OREANDA-NEWS. Gazit-Globe, one of the world's leading multi-national real estate companies focused on the management, acquisition, development and redevelopment of supermarket-anchored shopping centers in major urban markets, announced today its financial results for the second quarter ended June 30, 2016.

References to the “Group” relate to Gazit-Globe’s consolidated statements. References to the “Company” relate to Gazit-Globe’s stand-alone financial statements. Unless otherwise stated, financial information included in this press release relates to the “Group”.

Highlights:

  • NOI for the quarter increased by 3.0% to NIS 1,074 million (US$ 279 million) compared to NIS 1,043 million (US$ 271 million) in the same quarter last year. Excluding the effect of exchange rate fluctuations NOI increased by 5.4% compared to the same quarter last year.
  • FFO for the quarter totaled NIS 142 million (US$ 37 million), or NIS 0.72 per share (US$ 0.19), compared to NIS 135 million (US$ 35 million), or NIS 0.69 per share (US$ 0.18), in the first quarter of 2016 and NIS 162 million (US$ 42 million), or NIS 0.91 per share (US$ 0.24), in the same quarter last year. The decrease in FFO and FFO per share between the two periods is mainly due to the effects of exchange rates, the sale of shares in subsidiaries and the equity offering that was completed at the end of 2015.
  • Shareholders' equity as of June 30, 2016 increased during the quarter by approximately NIS 0.5 billion (NIS 2.6 per share) totaled NIS 7,867 million (US$ 2,046 million), or NIS 40.2 per share (US$ 10.45 per share), compared to NIS 7,512 million (US$ 1,953 million), or NIS 38.4 million (US$ 9.98 per share), as of December 31, 2015 and after a dividend distribution of NIS 0.81 per share (US$ 0.21) in the six months ended June 30, 2016.
  • Investments during the quarter totaled NIS 1.1 billion (US$ 293 million).
  • The occupancy rate as of June 30, 2016 increased to a level of 95.7% compared to 95.4% as of June 30, 2015.
  • Same Property NOI for the period, excluding the effect of foreign exchange rate fluctuations, decreased by 0.1%. The decrease is mainly due to one-time effect in Canada as well as a decrease in NOI in Russia.
  • As of June 30, 2016, the Group had liquid assets and unutilized revolving credit facilities in the amount of NIS 9.8 billion (US$ 2.55 billion), of which NIS 2.3 billion (US$ 0.6 billion) was at the Company level.
  • As of June 30, 2016, net debt to total assets (LTV) decreased by 50 basis points to 50.8%, compared to 51.3% as of December 31, 2015.
  • The Company will distribute a quarterly cash dividend of NIS 0.35 per share, payable on September 12, 2016 to shareholders record as of September 5, 2016.
  • During the quarter and thereafter Gazit-Globe disposed part of its shares in BR Malls, which resulted in a total realized and unrealized gain of more than NIS 130 million (US$ 34 million).
  • In August 2016, the local credit agency, S&P Maalot, re-affirmed Gazit-Globe’s local credit rating of ilAA-.

Rachel Lavine, CEO of Gazit-Globe: “The second quarter results clearly show the continuation of the positive trends as evident through a significant increase in shareholders' equity, strengthening of our balance sheet, decrease of our cost of debt, and the improvement in our financial ratios. The Company’s financial strength has recently been reinforced by the re-affirmation of our local credit rating by S&P Maalot.

Alongside of more than NIS 130 million gain from the investment in BR Malls, we continue to bear fruit as a result of our portfolio repositioning; We believe that our portfolio is exceptional due to its high quality as well as its geographical diversity in strong economies and their leading urban cities. The Company focuses its activity on the acquisition, development and redevelopment of prime assets which amount to approximately NIS 3.7 billion, with a cost to complete of approximately NIS 2 billion. We believe that these quality properties, located in leading cities around the world such as Toronto, San Francisco, Sau Paulo, Helsinki and Warsaw will yield over the coming quarters, and in particularly during the course of 2017.”

Financial highlights for second quarter 2016:

  • Rental income for the quarter totaled NIS 1,523 million compared to NIS 1,514 million in the same quarter last year, an increase of 0.6%. Excluding the effect of foreign exchange rate fluctuations, the rental income increased by 3.0% compared to the same quarter last year.
  • NOI for the quarter totaled NIS 1,074 million compared to NIS 1,043 million in the same quarter last year an increase of 3.0%. Excluding the effect of foreign exchange rate fluctuations, NOI increased by 5.4% compared to the same quarter last year.
  • FFO for the quarter totaled NIS 142 million, or NIS 0.72 per share, compared to NIS 135 million, or NIS 0.69 per share, in the first quarter of 2016 and NIS 162 million, or NIS 0.91 per share, in the same quarter last year. The decrease in FFO and FFO per share between the two periods is mainly due to the effects of exchange rates, the sale of shares in subsidiaries and the equity offering that was completed at the end of 2015.
  • The occupancy rate as of June 30, 2016 increased to a level of 95.7% compared to 95.4% as of June 30, 2015. By region, occupancy rates as of June 30, 2016 were: 96.3% in the US; 95.2% in Canada; 96.5% in North Europe; and 95.4% in Central and Eastern Europe.
  • EPRA NAV per share as of June 30, 2016 was NIS 55.2 compared to NIS 52.9 per share as of December 31, 2015.
  • Net income attributable to the Company’s shareholders totaled NIS 97 million, or NIS 0.47 per share, compared to NIS 130 million, or NIS 0.70 per share, in the same quarter last year.
  • The net fair value gain of investment property and investment property under development was NIS 572 million, compared to a gain of NIS 373 million in the same quarter last year.
  • Cash flow from operating activities totaled NIS 313 million, compared to NIS 322 million in the same quarter last year.

 Financial highlights for the first half 2016:

  • Rental income for the period totaled NIS 3,062 million compared to NIS 3,041 million in the same period last year, an increase of 0.7%. Excluding the effect of foreign exchange rate fluctuations, the rental income increased by 4.8% compared to the same period last year.
  • NOI for the period totaled NIS 2,126 million compared to NIS 2,071 million in the same period last year an increase of 2.7%. Excluding the effect of foreign exchange rate fluctuations, NOI increased by 6.6% compared to the same period last year.
  • FFO for the period totaled NIS 277 million, or NIS 1.42 per share, compared to NIS 323 million, or NIS 1.81 per share, in the same quarter last year. The decrease in FFO and FFO per share between the two periods is mainly due to the effects of foreign exchange rates, the sale of shares of subsidiaries and equity offering that was completed at the end of 2015.
  • Loss attributable to the Company’s shareholders totaled NIS 181 million, or NIS 0.96 per share, compared to net income of NIS 506 million, or NIS 2.81 per share, in the same period last year. The loss is mainly due to the revaluation of financial derivatives and the loss from the sale of shares of Luzon Group (previously: Dori Group) recognized in the first quarter of 2016.
  • Cash flow from operating activities totaled NIS 603 million, compared to NIS 497 million in the same period last year.

Acquisition, Development, Redevelopment and Capital Recycling Activities:

  • During the period, the Group invested NIS 2,122 million. Total investment included NIS 783 million invested in 7 income-producing properties totaling 63 thousand square meters, as well as NIS 1,339 million in development and redevelopment projects.
  • As of June 30, 2016, the Group had 6 properties under development with a gross leasable area of 111 thousand square meters with a total investment of NIS 1.4 billion, and 21 properties under redevelopment with a gross leasable area of 215 thousand square meters with a total investment of NIS 4.3 billion. The additional cost to complete the properties under development and redevelopment totaled NIS 2.0 billion.
  • During the quarter, the company announced that it is increasing its share in Gazit Israel (Development) to 100%, becoming the sole shareholder in the company.

Financing Activities:

  • The average nominal annual cost of debt during the period was 4.0%, compared to 4.2% in the same period last year.
  • The Company will distribute a quarterly cash dividend of NIS 0.35 per share, payable on September 12, 2016 to shareholders record as of September 5, 2016.
  • In August 2016, the local credit agency, S&P Maalot, re-affirmed Gazit-Globe’s local credit rating of ilAA-.