To NIS 293 million, compared with NIS 78 million in the corresponding quarter last year.
The FFO in the third quarter of 2021 rose to a peak of about NIS 201 million, compared to about NIS 141 million in the corresponding quarter last year and compared to about NIS 180 million in the corresponding quarter in 2019.
The NOI attributed to the owner in the quarter increased to approximately NIS 281 million, compared with approximately NIS 230 million in the corresponding quarter last year and compared to approximately NIS 274 million in the corresponding quarter in 2019.
The NOI attributed to the owner in the quarter, before the impact of the Corona easing and work to change the deep mix with the addition of new construction in Ofer Kryon, would have amounted to about NIS 290 million.
From the opening of the malls at the end of February this year until the end of September, there was a significant increase in revenues of about 6% in the Mlisron malls, compared to the corresponding period in 2019.
During the first nine months of the beginning of the year, the company showed an average increase of about 5% in real rents for new contracts and contract renewals in malls and of about 4% in real rents in offices.
The updated revenue forecast for the flagship project Landmark in the Sharona Tel Aviv complex (held with a partner in equal parts) increased from NIS 190 million at the beginning of the year to NIS 290 million – as a result of unprecedented demand for office space from large high-tech companies.
By the end of 2023, the company is expected to repay a debt with an average effective interest rate of 2.7% – potential for annual savings starting in 2024 of over NIS 70 million in interest expenses based on current interest rates.
Melisron Chairman, Liora Ofer: “This is the second consecutive quarter in which the company’s malls have been fully operational, with almost no restrictions and millions of visitors came to them and enjoyed the highest level of shopping and entertainment experience. To continue to improve our existing assets, along with expanding the portfolio and creating new growth engines. ”
Ofir Sarid, CEO of Melisron: “The strong results in the third quarter indicate continued momentum in Melisron’s operations. Visitors are once again spending time in malls, demand for expanding commercial space is growing and we are working to improve the centers and the mix of tenants and businesses. The customer’s entertainment and shopping experience, along with creating added value for tenants. In the office activity we experience huge demand as a result of the high-tech market tide. In the flagship project LANDMARK (held with a partner in equal parts), we conduct advanced negotiations 2023 (when the first contract has already been signed) and on parts of the towers of Tower B whose construction is expected to be completed in 2025.
At the same time, Melisron continues the momentum of initiating existing properties to the extent of 370,000 square meters, for the use of offices, commerce and residences that are in various planning stages and to implement its strategic plan in order to bring about its long-term growth and diversification.
Melisron Company, managed by Ofir Sarid, Reported its financial results for the third quarter of 2021 and concludes the quarter with a sharp increase in net profit, both compared to the corresponding quarter last year and compared to the corresponding quarter in 2019. The increase in profit is mainly due to an increase in investment value for Landmark Tel Aviv. , From the effect of the increase in the index during the period on the rent, as well as from the increase in the rent on new contracts signed during the period. The company also showed an increase in operating parameters – an increase in tenant redemptions, an increase in the NOI share of the owners, an increase in FFO and a further decrease in the leverage rate.
From the opening of the malls at the end of February this year with the end of the third closure until the end of the third quarter of 2021, there has been a significant increase of about 6% in Melisron malls’ revenues, compared to the corresponding period in 2019, despite 11 days of Operation Wall Guard in May this year And the impact of the fourth wave of the corona crisis.
The fashion and footwear sector, which accounts for about half of the mix of malls, stood out especially with an increase in revenue of about 13%, as well as the home design field, which showed an increase of about 8%.
Also, in this quarter the restaurants and fast food chains showed a nice increase in revenue and it seems that the trend of improvement is also noticeable in this industry with the return of the crowd of visitors to spend time in the malls. The positive trend in redemptions in Melisron malls continued even after the balance sheet date, when in October 2021, according to RIS data, there was a sharp increase of about 10% compared to the corresponding quarter in 2019.
From the beginning of the year until the date of the report, the company showed an increase in occupancy rates and real rents in both commerce and offices, which indicates the strength of its assets. In the field of commerce, the company showed an increase in the average occupancy rate to 98.5%, compared to about 98% at the end of 2020, along with an average increase of about 5% in real rents for new contracts and contract renewals signed during the period. In the field of offices, the company showed an increase in the average occupancy rate to 96.4%, compared with 94.5% at the end of 2020, along with an average increase of 4% in real rents for new contracts and contract renewals signed during the period.
Following record demand for office space rentals in the Tel Aviv area, mainly from large high-tech companies, Melisron is raising revenue expectations in the flagship project at Landmark in Sharona Tel Aviv (held with a partner in equal parts). During the quarter, the company signed a first contract to occupy about 11% of the total area of the project, which stands at about 150,000 square meters of offices and commercial space. (Approximately NIS 145 million, the company’s share) is fully occupied, an estimate has passed from the beginning of 2021, which was approximately NIS 190 million (approximately NIS 95 million, the company’s share). In addition, until the end of next year, the company is expected Complete construction of 3 additional projects (buildings C and D in Ofer East Park, completion of the new building in Ofer Carmel Park, and completion of works for a deep mix change and new construction in Ofer HaKryon) which are expected to yield an annual NOI of approximately NIS 43 million (the company’s share in occupancy Full).
Business results
The NOI attributed to the owner increased to NIS 281 million in the third quarter of 2021, compared with NIS 230 million in the corresponding quarter last year and NIS 274 million in the corresponding quarter in 2019. The increase in NOI is mainly due to From the fact that in the corresponding quarter last year the company recognized rent reductions for tenants due to the corona crisis in the amount of NIS 48 million, while in the current quarter the scope of the relief was a significantly lower amount of NIS 4 million, and a temporary decrease of 5 NIS million in rents in the Ofer HaKryon mall as a result of the company’s initiated actions to change a deep mix and work for new construction, which causes temporary closure of stores. NIS 290 million.
FFO in the third quarter of the year increased to NIS 201 million, compared to NIS 141 million in the corresponding quarter last year and compared to NIS 180 million in the corresponding quarter in 2019. The increase in FFO, compared to the corresponding quarter last year, This is 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 approximately NIS 11 million as a result of debts that the company repays at a lower interest rate. The company estimates that after the completion of the population of existing projects in the initiation and the continuation of the debt cycle in the current interest rate environment, the FFO is expected to stand at approximately NIS 1.2 billion.
Bottom line, Melisron ends the third quarter of 2021 with a net profit attributable to shareholders of NIS 293 million, compared to NIS 78 million in the corresponding quarter last year and compared to NIS 131 million in the corresponding quarter in 2019. The increase The sharpness in the net profit is mainly due to an increase in the value of real estate for investment in the amount of NIS 250 million, as a result of the increase in the index that increased the company’s income, an increase in rents and an update of the valuation of the Landmark Tel Aviv project.
Melisron ended the first nine months of 2021 with a 15% increase in NOI attributed to owners to NIS 749 million, compared to NIS 654 million in the corresponding period last year – an increase mainly due to the fact that in the corresponding period last year the company recognized In the Corona relief from rent in the amount of NIS 194 million, while in the first nine months of 2021 the company recognized the relief in a more moderate amount of NIS 103 million. FFO in the period increased by 31% to NIS 520 million, compared with NIS 397 million in the corresponding period last year.
The net profit attributable to shareholders in the first nine months of 2021 increased to NIS 780 million, compared with a loss of NIS 195 million in the corresponding period last year, mainly as a result of an increase in the value of investment real estate.
The company maintains its high financial strength, so that as of September 30, 2121, the company has a cash balance, cash value and approved credit facilities that are not utilized in the amount of NIS 2.2 billion, as well as unencumbered assets in the amount of NIS 6.9 billion. The Company’s leverage ratio (LTV) continued to decline and stands at 45.7%, compared to 47.9% at the end of 2020, and was positively affected by the cash flow from operating activities and the aforesaid increase in net real estate investment value from shareholders. NIS billion, compared to NIS 7.2 billion at the end of 2020.
By the end of 2023, the company is expected to repay a debt bearing an effective weighted interest rate of about 2.7%, compared to the current ability to raise debt at a significantly lower cost. As a result, the potential savings in annual interest rates starting in 2024 is estimated at NIS 70 million, based on current interest rates.
In the third quarter of this year, Melisron consolidated for the first time the financial results of the Groper Social Shopping Company (GROO), which was acquired in July this year. This acquisition was made with the aim of establishing a new digital arm, which will include a group that will advance Melisron’s strategy and vision – strengthening and improving the core business, along with upgrading the customer experience and strengthening the value given to tenants. The expected investment in the next two years in the development of the digital arm and advanced services, including the purchase cost, is about NIS 100 million.
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