The Gazit Globe share yesterday recorded a sharp rise of 4.5% in high trading on the Tel Aviv Stock Exchange, against the background of the reports it published for the fourth quarter and for the whole of 2021. The company is traded at a value of close to NIS 5 billion.
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The income-producing real estate company ended the fourth quarter with a profit of NIS 320 million compared to a loss of NIS 163 million in the corresponding quarter in 2020. The profit helped Gazit Globe to end the entire 2021 with a net profit of NIS 646 million compared to a similar loss of NIS 653 million in 2020 NIS 621 million of the profit is attributed to real estate revaluation, while in 2020 the company recorded a decrease in value of NIS 1.53 billion in the value of the assets. In the fourth quarter alone, the company recorded revaluations of NIS 517 million.
The quarterly income from renting buildings was NIS 583 million, a figure that reflects a decrease of about 3% compared to the corresponding quarter in 2020. Gazit’s equity stands at NIS 5.3 billion, so it is still trading below capital. For an income-producing real estate company, this is a discount, since most companies in the field are traded above capital.
Gazit Globe attracts special attention even on ordinary days, given its portfolio of assets, which are worth close to NIS 40 billion. But these days it is attracting even higher attention. This is after Israel Canada, controlled by Barak Rosen and Assi Tochmeier, bought 10% of the parent company Norstar’s shares on the stock exchange about two months ago, and later reached agreements on the purchase of an additional 11.6% from Haim Katzman, controlling shareholder in Norstar and Gazit Globe. There is no control agreement between the parties, and Israel Canada is pressuring Katzman to sell the rest of its shares in a reverse triangle merger deal.
Katzman, who serves as CEO of Gazit Globe, answered the question of “Calcalist” whether he will conduct the analysts’ call to summarize the company’s annual reports in another year: “My contract is for another two years, and I usually keep contracts.” On the question of a possible change in the picture of control he said: “I do not see a change in the situation I know of.”
In the last quarter, Gazit completed the delisting of Atrium, a subsidiary operating in Europe, with a takeover bid. This is just one step in a series of steps taken by the company in the past year, after the corona crisis, which it also suffered from, and which it used to repurchase shares at a price of NIS 19 per share. In the current quarter, the company raised more than NIS 400 million at a share price of NIS 32.
In the fourth quarter, Gazit recorded a 10.7% increase in NOI (net income from rental activities) to NIS 270 million, and a 21% increase in NOI from identical properties. The FFO (net cash flow) decreased by 6.7% to NIS 98 million, but after neutralizing the strengthening of the shekel in the fourth quarter, the company recorded a growth of 5.4% in the quarterly FFO.
Gazit Globe has increased its activity in the field of rental housing, and according to Katzman, “Calcalist”, “there is a real change of trend among the Israeli public when it comes to rental housing. The whole issue is very true – and does everything for both tenant and developer. Supervised, this is the right direction, and I wish they would do so on a much more massive scale. Institutional construction for rent begins there. There is an onslaught on the product, and there will be a similar phenomenon in Israel as well. If they continue to offer land for rent, the product will take hold in Israel. A family can raise their children up to the military, without worrying about their rent going up. It’s not that you have to quarrel with the landlord every two years over the rent – and it’s a fair deal for the developer as well. In Sweden, Germany and the United States “most of the accommodation is rented.”
Gazit Globe’s cash flow from operating activities amounted to NIS 94 million in the fourth quarter, and at the same time the company invested NIS 864 million in the purchase, construction and development of investment real estate. “We have been moving our operations center to Israel for three years,” said Katzman.
Gazit Globe, which canceled the IPO of local assets in Brazil, is not expected to hurry and return to the move, in light of the rise in interest rates. This is what Katzman said in the analysts’ conversation.
The cost of Katzman’s salary in 2021 was NIS 5.6 million, while the cost of Atrium’s CEO, Liad Barzilai, reached NIS 8.7 million, including bonuses.