Amot: Results for the Third Quarter of 2021

10 Nov, 2021

 

10.11.2021
 
Amot: Results for the Third Quarter of 2021
 
·       NOI in the third quarter amounted to approximately NIS 197 million, an increase of approximately 3% relative to the corresponding quarter last year.
·       Same property NOI in the third quarter amounted to approximately NIS 196 million, an increase of approximately 5% relative to the corresponding quarter last year.
·       FFO in the third quarter grew by approximately 9% relative to the corresponding quarter, amounting to approximately NIS 149 million.
·       FFO per share in the third quarter amounted to 35.9 agorot, unchanged relative to the corresponding period last year, along with a 9% increase in the weighted number of shares.
·        The Company has revised upwards its 2021 forecasts, whereby NOI is expected to total NIS 765-775 million; FFO is expected to total NIS 565-575 million; and FFO per share is expected to total 137-135 agorot per share.
·        Business developments:
·        In September 2021, the Company signed an agreement for the acquisition of rights to Tzrifin logistics park, for a total consideration of approximately NIS 1.5 billion - The complex has a total area of approximately 274 dunams, and includes 18 logistics buildings with a total area of approximately 113 thousand square meters. The logistics buildings currently built in the complex are leased at full occupancy, while the aggregate rent amounts to an annual total of approximately NIS 56 million (including management fees). The transaction was closed on September 30, and the consideration for the transaction was paid in full. The transaction was financed by way of an equity issue and the use of credit facilities, which were repaid after the balance sheet date, through a loan from a banking institution and an issuance of debentures (Series H).
·        In October, the Company’s Board of Directors passed a resolution to build and market the ToHa 2 project - The project will be built by Amot and Gav Yam, the joint holders (in equal parts) of the rights to a plot of land located at the intersection of Totzeret Ha’aretz, Yigal Alon and Derech HaShalom streets in Tel Aviv, in continuation of and adjacent to the ToHa1 project.  ToHa2 will include around 160 thousand square meters of aboveground areas for marketing, and approximately 45 thousand of underground parking lots, and its construction is expected to begin in the coming months, once the construction of the partial underground parking lot has been completed. The project is expected to be completed in 2026. The total investment of the Amot and Gav Yam in the construction of the project is estimated at around NIS 3 billion (of which, a total of around NIS 700 million has been paid to date), and the expected revenue from the tower, once completed and fully occupied, is estimated at around NIS 280 million per year. Additionally, in August 2021 the partners (Amot and Gav Yam) acquired from Tel Aviv Municipality the rights to build the ToHa 2 project, and leased the land for a period ending in 2108.
 
Mr. Shimon Abudraham, CEO of Amot: “We have concludeded an extraordinary quarter in which we increased the volume of the company's real estate assets by approximately 2 billion NIS. The Zrifin deal expresses the company's ability to identify a significant business opportunity, price the property and the real estate development potential inherent in it, make an offer and complete purchase and financing procedures for a NIS 1.5 billion deal, all within a short period of six weeks. In another transaction, we leased the building rights to the ToHa2 tower from the Tel Aviv Municipality and launched the project. The transactions were carried out at good prices and their potential development and profit for the future is significant. Along with locating and purchasing additional quality properties. At the same time, we are constantly exploring opportunities to enter new areas of activity in which real estate plays a significant role.”
 
 
Summary data for the first nine months of 2021 (in millions of NIS):
 
% Change 2020/21
1-9
2021
1-9
 2020
% Change 2020/21
Q3 2021
Q3 2020
2020
 
NOI
1%
567
560
3%
197
192
734
Net profit
 
314
219
 
16
121
289
Real FFO after neutralizing one-time financing expenses, net of tax
7%
420
393
9 %
149
136
512
FFO per share (in agorot) after neutralizing one-time financing expenses
(1%)
101.9
103.0
-
35.9
35.8
131.5
Weighted number of shares par value
8%
412,106
381,412
9%
414,684
381,490
389,183
Change in CPI during the period
 
2.2%
(0.6%)
 
0.79%
0.1%
(0.6%)
 
Main data and points in the report (according to extended consolidated reports):
·         99 new contracts were signed during the third quarter, including exercised options and contract renewals of 49 thousand square meters, with annual rent of NIS 54 million.
·         NOI in the third quarter amounted to approximately NIS 197 million, as compared with approximately NIS 192 million in the corresponding quarter last year, an increase of approximately 3% due to concessions which were given in the corresponding period last year to tenants of the commercial centers, of approximately NIS 9 million.
·         Same property NOI amounted to approximately NIS 196 million, as compared with approximately NIS 188 million in the corresponding quarter last year. The increase of approximately 5% was due to concessions which were given due to tenants in the corresponding period, due to the lockdowns.
·         FFO in the third quarter amounted to approximately NIS 149 million, an increase of approximately 9%, as compared with NIS 136 million in the corresponding quarter last year. The growth was mostly due to the increase in NOI during the quarter, the decrease in real financing expenses, and the decline in current taxes due to the increase of the CPI during the reporting period, as compared with a decline in the corresponding period last year.
·         FFO per share in the third quarter amounted to 35.9 agorot, unchanged relative to the corresponding period, along with growth of 9% in the Company’s weighted number of shares.
·         Net profit in the quarter amounted to approximately NIS 16 million, as compared with NIS 121 million in the corresponding period last year. The decline is due to inclusion in the quarter of amortization of transaction costs with respect to the acquisition of rights to ToHa2 and Tzrifin Park of approximately NIS 106 million.  
·      The total value of investment property (revenue-generating and under construction) as of September 30, 2021 amounted to approximately NIS 16.2 billion.
·      The occupancy rate as of September 30, 2021 amounted to approximately 97.5%, a slight increase relative to the occupancy rate as of December 31, 2020, which was around 97.2%.  
·         Equity attributable to shareholders as of September 30, 2021 amounted to a total of NIS 7.1 billion (equity per share of NIS 16.02), as compared with a total of approximately NIS 6.32 billion (equity per share of NIS 15.42) as of December 31, 2020. The increase was due to comprehensive income in the period, after offsetting dividend distributions.
·         As of the publication date of the report, the Company has cash balances of approximately NIS 600 million, and unused credit facilities of NIS 1,185 million.
·         All of the Company’s properties are unpledged (except for properties owned with partners, worth approximately 2% of the total value).
 
·         Net financial debt as of the balance sheet date was approximately NIS 7.4 billion, representing approximately 45% of the total balance sheet (after neutralizing cash and cash equivalents).
·         Capitalisation rate - The weighted rate of return derived from revenue-generating investment property (excluding Tzrifin logistics park) as of the end of the period amounted to 6.50%.
·         Amot has seven projects in construction, and the Company’s share therein is 270 thousand square meters. The total expected investment in these projects is in the range of NIS 3.7-3.9 billion (the Company’s share): ToHa2, office building in Holon, office building in Modiin, HaLechi complex in Bnei Brak, K complex in Jerusalem, Beit HaVered in Givatayim, and land in Beit Shemesh.  
Forecast for FY 2021:
 
Presented below is the Company’s forecast regarding the Company’s primary operating results in FY 2021, based on the following working assumptions:
o   Consumer Price Index - CPI increase of 2.5%.
o   No significant changes in the Company’s business environment in Israel.
o   Signed lease agreements and projections of Company management regarding current lease renewals in 2021.
 
The Company is revising its forecasts upwards for the second time during the FY 2021 reporting period. Below is an updated forecast:
 
 
Actual performance 9 months to 9/2021
Updated forecast FY 2021
Original forecast
FY 2021
Actual performance FY 2020
NOI
(Millions of NIS)
567
765-775
735-765
734
Real FFO
(Millions of NIS)
420
565-575
535-555
512
FFO per share (Agorot)
101.9
135-137
130-135
131.5
 
 
 
Dividend
In March 2021, the Company’s Board of Directors determined that in 2021 the Company intends to distribute minimum annual dividends of 100 agorot per share, to be paid in 4 quarterly payments of 25 agorot per share, subject to a specific resolution of the Board of Directors at the end of each quarter. Accordingly, in August 2021, the Company announced a dividend distribution for the firth quarter, of 25 agorot per share (approximately NIS 110.5 million), to be paid in November 2021.
 
About Amot
 
Amot, a member of Alony Hetz Group, is one of the leading and largest revenue-generating real estate companies in Israel. The Company’s stock is listed on the Tel Aviv 35 Index and on the Tel Aviv Real Estate Index. Amot holds 123 revenue-generating properties in Israel, with a total area of 1.8 million square meters. Most of the Group’s properties (90%) are located in major cities in Central Israel, and in large cities with high occupancy rates (around 97.5%). 46% of the value of the revenue-generating properties represent offices; 29% logistics and industrial parks; 18% commercial; 5% supermarkets; and 2% others. The Company has 7 projects under construction of approximately 270 thousand square meters, including the ToHa2 project, the office building in Holon, the office building in Modiin and HaLechi complex, as well as 3 properties in planning and initiation stages, with a total area of around 64 thousand square meters.
Major properties include ToHa1 (Totzeret Ha’aretz complex), the Atrium Tower in Ramat Gan, the logistics center in Tzrifin, the Teva logistics center in Shoham, Shufersal’s online center in Modiin, Amot Tower (formerly known as IBM House), Beit Amot Mishpat, Amot Insurance House, Kiryat Ono Shopping Mall, and a portfolio of around 35 supermarkets throughout the country.