Same Store NOI Grew by 3.5%, Occupancy Rate Remained High at 94.5%
The Group's Liquidity Reached a Level of NIS 9.7 Billion
TEL-AVIV, Israel, Aug. 27, 2013 (GLOBE NEWSWIRE) -- Gazit-Globe (TASE:GZT) (NYSE:GZT), one of the world's leading multi-national real estate companies focused on acquisition, development and redevelopment of supermarket-anchored shopping centers in major urban markets, announced today its financial results for the second quarter of 2013.
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 totaled NIS 865 million (U.S.$ 239 million), similar to the same quarter last year
- FFO for the quarter increased by 3% to NIS 142 million (U.S.$ 39 million), or NIS 0.85 per share (U.S.$ 0.23), compared to NIS 138 million (U.S.$ 38 million), or NIS 0.84 per share (U.S.$ 0.23), in the same quarter last year
- Acquisition and development of investment property during the quarter totaled NIS 862 million (U.S.$ 238 million). The group recycled capital from the divestitures of non-core properties in the amount of NIS 1.0 billion (U.S.$ 280 million)
- Same Property NOI for the first half of 2013 grew by 3.5%, compared to same period last year
- Occupancy rate as of June 30, 2013 was 94.5%, compared to 95.0% as of December 31, 2012 and 94.5% as of June 30, 2012
- Shareholders' equity as of June 30, 2013 totaled NIS 7,988 million (U.S.$ 2,208 million), or NIS 45.4 per share (U.S.$ 12.55), compared to NIS 7,849 million (U.S.$ 2,169 million), or NIS 47.5 per share (U.S.$ 13.13), as of December 31, 2012, and to NIS 7,906 million (U.S.$ 2,185 million), or NIS 48.0 per share (U.S.$ 13.27), as of June 30, 2012.
- EPRA NAV per share as of June 30, 2013 was NIS 52.3 (U.S.$ 14.46) compared to NIS 56.9per share (U.S.$ 15.73) as of December 31, 2012, and to NIS 56.2 (U.S.$ 15.53) as of June 30, 2012
- As of June 30, 2013, the Group had cash on hand and unutilized revolving credit facilities in the amount of NIS 9.7 billion (U.S.$ 2.7 billion) of which NIS 3.0 billion (U.S.$ 0.83 billion) is at the Company level
- In the first half of 2013 the group issued NIS 1.0 billion of equity, and NIS 6.7 billion of debentures and convertible debentures with an average duration of approximately 8 years
- As of June 30, 2013, net debt to total assets (LTV) was 55.0%, compared to 56.1% as of December 31, 2012, and to 57.5% as of June 30, 2012
- During the quarter, the credit agency S&P Maalot upgraded Gazit-Globe's domestic credit rating from ilA+ to ilAA- with a stable outlook
- The Company's Board of Directors declared a quarterly cash dividend of NIS 0.43 per share (U.S.$ 0.12) payable on October 9th, 2013 to shareholders of record as of September 24th, 2013, which represents an annualized projected dividend per share of NIS 1.72 (U.S.$ 0.48)
Roni Soffer, President of Gazit-Globe: "We have concluded another positive quarter with solid FFO. The Israeli Shekel's appreciation against other currencies had a major effect on our quarterly results, and by adjusting for this effect, our FFO growth rate was higher.
"During the period, we continued to enhance the quality of our portfolio, increase available liquidity, reduce our leverage and strengthen our balance sheet. In addition, we took advantage of the low interest rate environment through significant long-term debt issuances, resulting in longer duration and a lower average cost of debt. Our group is well positioned today to take advantage of growth opportunities in the global real estate market," concluded Mr. Soffer.
Financial Highlights for the second quarter 2013:
- Rental income grew by 1% to NIS 1,286 million, compared to NIS 1,268 million in the same quarter last year
- NOI for the quarter totaled NIS 865 million similar to the same quarter last year
- FFO for the quarter increased by 3% to NIS 142 million, or NIS 0.85 per share, compared to NIS 138 million, or NIS 0.84 per share, in the same quarter last year
- Net income attributable to the Company's shareholders totaled NIS 60 million, or NIS 0.33 per share, compared to NIS 288 million, or NIS 1.70 per share, in the same quarter last year. The decrease in Net Income is mainly a result of a lower fair value gain from investment property and investment property under development, compared with the gain in the second quarter of 2012, as well as of non-recurring items such as the cost of unwinding of derivatives for the purpose of refinancing
- Cash flow from operating activities totaled NIS 87 million, compared to NIS 283 million in the same quarter last year. The decrease resulted mainly from non-recurring items such as the cost of unwinding of derivatives for the purpose of refinancing, and timing difference of account receivables and payables
- Occupancy rate as of June 30, 2013 was 94.5%, compared to 95.0% as of December 31, 2012 and 94.5% as June 30, 2012. Occupancy rate as of June 30, 2013 was 93.6% in North America, 95.9% in Europe and 98.5% in Israel
- The fair value gain from investment property and investment property under development was NIS 214 million compared to NIS 718 million in the same quarter last year
- Shareholders' equity as of June 30, 2013 totaled NIS 7,988 million, or NIS 45.4 per share, compared to NIS 7,849 million, or NIS 47.5 per share, as of December 31, 2012, and to NIS 7,906 million, or NIS 48.0 per share, as of June 30, 2012. The increase in shareholders' equity was mainly driven by a NIS 0.5 billion equity issuance, and was negatively effected by the appreciation of the NIS against the U.S. dollar, the Canadian Dollar and the Euro
Financial Highlights for the first half of 2013:
- Rental income increased by 4% and totaled NIS 2,626 million, compared to NIS 2,527 million in the same period of 2012
- NOI for increased by 3% and totaled NIS 1,748 million, compared to NIS 1,705 million in the same period last year
- Same Property NOI for the first half of 2013 grew by 3.5%, resulting from an increase of 3.3% in the same-property NOI from North America, a 3.8% increase in same-property NOI from Europe and a 2.7% increase in same-property NOI from Israel
- FFO increased by 7% to NIS 291 million, or NIS 1.75 per share, compared to NIS 272 million, or NIS 1.65 per share, in the same period last year
- Net income attributable to the Company's shareholders totaled NIS 405 million, or NIS 2.41 per share, compared to NIS 546 million, or NIS 3.24 per share, in the same period last year. The decrease in Net Income is mainly a result of a lower fair value gain from investment property and investment property under development, compared with the gain in the first half of 2012, as well as of non-recurring items such as the cost of unwinding of derivatives for the purpose of refinancing
- Cash flow from operating activities totaled NIS 159 million, compared to NIS 395 million in the same period of 2012. The decrease resulted mainly from non-recurring items such as unwinding of derivatives for the purpose of refinancing, and timing difference of account receivables and payables
Acquisition, Development and Redevelopment Activities:
- During the first half of 2013, the Group invested a total of NIS 1.5 billion including NIS 664 million for the acquisition of 4 income-producing properties totaling 36 thousand square meters and adjacent land parcels for future development, and NIS 826 million in development, redevelopment and expansion projects
- In addition, Citycon completed the acquisition of the Kista Galleria shopping center in Stockholm, Sweden, together with a JV partner (50%) for approximately EUR 530 million
- During the first half of 2013, the Group sold non-core assets for a total of NIS 1.6 billion
-
As of June 30, 2013, the Group had 10 properties under development with a gross leasable area of 210 thousand square meters and 31 properties under redevelopment with a gross leasable area of 187 thousand square meters with a total investment of NIS 2,955 million. The additional cost to complete the properties under development and redevelopment totals NIS 1,438 million
Financing Activities:
- During the quarter, the Group raised NIS 524 million in equity, out of which, NIS 0.5 billion was raised at the company level. In addition, the group raised approximately NIS 5.6 billion in debentures and convertible debentures
- The average annual nominal interest rate during the first half of 2013 was 4.9%, compared to 5.2% during the same period of 2012
- During the quarter, the credit agency S&P Maalot upgraded Gazit-Globe's domestic credit rating from ilA+ to ilAA- with a stable outlook
- During the quarter, Citycon received an investment grade credit rating from S&P (BBB-) and Moody's (Baa3) with a stable outlook
ACCOUNTING AND OTHER DISCLOSURES
The Company believes that publication of FFO, which is computed according to EPRA guidance, more correctly reflects the operating results of the Company, since the Company's financial statements are prepared in line with IFRS. In addition, publication of FFO provides a better basis for the comparison of the Company's operating results in a particular period with those of previous periods and also provides a uniform financial measure for comparing the Company's operating results with those published by other European property companies.
In addition, pursuant to the investment property guideline issued by the Israel Securities Authority in January 2011, FFO is to be presented in the "Description of the Company's Business" section of the annual report of investment property companies on the basis of the EPRA criteria.
As clarified in the EPRA and NAREIT position papers, the EPRA Earnings and the FFO measures do not represent cash flows from operating activities according to accepted accounting principles, nor do they reflect the cash held by a company or its ability to distribute that cash, and they are not a substitute for the reported net income. Furthermore, it is clarified that these measures are not audited by the Company's independent auditors.
CONFERENCE CALL/WEB CAST INFORMATION
Gazit-Globe will host a conference call and webcast in English on Tuesday, August 27, 2013 at 5:00 pm Israel Time/ 3:00 pm UK Time/ 10:00 am Eastern Time,to review the second quarter 2013 financial results. Shareholders, analysts and other interested parties can access the conference call by dialing 1 866 966 9439 (U.S./Canada) or 0800 694 0257 (U.K.) or +44 (0) 1452 555 566 (International) or 1 809 216 057(Israel) or on the Company's website www.gazit-globe.com. (Conference ID: 17608711)
For those unable to participate during the call, a replay will be available for future review on Gazit-Globe's website under Investor Relations.
About Gazit-Globe
Gazit-Globe is one of the world's largest owners and operators of supermarket-anchored shopping centers in major urban markets. In addition, the Company is active in North America in the healthcare real estate sector. Gazit-Globe is listed on the New York Stock Exchange (NYSE:GZT) and the Tel Aviv Stock Exchange (TASE:GZT) and is included in the TA-25 and Real-Estate 15 indices in Israel. Gazit Globe owns and operates 592 properties in more than 20 countries, with a gross leasable area of approximately 6.7 million square meters and a total value of more than $20 billion.
FOR ADDITIONAL INFORMATION
A comprehensive copy of the Company's annual report is available on Gazit-Globe website at www.gazit-globe.com
Investors Contact: IR@gazitgroup.com, Media Contact: press@gazitgroup.com
Gazit-Globe Headquarters, Tel-Aviv, Israel, Tel: +972 3 694 8000 / New York Office, Tel: +1 212 897 9741
FORWARD LOOKING STATEMENTS
This release may contain forward-looking statements within the meaning of the U.S. federal securities laws. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve a number of known and unknown risks and uncertainties, many of which are outside our control, that could cause our future results, performance or achievements to differ significantly from the results, performance or achievements expressed or implied by such forward-looking statements. Important factors that could cause or contribute to such differences include risks detailed in our public filings with the SEC. Except as required by law, we undertake no obligation to update any forward-looking or other statements herein, whether as a result of new information, future events or otherwise.
Below please find excerpts from our quarterly Report. For our full second quarter 2013 Financial Report in English, please go to http://www.gazitglobe.com/financial-reports.
| CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | |||
| June 30, | December 31, | ||
| 2013 | 2012 | 2012 | |
| NIS in millions | |||
| ASSETS | |||
| CURRENT ASSETS: | |||
| Cash and cash equivalents | 1,309 | 1,442 | 1,683 |
| Short-term investments and loans | 670 | 385 | 538 |
| Marketable securities at fair value through profit or loss | 157 | 62 | 87 |
| Available-for-sale securities | 8 | 18 | 14 |
| Financial derivatives | 109 | 78 | 81 |
| Trade receivables | 797 | 730 | 744 |
| Other accounts receivable | 302 | 284 | 216 |
| Inventory of buildings and apartments for sale | 647 | 645 | 712 |
| Income taxes receivable | 16 | 21 | 15 |
| 4,015 | 3,665 | 4,090 | |
| Assets classified as held for sale | 455 | 636 | 1,482 |
| 4,470 | 4,301 | 5,572 | |
| NON-CURRENT ASSETS | |||
| Equity-accounted investees | 5,208 | 4,808 | 4,713 |
| Other investments, loans and receivables | 908 | 442 | 713 |
| Available-for-sale financial assets | 364 | 357 | 339 |
| Financial derivatives | 1,134 | 883 | 929 |
| Investment property | 53,815 | 54,080 | 55,465 |
| Investment property under development | 2,296 | 3,063 | 2,806 |
| Non-current inventory | 23 | 23 | 23 |
| Fixed assets, net | 198 | 163 | 187 |
| Goodwill | 95 | 103 | 100 |
| Other intangible assets, net | 14 | 43 | 17 |
| Deferred taxes | 177 | 199 | 198 |
| 64,232 | 64,164 | 65,490 | |
| 68,702 | 68,465 | 71,062 | |
| CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | |||
| June 30, | December 31, | ||
| 2013 | 2012 | 2012 | |
| NIS in millions | |||
| LIABILITIES AND EQUITY | |||
| CURRENT LIABILITIES | |||
| Credit from banks and others | 362 | 289 | 351 |
| Current maturities of non-current liabilities | 2,139 | 2,906 | 2,382 |
| Financial derivatives | 23 | 25 | 12 |
| Trade payables | 896 | 785 | 914 |
| Other accounts payable | 1,176 | 1,236 | 1,256 |
| Advances from customers and buyers of apartments | 274 | 225 | 257 |
| Income taxes payable | 37 | 30 | 52 |
| 4,907 | 5,496 | 5,224 | |
| Liabilities attributed to assets held for sale | 5 | 83 | 168 |
| 4,912 | 5,579 | 5,392 | |
| NON-CURRENT LIABILITIES | |||
| Debentures | 22,039 | 17,258 | 18,500 |
| Convertible debentures | 1,289 | 1,602 | 1,197 |
| Interest-bearing loans from financial institutions and others | 14,237 | 19,487 | 19,433 |
| Financial derivatives | 192 | 385 | 472 |
| Other financial liabilities | 191 | 312 | 346 |
| Employee benefit liability, net | 6 | 7 | 7 |
| Deferred taxes | 3,061 | 2,805 | 3,066 |
| 41,015 | 41,856 | 43,021 | |
| EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY | |||
| Share capital | 229 | 218 | 219 |
| Share premium | 4,289 | 3,791 | 3,805 |
| Retained earnings | 4,957 | 4,318 | 4,699 |
| Foreign currency translation reserve | (1,621) | (557) | (913) |
| Other reserves | 155 | 157 | 60 |
| Loans granted to purchase shares of the Company *) | -- | -- | -- |
| Treasury shares | (21) | (21) | (21) |
| 7,988 | 7,906 | 7,849 | |
| Non-controlling interests | 14,787 | 13,124 | 14,800 |
| Total equity | 22,775 | 21,030 | 22,649 |
| 68,702 | 68,465 | 71,062 | |
| *) Represents an amount of less than NIS 1 million. | |||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||
|
Six months ended June 30, |
Three months ended June 30, |
Year ended December 31, |
|||
| 2013 | 2012 | 2013 | 2012 | 2012 | |
| NIS in millions (except per share amounts) | |||||
| Rental income | 2,626 | 2,527 | 1,286 | 1,268 | 5,249 |
| Property operating expenses | 878 | 822 | 421 | 403 | 1,705 |
| Net operating rental income | 1,748 | 1,705 | 865 | 865 | 3,544 |
| Revenues from sale of buildings, land and construction works performed | 948 | 932 | 521 | 456 | 1,749 |
| Cost of buildings sold, land and construction works performed | 877 | 885 | 481 | 430 | 1,665 |
| Gross profit from sale of buildings, land and construction works performed | 71 | 47 | 40 | 26 | 84 |
| Gross profit | 1,819 | 1,752 | 905 | 891 | 3,628 |
| Fair value gain from investment property and investment property under development, net | 391 | 1,031 | 214 | 718 | 1,913 |
| General and administrative expenses | (293) | (327) | (146) | (165) | (648) |
| Other income | 7 | 125 | 2 | 35 | 164 |
| Other expenses | (54) | (17) | (37) | (12) | (47) |
| Company's share in earnings of equity accounted investees, net | 105 | 154 | 47 | 74 | 299 |
| Operating income | 1,975 | 2,718 | 985 | 1,541 | 5,309 |
| Finance expenses | (1,153) | (1,097) | (676) | (591) | (2,214) |
| Finance income | 304 | 45 | 91 | 19 | 120 |
| Profit before taxes on income | 1,126 | 1,666 | 400 | 969 | 3,215 |
| Taxes on income | 127 | 343 | 53 | 211 | 681 |
| Net income | 999 | 1,323 | 347 | 758 | 2,534 |
| Attributable to: | |||||
| Equity holders of the Company | 405 | 546 | 60 | 288 | 957 |
| Non-controlling interests | 594 | 777 | 287 | 470 | 1,577 |
| 999 | 1,323 | 347 | 758 | 2,534 | |
| Net earnings per share attributable to equity holders of the Company (NIS): | |||||
| Basic net earnings | 2.43 | 3.31 | 0.35 | 1.74 | 5.80 |
| Diluted net earnings | 2.41 | 3.24 | 0.33 | 1.70 | 5.59 |
| FFO (EPRA Earnings) | |||||
| The table below presents the calculation of the Company's FFO, computed according to the directives of EPRA and the guidelines of the Israel Securities Authority, and its FFO per share for the stated periods: | |||||
|
For the 6 months ended June 30 |
For the 3 months ended June 30 |
For the year ended December 31 |
|||
| 2013 | 2012 | 2013 | 2012 | 2012 | |
| NIS in millions (other than per share data) | |||||
| Net income attributable to equity holders of the Company for the period | 405 | 546 | 60 | 288 | 957 |
| Adjustments: | |||||
| Fair value gain from investment property and investment property under development, net | (391) | (1,031) | (214) | (718) | (1,913) |
| Capital loss on sale of investment property and investment property under development | 40 | 13 | 24 | 10 | 5 |
| Changes in the fair value of financial instruments including derivatives, measured at fair value through profit or loss | (247) | 35 | (57) | 13 | (36) |
| Adjustments with respect to equity-accounted investees | 4 | (47) | 6 | (48) | (43) |
| Loss from decrease in interest in investees | 10 | 1 | 10 | -- | 4 |
| Deferred taxes and current taxes with respect to disposal of properties | 111 | 333 | 47 | 206 | 668 |
| Gain from bargain purchase | -- | (119) | -- | (37) | (134) |
| Acquisition costs recognized in profit or loss | 3 | 6 | -- | 3 | 26 |
| Loss from early redemption of interest-bearing liabilities and financial derivatives | 144 | 2 | 141 | -- | 147 |
| Non-controlling interests' share in above adjustments | 107 | 401 | 45 | 287 | 685 |
| Nominal FFO | 186 | 140 | 62 | 4 | 366 |
| Additional adjustments: | |||||
| CPI and exchange rates linkage differences | 56 | 83 | 53 | 81 | 94 |
| Depreciation and amortization | 8 | 8 | 4 | 5 | 16 |
| Adjustments with respect to equity-accounted investees | 19 | 14 | 8 | 34 | 2 |
| Other adjustments1 | 22 | 27 | 15 | 14 | 55 |
| FFO according to the management approach | 291 | 272 | 142 | 138 | 533 |
| Basic FFO according to the management approach per share (in NIS) | 1.75 | 1.65 | 0.85 | 0.84 | 3.23 |
| Diluted FFO according to the management approach per share (in NIS) | 1.75 | 1.65 | 0.85 | 0.84 | 3.23 |
| Number of shares used in the basic FFO calculation2 (in thousands) | 166,315 | 164,831 | 167,296 | 164,840 | 164,912 |
| Number of shares used in the diluted FFO calculation (in thousands) | 166,549 | 165,099 | 167,544 | 165,124 | 165,016 |
| 1 Income and expenses adjusted against the net income for the purpose of calculating FFO, which include expenses from extra-ordinary legal proceedings not related to the reporting periods, expenses arising from one-time payments relating to the termination of engagements with senior Group officers and also income and expenses from operations not related to income-producing property. | |||||
| 2 Number of issued shares (weighted average for the period) | |||||