom time and 09:00AM Eastern Time). The call will include a review of the Company's Q1 2019 performance as well as a discussion of the Company's strategy and expectations for the future. A Question & Answer session will follow the discussion.

To participate, please dial 03-9180664 from Israel, 1-888-407-2553
from the U.S., 0-800-917-9141
from the U.K., 0-800-024-9936
from the Netherlands, 1-888-604-5839 from Canada, or +972-3-9180664 internationally.

(1) Jewish holidays have a material effect on store revenues in Israel. In 2018, the holiday of Passover fell on March 31, and therefore the effect on the store revenues of pre-holiday shopping was included in Q1/2018, while in 2019 the holiday fell on April 20, and therefore the effect on store revenues of the pre-holiday shopping was included in Q2/2019, in April.

For further details:

Moran Goder
Head of Capital Markets and Business Development Analyst,
Azrieli Group Ltd.
morango@azrieli.com

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SOURCE Azrieli Group