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Gazit-Globe Reports First Quarter 2015 Financial Results

TEL-AVIV, Israel, May 31, 2015 (GLOBE NEWSWIRE) -- Gazit-Globe (NYSE:GZT) (TSX:GZT) (TASE:GZT), 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 first quarter ended March 31, 2015.

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 26% to NIS 1,028 million (US$ 258 million) compared to NIS 817 million (US$ 205 million) in the same quarter last year. The increase results from the consolidation of Atrium's financial reports for the first time which resulted in an increase of NIS 218 million (US$ 55 million) in the NOI
  • FFO for the quarter increased by 6% to NIS 160 million (US$ 40 million), or NIS 0.90 per share (US$ 0.23), compared to NIS 151 million (US$ 38 million), or NIS 0.86 per share (US$ 0.22), in same quarter last year. The number of shares grew by 1% between the periods
  • Investments during the quarter totaled NIS 861 million (US$ 216 million). The group also recycled capital from the divestiture of non-core assets in the amount of NIS 665 million (US$ 167 million)
  • Same Property NOI for the quarter, excluding the effect of changes in exchange rates, decreased by 0.9% compared to same quarter last year. Occupancy rate as of March 31, 2015 was 95.6% compared to 95.3% as of March 31, 2014
  • Shareholders' equity as of March 31, 2015 totaled NIS 7,842 million (US$ 1,970 million), or NIS 44.0 per share (US$ 11.06 per share), compared to NIS 7,789 million (US$ 1,957 million), or NIS 44.3 per share (US$ 11.13 per share), as of March 31, 2014
  • EPRA NAV per share as of March 31, 2015 was NIS 59.1 (US$ 14.85) compared to NIS 56.8 per share (US$ 14.27) as of March 31, 2014
  • As of March 31, 2015, the Group had liquid assets and unutilized revolving credit facilities in the amount of NIS 13.0 billion (US$ 3.3 billion) of which NIS 3.2 billion (US$ 0.8 billion) is at the Company level
  • As of March 31, 2015, net debt to total assets (LTV) was 49.3%, compared to 55.5% as of March 31, 2014
  • The Company declared a quarterly cash dividend of NIS 0.46 per share payable on July 6, 2015 to shareholders of record as of June 22, 2015, which represents an annualized dividend per share of NIS 1.84. The dividend policy for 2015 is a minimum quarterly dividend payment of NIS 0.46 per share, representing an increase of 2.2% over the 2014 dividend.
  • After the quarter ended, Gazit-Globe's subsidiary, Citycon (42.8%), entered into an agreement to purchase all of the shares of Norway's second largest commercial real estate company, Sektor Gruppen, for consideration amounting to approximately EUR 1.47 billion subject to customary balance sheet and post-closing adjustments. The consideration will be paid in cash (approximately EUR 541 million) and by the assumption of debt

Roni Soffer, President of Gazit-Globe: "We are pleased to conclude a strong quarter in which we experienced continued growth in our activities. Recently, we announced a major, strategic transaction in which Citycon will acquire Norway's second-largest shopping center company for EUR 1.47 billion. Citycon will become the largest publicly-listed shopping center company in the Nordic region and the third largest in continental Europe. This strategic transaction alongside the constant upgrading of the Company's portfolio around the world, has positioned the Group well for continued long-term growth."

Financial Highlights for the three months ended March 31, 2015:

  • Rental income increased by 24% to NIS 1,527 million compared to NIS 1,227 million in the same quarter last year. The increase results from the consolidation of Atrium's financial reports for the first time which resulted in an increase of NIS 311 million in the rental income.
  • NOI for the quarter increased by 26% to NIS 1,028 million compared to NIS 817 million in the same quarter last year. The increase results from the consolidation of Atrium's financial reports for the first time which resulted in an increase of NIS 218 million in the NOI.
  • Same-property NOI, excluding the effect of changes in exchange rates, decreased by 0.9%, resulting from an increase of 4.6% in the same-property NOI from Canada, a 2.8% increase in same-property NOI from the US, a 2.4% increase in same-property NOI from Northern Europe and a 12.8% decrease in same-property NOI from Central and Eastern Europe.
  • FFO for the quarter increased by 6% to NIS 160 million, or NIS 0.90 per share, compared to NIS 151 million, or NIS 0.86 per share, in same quarter last year. The number of shares grew by 1% between the periods.
  • Net income attributable to the Company's shareholders totaled NIS 376 million, or NIS 2.10 per share, compared to net income of NIS 157 million, or NIS 0.89 per share, in the same quarter last year.
  • Occupancy rate as of March 31, 2015 was 95.6% compared to 95.3% as of March 31, 2014. Occupancy rate as of March 31, 2014 was 95.6% in Canada, 95.2% in the US, 95.9% in North Europe and 96.7% in Central and Eastern Europe.
  • The fair value gain from investment property and investment property under development was NIS 107 million compared to NIS 25 million in the same quarter last year.
  • Shareholders' equity as of March 31, 2015 totaled NIS 7,842 million, or NIS 44.0 per share, compared to NIS 7,789 million, or NIS 44.3 per share, as of March 31, 2014.

Acquisition, Development, Redevelopment and Capital Recycling Activities:

  • During the first quarter of 2015, the Group invested NIS 861 million, including one income-producing property totaling 13 thousand square meters for a total amount of NIS 344 million as well as NIS 517 million in new development and redevelopment projects. The Group also recycled capital from the divestiture of non-core assets in the amount of NIS 665 million.
  • As of March 31, 2015, the Group had 8 properties under development with a gross leasable area of 195 thousand square meters and a total investment of NIS 1.6 billion, and 20 properties under redevelopment with a gross leasable area of 311 thousand square meters and a total investment of NIS 3.8 billion. The additional cost to complete the properties under development and redevelopment totals NIS 2.1 billion.
  • During the first quarter of 2015, Gazit-Globe acquired 52.1 million ordinary shares of Atrium European Real Estate Limited ("ATR") representing approximately 13.9% of ATR's issued share capital and voting rights. The shares were acquired from a consortium managed by CPI CEE Management LLC, at a price of EUR 4.40 per share, for a total consideration of approximately EUR 229 million in an off-market transaction. With the closing of the transaction Gazit-Globe became the sole controlling shareholder of Atrium and started to consolidate its financial reports.

Financing Activities:

  • During the first quarter of 2015, the Group raised NIS 0.8 billion in equity. In addition, the Group raised approximately NIS 1.1 billion through debenture offerings.
  • The average nominal annual cost of debt during the first quarter of 2015, was 3.5%, compared to 4.3% in the same quarter last year. The decrease is mainly a result of the negative Israeli CPI in the quarter.
  • The Company declared a quarterly cash dividend of NIS 0.46 per share payable on July 6, 2015 to shareholders of record as of June 22, 2015, which represents an annualized dividend per share of NIS 1.84.

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 Monday, June 1, 2015 at 5:00 pm Israel Time / 4:00 pm Central European Time / 10:00 am Eastern Time, to review the first quarter 2015 financial results. Shareholders, analysts and other interested parties can access the conference call by dialing 1877 280 1254 (U.S./Canada) or 0800 279 5004 (U.K.) or +44 (0) 20 3427 1907 (International) or 1809 212 925 (Israel), or on the Company's website www.gazit-globe.com. (Conference ID 5575639)

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 448 properties in more than 20 countries, with a gross leasable area of approximately 6.5 million square meters and a total value of approximately US$ 19 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 Q1 2015 financial report. For our full Q1 2015 report in English, please go to http://www.gazitglobe.com/financial-reports.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
March 31, December 31,
2015 2014 2014
Unaudited Audited
NIS in millions
ASSETS
CURRENT ASSETS
Cash and cash equivalents 2,991 921 650
Short-term deposits and loans 357 450 368
Marketable securities 45 109 299
Financial derivatives 128 54 90
Trade receivables 582 668 536
Other accounts receivable 389 282 303
Inventory of buildings and apartments for sale 581 727 588
Income taxes receivable 22 20 14
5,095 3,231 2,848
Assets classified as held for sale 303 931 1,046
5,398 4,162 3,894
NON-CURRENT ASSETS
Equity-accounted investees 2,196 5,941 6,213
Other investments, loans and receivables 709 423 564
Available-for-sale financial assets 373 438 383
Financial derivatives 720 838 288
Investment property 65,951 53,114 56,646
Investment property under development 3,119 2,504 1,642
Non-current inventory 2 4 2
Fixed assets, net 201 162 171
Intangible assets, net 100 104 103
Deferred taxes 87 106 78
73,458 63,634 66,090
78,856 67,796 69,984
The notes are an integral part of the interim condensed consolidated financial statements.
March 31, December 31,
2015 2014 2014
Unaudited Audited
NIS in millions
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Credit from banks and others 570 506 553
Current maturities of non-current liabilities 2,618 2,441 2,711
Financial derivatives 55 19 59
Trade payables 812 901 900
Other accounts payable 1,597 1,322 1,262
Advances from customers and buyers of apartments 275 273 304
Income taxes payable 93 32 74
6,020 5,494 5,863
Liabilities attributed to assets held for sale 17 119 110
6,037 5,613 5,973
NON-CURRENT LIABILITIES
Debentures 27,931 22,891 24,433
Convertible debentures 1,162 1,184 1,254
Interest-bearing loans from financial institutions and others 9,428 12,324 8,552
Financial derivatives 95 177 94
Other liabilities 450 193 190
Deferred taxes 4,331 3,312 3,618
43,397 40,081 38,141
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY
Share capital 232 229 232
Share premium 4,413 4,295 4,411
Retained earnings 5,209 5,238 4,915
Foreign currency translation reserve (2,162) (2,062) (1,641)
Other reserves 171 110 127
Loans to purchase shares -- (*-- (*--
Treasury shares (21) (21) (21)
7,842 7,789 8,023
Non-controlling interests 21,580 14,313 17,847
Total equity 29,422 22,102 25,870
78,856 67,796 69,984
*) Represents an amount of less than NIS 1 million.
The notes are an integral part of the interim condensed consolidated financial statements.
CONSOLIDATED STATEMENTS OF INCOME
Three months ended Year ended
March 31, December 31,
2015 2014 2014
Unaudited Audited
NIS in millions (except for per share data)
Rental income 1,527 1,227 4,913
Property operating expenses 499 410 1,584
Net operating rental income 1,028 817 3,329
Revenues from sale of buildings, land and construction works performed 349 331 1,357
Cost of buildings sold, land and construction works performed 355 438 1,660
Gross loss from sale of buildings, land and construction works performed (6) (107) (303)
Total gross profit 1,022 710 3,026
Fair value gain from investment property and investment property under development, net 107 25 1,053
General and administrative expenses (187) (147) (619)
Other income 4 4 55
Other expenses (502) (5) (81)
Company's share in earnings of equity-accounted investees, net 35 78 12
Operating income 479 665 3,446
Finance expenses (312) (379) (2,115)
Finance income 618 120 157
Income before taxes on income 785 406 1,488
Taxes on income 58 92 405
Net income 727 314 1,083
Attributable to:
Equity holders of the Company 376 157 73
Non-controlling interests 351 157 1,010
727 314 1,083
Net earnings per share attributable to equity holders of the Company (NIS):
Basic net earnings 2.11 0.89 0.41
Diluted net earnings 2.10 0.89 0.39
The notes are an integral part of the interim condensed consolidated financial statements.
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 3 months
ended March 31,
For the year ended
December 31
2015 2014 2014
NIS in millions (other than per share data)
Net income attributable to equity holders of the Company for the period 376 157 73
Adjustments:
Fair value gain from investment property and investment property under development, net (107) (25) (1,053)
Capital loss on sale of investment property 5 3 65
Changes in the fair value of financial instruments, including derivatives, measured at fair value through profit or loss (575) (98) 156
Adjustments with respect to equity-accounted investees 12 20 324
Loss from decrease and revaluation in and revaluation of holding interest in investee 1,531 1 1
Deferred taxes and current taxes with respect to disposal of properties 41 100 399
Gain from bargain purchase (1,065) -- (47)
Acquisition costs recognized in profit or loss 1 1 6
Loss (gain) from early redemption of interest-bearing liabilities and financial derivatives (1) (3) 154
Non-controlling interests' share in above adjustments 42 1 267
Nominal FFO 260 157 345
Additional adjustments:
CPI and exchange rate linkage differences (142) (57) (5)
Depreciation and amortization 5 4 13
Adjustments with respect to equity-accounted investees (3) (16) (3)
Other adjustments 40 63 248
FFO according to the management approach 160 151 598
FFO according to the management approach per share (basic and diluted) (in NIS) 0.90 0.86 3.39
Number of shares used in the basic FFO per share calculation (in thousands) 178,414 175,811 176,459
Number of shares used in the diluted FFO per share calculation (in thousands) 178,507 176,014 176,546
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 relating to non-recurring payments arising from the termination of engagements with senior Group officers, as well as income and expenses from operations not related to income-producing property (including the results of Dori Group) and internal leasing costs (mainly salary) incurred in the leasing of properties.
2 Weighted average for the period.

CONTACT: Gazit-Globe Ltd. 1 HaShalom Rd. Tel Aviv, Israel 67892 +972 3 694 8000 Gil Kotler, Senior Executive VP and CFO

Source:Gazit-Globe