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Melisron (TASE :), led by CEO Ofir Sarid (pictured above), reports on Monday morning on its own for 2021 and concludes a year with record profits of about NIS 1.5 billion, compared to a loss of about NIS 250 million in 2020. Against the background of the positive financial statements, Melisron shares rose about 2.6% this morning during trading on the Tel Aviv Stock Exchange, reflecting a real estate company with a market value of about NIS 11.7 billion. From the beginning of 2022, the Melisron share completed a decline of about 15%.
Melisron, which is controlled by Ofer Investments and its chairman is Liora Ofer, specializes in the construction, maintenance and management of malls and office complexes and high-tech campuses branded under the name “Ofer”. As of the end of 2021, the company owns and manages 27 income-producing properties Plus 26,000 parking spaces. Melisron’s rental areas are populated with high occupancy rates, of about 98%. Among the company’s main assets: Ofer Ramat Aviv Mall, Ofer HaKryon, Ofer Grand Beer Sheva Mall, Ofer Grand Mall Haifa, Ofer Rehovot, Ofer Grand Mall Petah Tikva, Ofer Bilu Center Outlet, Ofer Park Petah Tikva East and Ofer Park Petah Tikva West.
The significant increase in Melisron’s profits last year is due to an increase in NOI (income from renting the company’s assets, plus income from asset management, less expenses related to operating the assets), resulting from an increase in rents on new contracts signed, options and index increases. Spring and cancellation of a decrease in property value recorded in 2020 with the outbreak of the corona virus.
Melisron also showed an annual increase in operating parameters, including a peak in FFO (excluding corona relief), a decrease in the leverage rate and a 6% increase in tenant redemptions (FFO is a net profit excluding revaluations and one-time expenses and income).
Regarding redemptions in malls, Melisron notes that since the malls opened at the end of February 2021, with the end of the third closure until the end of 2021, there has been a significant 6% increase in Melisron malls redemptions, compared to redemptions in the corresponding period in 2019. The walls “in May and the effect of the fourth and fifth waves of the corona during the year. In February 2022, with the onset of the decline in morbidity along with the recovery in the volume of activity in the economy, there was (according to RIS reports) an increase in the company’s mall revenues, which intensified from the second half of the month.
During 2021, the company showed an increase in both occupancy rates and real rents, in commerce and offices. Thus, in the field of commerce there was an average increase of about 5% in real rents for new contracts and exercise of options and in the field of offices there was an average increase of about 3% in real rents for new contracts and exercise of options.
Melisron has six projects that are in various stages of implementation and are expected to yield the company an annual NOI of approximately NIS 220 million upon completion and construction. The most prominent of these is the Landmark flagship project in the Sharona complex in Tel Aviv (held with a partner in equal parts), which during 2021 raised the expected profit from it from NIS 190 million (NIS 95 million to the company) to NIS 307 million (NIS 154 million). Shekel part of the company) due to record demand for office space in the area. Construction of the project’s first tower is expected to be completed by the end of 2023, and to date leases have been signed for about a third of its area.
At the same time, Melisron announced progress in implementing the strategic plan, according to which the construction of 12 new projects will begin in the next two years, including about 400 housing units for rent, nine more projects in an area of 160,000 square meters of offices and commerce, and an advanced server farm. About 16 megawatts These projects are expected to yield the company after their completion an annual NOI of NIS 200-230 million.
In summary, the company has projects in the advanced stages and in the advanced planning stages that are expected to generate an additional NOI in the range of NIS 420-450 million by 2028 (of which NIS 220 million is attributed to projects in the early stages
And NIS 200-230 million are attributed to projects in initiation) – a figure that is expected to reflect an increase of about 40% in the company’s NOI compared to the annual NOI that currently represents.
The NOI attributed to owners in 2021 increased by 33% to NIS 1.03 billion (a representative annual rate of NIS 1.15 billion, based on the fourth quarter of 2021) compared to NIS 779 million in 2020. The sharp increase is due to a decrease in the amount of rent reductions granted. For tenants due to the corona crisis, which this year amounted to about NIS 104 million, as well as an increase in real rents from signing new contracts, realizing contracts and raising the index.
The FFO in 2021 increased to NIS 723 million (a representative annual rate of NIS 812 million, based on the fourth quarter of 2021), compared to NIS 461 million in 2020 and compared to NIS 717 million in 2019. The sharp increase in FFO, compared For 2020, this was mainly due to the aforesaid decrease in the amount of relief granted to tenants, as well as savings in financing expenses in the amount of NIS 37 million as a result of actions taken by the company to debt. The company estimates that after the completion of the population of the new projects in the implementation stages, which are expected to be completed in 2025 and the continuation of the debt cycle in the current interest rate environment, the FFO is expected to stand at NIS 1.2 billion.
Bottom line, Melisron ends 2021 with an annual record in net profit attributable to shareholders that amounted to NIS 1.5 billion, compared with a loss of NIS 250 million in 2020. The transition from a loss to record profits was mainly due to an increase in real estate investment value, net tax in total Of NIS 1.02 billion during 2021, compared with a decrease in net tax value of NIS 571 million in 2020, as a result of the increase in rents, the increase in the index that increased the company’s revenues, the cancellation of the decrease in assets in 2020 due to the outbreak of the corona virus. A decrease of about 0.25% in the weighted discount rate of the income-producing properties to about 6.76%, as well as an update of the valuation of the Landmark Tel Aviv project.
In the fourth quarter of 2021, the NOI attributed to owners increased to NIS 285 million, compared to NIS 281 million in the previous quarter and compared to NIS 125 million in the corresponding quarter in 2020. The increase in NOI, compared to the corresponding quarter last year, was mainly due to a significant decrease In relief for tenants who amounted to only NIS 2 million this quarter. The FFO in the quarter increased to NIS 203 million, compared with NIS 201 million in the previous quarter and compared to NIS 64 million in the corresponding quarter last year.
Melisron records a quarterly record in net profit attributable to shareholders, which amounted to NIS 693 million, compared with a loss of NIS 55 million in the corresponding quarter last year, as a result of an increase in the value of real estate for investment, net of tax, in the amount of NIS 552 million. Rents, increase in the index and update of the valuation of the Landmark project.
The equity attributed to Melisron shareholders at the end of 2021 increased to NIS 8.7 billion, compared with NIS 7.2 billion at the end of 2020 – an increase of NIS 1.5 billion during 2021.
According to Liora Ofer, chairman of Melisron,
“The company concludes 2021 with a significant increase in operating results in both mall and office operations, indicating, among other things, the market’s adaptation to the reality of routine alongside Corona. “Entering new areas and improvement and property development moves. All of these will ensure the continuation of the positive trend in the coming years as well.”