- ISIN PAL0605071A3
Gazit-Globe
Gazit-Globe Reports Second Quarter 2014 Financial Results
DGAP-News: Gazit-Globe
01.09.2014 / 10:05
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FFO grew by 15% to NIS 163 Million; FFO per share grew by 8%
The Group Liquidity Totaled NIS 10.9 billion; Net debt to total assets (LTV)
declined to 53.4%
TEL-AVIV, Israel, Sept. 1, 2014 (GLOBE NEWSWIRE) -- Gazit-Globe (NYSE:GZT)
(TSX:GZT) (TASE: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 ended June 30, 2014.
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 decreased by 4% to NIS 832 million (US$ 242 million)
compared to NIS 865 million (US$ 252 million) in same quarter last year.
Excluding the effect of changes in exchange rates, NOI increased by 1%
compared to same quarter last year
-- FFO for the quarter increased by 15% to NIS 163 million (US$ 47 million),
or NIS 0.92 per share (US$ 0.27), compared to NIS 142 million (US$ 41
million), or NIS 0.85 per share (US$ 0.25), in same quarter last year. The
number of shares grew by 5% between the periods
-- Investments during the quarter totaled NIS 562 million (US$ 163 million).
The group also recycled capital from the divestment of non-core assets in
the amount of NIS 596 million (US$ 173 million). (Assuming consolidation of
jointly controlled companies that are presented according to the equity
method, total investments equaled NIS 618 million (US$ 180 million), and
divestment of non-core assets totaled NIS 878 million (US$ 255 million))
-- Same Property NOI for the period, excluding the effect of changes in
exchange rates, grew by 1.5% compared to same period last year
-- Occupancy rate as of June 30, 2014 increased to 95.4%, compared to
occupancy rate of 95.0% as of December 31, 2013, and 94.5% as of June 30,
2013
-- Shareholders' equity as of June 30, 2014 totaled NIS 7,687 million (US$
2,236 million), or NIS 43.7 per share (US$ 12.71), compared to NIS 7,802
million (US$ 2,269 million), or NIS 44.4 per share (US$ 12.91), as of
December 31, 2013, and to NIS 7,809 million (US$ 2,271 million), or NIS
44.4 per share (US$ 12.91), as of June 30, 2013
-- EPRA NAV per share as of June 30, 2014 was NIS 56.6 (US$ 16.46) compared to
NIS 57.9 per share (US$ 16.84) as of December 31, 2013, and NIS 57.0 per
share (US$ 16.58) as of June 30, 2013
-- As of June 30, 2014, the Group had liquid assets and unutilized revolving
credit facilities in the amount of NIS 10.9 billion (US$ 3.17 billion) of
which NIS 3.1 billion (US$ 0.90 billion) is at the Company level. A jointly
controlled company (Atrium) has additional NIS 1.2 billion (US$ 0.35
billion) in cash
-- As of June 30, 2014, net debt to total assets (LTV) was 53.4%, compared to
55.1% as of December 31, 2013, and 55.1% as of June 30, 2013
-- The Company's Board of Directors declared a quarterly cash dividend of NIS
0.45 per share, which represents an annualized dividend per share of NIS
1.80, payable on October 1, 2014 to shareholders of record as of September
16, 2014
-- Our consolidated subsidiary, U. Dori Construction Ltd., reported material
deviations in its estimated costs and expected revenues from projects it
performed, totaling a net amount of NIS 441 million cumulatively since the
fourth quarter of 2012. As a result, Gazit-Globe has restated its financial
reports for the relevant periods. Gazit-Globe's board of directors approved
the grant to Gazit-Globe Israel (Development) Ltd. of a loan in the amount
of up to NIS 200 million that will be used to strengthen the capital
structure, liquidity and cash flows of Dori Group. As a result, Gazit
Development presented a framework for investment in Dori Group, including,
among other things, the injection of NIS 130 million of equity into Dori
Group, the issuance of a perpetual capital note in exchange for the
assignment of credit lines provided to Dori Construction in the sum of NIS
250 million, and the issuance of a NIS 70 million credit line to Dori
Group, following the completion of the purchase of the Dori construction
bonds. The framework is subject to customary approvals required by law.
Exchange rate as of June 30, 2014 of 1 USD = 3.438 NIS
Roni Soffer, President of Gazit-Globe: 'We conclude a positive quarter for the
group's core activity and, notwithstanding material losses recorded by Dori
Construction, we saw strong growth in both FFO and FFO per share, while further
reducing our LTV, increasing our liquidity, and strengthening our balance
sheet. We continue to enhance the quality of our portfolio through capital
recycling activity, having recently sold properties in our medical office
platform while investing in the Nordic region and Brazil. These steps are
aligned with our long-term strategy to focus on our core shopping center
operations.'
Financial highlights for second quarter 2014:
-- Rental income decreased by 5% to NIS 1,226 million compared to NIS 1,286
million in the second quarter 2014. Excluding the effect of changes in
exchange rates, rental income increased by 1% compared to the second
quarter 2013
-- NOI for the quarter decreased by 4% to NIS 832 million compared to NIS 865
million in same quarter last year. Excluding the effect of changes in
exchange rates, NOI increased by 2% compared to same quarter last year
-- FFO for the quarter increased by 15% to NIS 163 million, or NIS 0.92 per
share, compared to NIS 142 million, or NIS 0.85 per share, in same quarter
last year. The number of shares grew by 5% between the periods
-- Net income attributable to the Company's shareholders totaled NIS 146
million, or NIS 0.80 per share, compared to NIS *) 60 million, or NIS 0.34
per share, in the second quarter 2013
-- Occupancy rate as of June 30, 2014 increased to 95.4%, compared to
occupancy rate of 95.0% as of December 31, 2013 and 94.5% as of June 30,
2013. Occupancy rate as of June 30, 2014 was 95.0% in North America, 96.2%
in Europe and 98.3% in Israel
-- The fair value gain from investment property and investment property under
development was NIS 241 million compared to NIS 222 million in the second
quarter 2013
-- Shareholders' equity as of June 30, 2014 totaled NIS 7,687 million, or NIS
43.7 per share, compared to NIS *) 7,802 million, or NIS 44.4 per share, as
of December 31, 2013, and to NIS *) 7,809 million, or NIS 44.4 per share,
as of June 30, 2013
-- Cash flow from operating activities totaled NIS 270 million, compared to
NIS 79 million in the second quarter 2013
Financial highlights for the first half 2014:
-- Rental income decreased by 7% to NIS 2,453 million compared to NIS 2,626
million in the same period of 2013. Excluding the effect of changes in
exchange rates, rental income increased by 1% compared to the same period
of 2013
-- NOI decreased by 6% to NIS 1,649 million compared to NIS 1,748 million in
the same period of 2013. Excluding the effect of changes in exchange rates,
NOI increased by 1% compared to the same period of 2013
-- Same-property NOI for the first half of 2014, excluding the effect of
changes in exchange rates, grew by 1.5%, resulting from an increase of 1.9%
in the same-property NOI from North America, a 1.0% increase in
same-property NOI from Europe and a 2.2% increase in same-property NOI from
Israel
-- FFO increased by 8% to NIS 313 million, or NIS 1.78 per share, compared to
NIS 291 million, or NIS 1.75 per share, in the same period of 2013. The
number of shares grew by 6% between the periods
-- Net income attributable to the Company's shareholders totaled NIS 303
million, or NIS 1.70 per share, compared to NIS *) 389 million, or NIS 2.32
per share, in the same period of 2013.
-- Cash flow from operating activities totaled NIS 457 million, compared to
NIS 143 million in the same period of 2013
*) Restated to adjust for the deviations in the estimated costs and expected
revenues from projects performed by Dori Construction
Acquisition, Development, Redevelopment and Capital Recycling Activities:
-- During the first half of 2014, the Group invested NIS 1,345 million
acquiring 3 income-producing properties totaling 49 thousand square meters
and adjacent land parcels for future development in a total amount of NIS
734 million and an amount of NIS 611 million in new development and
redevelopment projects
-- During the first half of 2014, the group sold non-core properties for a
total amount of NIS 723 million. (Assuming consolidation of jointly
controlled companies that are presented according to the equity method,
divestment of non-core assets totaled NIS 1,006 million)
-- As of June 30, 2014, the Group had 10 properties under development with a
gross leasable area of 206 thousand square meters and a total investment of
NIS 1,509 million, and 25 properties under redevelopment with a gross
leasable area of 359 thousand square meters and a total investment of NIS
3,570 million. The additional cost to complete the properties under
development and redevelopment totals NIS 2,112 million
-- During the quarter, ProMed Properties sold 6 medical office building for
$200 million pre-tax and transaction costs. Subsequent to the quarter end,
ProMed sold additional 6 properties for $205 million pre-tax and
transaction costs
-- Subsequent to the quarter end, Gazit-Globe's wholly owned subsidiary, Gazit
Brasil, has entered into an agreement to acquire the 'Top Center Shopping'
property in Sao Paulo, Brazil for approximately R$ 145 million (US$ 65
million). Closing of the acquisition remains subject to the fulfillment of
certain closing conditions
-- Subsequent to the quarter end, Gazit-Globe's wholly owned subsidiary, Gazit
Germany, sold one property for 42 million euro, and entered into an
agreement to sell two additional properties for 51 million euros, subject
to the fulfillment of certain closing conditions.
Financing Activities:
-- During the quarter, the Group raised NIS 1.0 billion in equity. In
addition, the Group raised approximately NIS 1.9 billion through debenture
offerings
-- The average cost of debt during the first half of 2014 was 4.7%, compared
to 4.9% in the same period of 2013
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,
September 2, 2014 at 5:00 pm Israel Time / 3:00 pm Central European Time /
10:00 am Eastern Time, to review the second quarter 2014 financial results.
Shareholders, analysts and other interested parties can access the conference
call by dialing 1877 280 2342 (U.S./Canada) or 0800 279 4977 (U.K.) or +44 (0)
20 3427 1907 (International) or 1809 212 923(Israel), or on the Company's
website www.gazit-globe.com. (Conference ID 8293579)
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 largest owners, developers and operators of
predominantly supermarket-anchored shopping centers in major urban markets
around the world. Gazit-Globe is listed on the New York Stock Exchange
(NYSE:GZT), the Toronto Stock Exchange (TSX: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 561 properties in more than 20 countries,
with a gross leasable area of approximately 6.6 million square meters and a
total value of approximately US$ 22 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 6948000 / New York
Office, Tel: +1 212 897 9741
FORWARD LOOKING STATEMENTS
This release may contain forward-looking statements within the meaning of
applicable securities laws. In the United States, 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 and
the Canadian Securities Administrators. Except as required by applicable 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 second quarter 2014 financial Report. For
our second quarter 2014 financial Report in English, please go to
http://www.gazitglobe.com/financial-reports.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
-------------------------------------------------------------------------------
June 30 December 31,
-----------------
2014 *) 2013 *) 2013
------------------------------
NIS in millions
------------------------------
ASSETS
------------------------------------------------
CURRENT ASSETS:
Cash and cash equivalents 1,895 1,309 1,018
Short-term deposits and loans 515 670 504
Marketable securities 112 165 100
Financial derivatives 41 109 39
Trade receivables 566 748 689
Other accounts receivable 315 297 302
Inventory of buildings and apartments for sale 725 647 692
Income taxes receivable 10 16 19
------------------------------
4,179 3,961 3,363
Assets classified as held for sale 2,360 455 611
------------------------------
6,539 4,416 3,974
------------------------------
NON-CURRENT ASSETS
Equity-accounted investees 5,807 5,208 5,907
Other investments, loans and receivables 423 908 659
Available-for-sale financial assets 635 364 435
Financial derivatives 784 1,134 769
Investment property 51,105 53,815 53,309
Investment property under development 2,642 2,296 2,479
Non-current inventory 4 23 23
Fixed assets, net 160 198 160
Intangible assets, net 99 109 106
Deferred taxes 109 177 106
------------------------------
61,768 64,232 63,953
------------------------------
68,307 68,648 67,927
==============================
*) Restated retrospectively adjusted, refer to note 2F and 8
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
--------------------------------------------------------------------------------
-
June 30, December
31,
------------------
2014 *) 2013 *) 2013
-----------------------------
NIS in millions
-----------------------------
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Credit from banks and others 575 362 257
Current maturities of non-current liabilities 3,259 2,139 2,914
Financial derivatives 37 23 32
Trade payables 867 897 940
Other accounts payable 1,425 1,184 1,272
Advances from customers and buyers of apartments 298 274 267
Income taxes payable 63 29 32
-----------------------------
6,524 4,908 5,714
Liabilities attributed to assets held for sale 309 5 73
-----------------------------
6,833 4,913 5,787
-----------------------------
NON-CURRENT LIABILITIES
Debentures 22,838 22,039 22,231
Convertible debentures 1,210 1,289 1,221
Interest-bearing loans from financial 10,692 14,237 12,692
institutions and others
Financial derivatives 125 192 169
Other liabilities 181 197 198
Deferred taxes 3,379 3,378 3,276
-----------------------------
38,425 41,332 39,787
-----------------------------
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE
COMPANY
Share capital 229 229 229
Share premium 4,297 4,289 4,288
Retained earnings 5,305 4,773 5,160
Foreign currency translation reserve (2,164) (1,614) (2,000)
Other reserves 41 153 146
Loans granted for purchase of Company's shares -- -- --
**)
Treasury shares (21) (21) (21)
-----------------------------
7,687 7,809 7,802
Non-controlling interests 15,362 14,594 14,551
-----------------------------
Total equity 23,049 22,403 22,353
-----------------------------
68,307 68,648 67,927
=============================
*) Restated retrospectively adjusted, refer to note 2F and 8
**) Represents an amount of less than NIS 1 million
CONSOLIDATED STATEMENTS OF INCOME
--------------------------------------------------------------------------------
-
Six months Three months Year
ended ended ended
June 30, June 30, December
31,
----------------------------------
2014 **) 2013 2014 **) 2013 **) 2013
-------------------------------------------
Unaudited Audited
-------------------------------------------
NIS in millions (except for per share
data)
-------------------------------------------
Rental income 2,453 2,626 1,226 1,286 5,146
Property operating expenses 804 878 394 421 1,689
-------------------------------------------
Net operating rental income 1,649 1,748 832 865 3,457
-------------------------------------------
Revenues from sale of buildings, 603 927 272 518 1,672
land and construction work
performed
Cost of buildings sold, land and 851 876 413 480 1,688
construction work performed
-------------------------------------------
Gross profit (loss) from sale of
buildings,
land and construction work performed (248) 51 (141) 38 (16)
-------------------------------------------
Total gross profit 1,401 1,799 691 903 3,441
Fair value gain from investment 266 *) 407 241 *) 222 *) 962
property and investment property
under development, net
General and administrative expenses (296) *) (308) (149) *) (153) *) (610)
Other income 5 7 1 2 218
Other expenses (21) (54) (16) (37) (74)
Company's share in earnings of 112 105 34 47 149
equity- accounted investees, net
-------------------------------------------
Operating income 1,467 1,956 802 984 4,086
Finance expenses (945) (1,153) (566) (676) (2,185)
Finance income 277 304 157 91 549
-------------------------------------------
Income before taxes on income 799 1,107 393 399 2,450
Taxes on income 186 143 94 52 265
-------------------------------------------
Net income 613 964 299 347 2,185
===========================================
Attributable to:
Equity holders of the Company 303 389 146 60 927
Non-controlling interests 310 575 153 287 1,258
-------------------------------------------
613 964 299 347 2,185
===========================================
Net earnings per share attributable
to equity holders of the Company:
Basic net earnings 1.72 2.34 0.83 0.35 5.41
===========================================
Diluted net earnings 1.70 2.32 0.80 0.34 5.35
===========================================
*) Reclassified, refer to Note 2d
**) Restated retrospectively adjusted, refer to note 2F and 8
FFO (EPRA Earnings)
--------------------------------------------------------------------------------
-
The table below presents the calculation of the Company's FFO, calculated
according to the recommendations of EPRA and the guidelines of the Israel
Securities Authority, and its FFO per share for the stated periods:
For the 6 months For the 3 months For the
year
ended June 30, ended June 30, ended
December
31
----------------------------------------
2014 2013 2014 2013 2013
---------------------------------------------------
NIS in millions (other than per share data)
---------------------------------------------------
Net income attributable to 303 *) 389 146 *) 60 *) 927
equity holders of the
Company for the period
---------------------------------------------------
Adjustments:
Fair value gain from (266) **) (407) (241) **) (222) **) (962)
investment property and
investment property under
development, net
Capital loss on sale of 19 40 16 24 52
investment property
Changes in the fair value of (218) (247) (120) (57) (435)
financial instruments,
including derivatives,
measured at fair value
through profit or loss
Adjustments with respect to 50 4 30 6 60
equity-accounted investees
Loss from decrease in 1 10 -- 10 11
interest in investees
Deferred taxes and current 198 *) 136 97 *) 47 *) 262
taxes with respect to
disposal of properties
Gain from bargain purchase -- -- -- -- (173)
Acquisition costs recognized 3 3 2 -- 10
in profit or loss
Loss (gain) from early 65 144 68 141 142
redemption of
interest-bearing
liabilities and financial
derivatives
Non-controlling interests' 25 *) 95 26 *) 45 *) 375
share in above adjustments
---------------------------------------------------
Nominal FFO 180 167 24 54 269
===================================================
Additional adjustments:
CPI and exchange rate (15) 56 41 53 152
linkage differences
Depreciation and 7 8 4 4 16
amortization
Adjustments with respect to (3) 19 13 8 27
equity-accounted investees
Other adjustments(1) 144 **) *) 41 81 **) *) 23 **) *) 121
---------------------------------------------------
FFO according to the 313 291 163 142 585
management approach
===================================================
FFO according to the 1.78 1.75 0.93 0.85 3.42
management approach per
share (in NIS)
===================================================
FFO according to the 1.78 1.75 0.92 0.85 3.41
management approach per
share (diluted) (in NIS)
===================================================
Number of shares used in the 175,875 166,315 175,939 167,296 171,103
basic FFO per share
calculation (in
thousands)(2)
===================================================
Number of shares used in the 175,983 166,549 176,047 167,544 171,413
diluted FFO per share
calculation (in
thousands)(2)
===================================================
*) Restated (refer to section 1.4 above) and retrospectively adjusted for
implementation of a clarification to IAS 12, refer to Notes 2e, 2f and 8 to the
financial statements
**) Reclassified, refer to Note 2d to the financial statements
1 Income and expenses adjusted against the net income for the purpose of
calculating FFO, which include the adjustment of expenses and income from
extraordinary legal proceedings not related to the Reporting Periods, expenses
arising from non-recurring expenses relating to the termination of engagements
with senior Group officers, income and expenses from operations not related to
income-producing property (including the results of Dori Group), as well as
internal leasing costs (mainly salary) incurred in the leasing of properties.
2 Weighted average for the period.
For additional information:
Gil Kotler,
Senior Executive VP and CFO
Gazit-Globe Ltd.
1 HaShalom Rd.
Tel Aviv, Israel 67892
+972 3 694 8000
News Source: NASDAQ OMX
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01.09.2014 Dissemination of a Corporate News, transmitted by DGAP - a
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Language: English
Company: Gazit-Globe
Panama
ISIN: PAL0605071A3
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