Gazit-Globe Reports Year-End And Fourth Quarter 2012 Financial Results

Total Investments of NIS 5.7 Billion During 2012

FFO and FFO Per Share Grew by 32 % and 23 % Respectively, Same Property NOI Grew by 3.9 %  

TEL-AVIV, Israel, March 20, 2013 (GLOBE NEWSWIRE) -- Gazit-Globe (TASE:GLOB) (NYSE:GZT), one of the world's leading multi-national real estate companies focused on acquisition, development and redevelopment of supermarket-anchored shopping centers announced today its financial results for the year and the fourth quarter ended December 31, 2012.

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 year increased by 11% to NIS 3,544 million (US$ 949 million) compared to NIS 3,196 million (US$ 856 million) in 2011
  • FFO for the year increased by 32% to NIS 533 million (US$ 143 million), or NIS 3.23 per share (US$0.87), as compared to NIS 405 million (US$ 108 million), or NIS 2.62 per share (US$ 0.70), in 2011
  • Investments during the year totaled NIS 5.7 billion (US$1.5 billion). The group also recycled capital from the divesture of non core assets in the amount of NIS 1.5 billion (US$ 0.4 billion), and sold the majority of its senior housing platform for a total of NIS 0.9 billion (US$ 0.23 billion)
  • Same Property NOI for the year grew by 3.9% compared to 2011 and occupancy rate as of December 31, 2012 increased to 95.0% from 94.3% as of December 31, 2011
  • Shareholders' equity as of December 31, 2012 totaled NIS 7,849 million (US$ 2,103 million), or NIS 47.5 per share (US$ 12.72), as compared to NIS 7,310 million (US$1,958 million), or NIS 44.4 per share (US$ 11.89), as of December 31, 2011
  • EPRA NAV per share as of December 31, 2012 was NIS 56.9 (US$ 15.24) compared to NIS49.4 per share (US$ 13.23) as of December 31, 2011
  • As of December 31, 2012, the Group had cash on hand and unutilized revolving credit facilities in the amount of NIS 8.2 billion (US$ 2.2 billion) of which NIS 2.6 billion (US$ 0.7 billion) is at the level of the Company and its fully owned subsidiaries
  • As of December 31, 2012, net debt to total assets (LTV) was 56.1%, compared to 58.0% as of December 31, 2011
  • The Company's Board of Directors declared a quarterly cash dividend of NIS 0.43 per share (US$ 0.12) payable on April 21, 2013 to shareholders of record as of April 7, 2013, which represents an annualized dividend per share of NIS 1.72 (US$ 0.46)

"During the year our business continued to benefit from favorable trends in many of our key markets, including the U.S., Canada and Europe. Our focus on investing and developing properties in densely-populated urban areas that are supply-constrained and have appealing demographics drove our strong financial performance, including 32% year-over-year increase in FFO and 23% increase in FFO per share." said Roni Soffer, President of Gazit-Globe "We also strengthened and delevered our balance sheet, and continued to recycle capital within the group, while issuing significant amounts of equity and long term debt. The Group has a high quality portfolio and we are well positioned for growth over the long term as we continue to seize opportunities in the various territories in which we operate."

Financial Highlights for 2012:
  • Rental income increased by 11% to NIS 5,249 million compared to NIS 4,718 million in 2011
  • NOI for the year increased by 11% to NIS 3,544 million compared to NIS 3,196 million in 2011
  • FFO for the year increased by 32% to NIS 533, or NIS 3.23 per share, as compared to NIS 405 million, or NIS 2.62 per share, in 2011
  • Net income attributable to the Company's shareholders for the year totaled NIS 957 million, or NIS 5.59 per share, compared to NIS 719 million, or NIS 4.30 per share, in 2011
  • Cash flow from operating activities totaled NIS 1,393 million, compared to NIS 1,126 million in 2011
  • Same-property NOI grew by 3.9%, resulting from an increase of 2.3% in the same-property NOI from North America, a 5.8% increase in same-property NOI from Europe and a 3.5% increase in same-property NOI from Israel
  • ccupancy rate as of December 31, 2012 increased to 95.0% from 94.3% as of December 31, 2011. Occupancy rate as of December 31, 2012 was 94.1% in North America, 96.5% in Europe and 98.6% in Israel
  • The fair value gain from investment property and investment property under development was NIS 1,913 million compared to NIS 1,670 million in 2011

Financial Highlights for the three months ended December 31, 2012:
  • Rental income increased by 10% to NIS 1,370 million compared to NIS 1,248 million in the fourth quarter 2011
  • NOI increased by 7% to NIS 911 million compared to NIS 851 million in the fourth quarter 2011
  • Proportional consolidated NOI increased by 3% to NIS 531 million, compared to NIS 517 million in the fourth quarter 2011
  • FFO increased by 23% to NIS 137 million, or NIS 0.83 per share, as compared to NIS 111 million, or NIS 0.71 per share, in the fourth quarter 2011
  • Net income attributable to the Company's shareholders totaled NIS 224 million, or NIS 1.34 per share, compared to NIS 269 million, or NIS 1.54 per share, in the fourth quarter 2011
  • Cash flow from operating activities totaled NIS 430 million, compared to NIS 234 million in the fourth quarter 2011
  • The fair value gain from investment property and investment property under development was NIS 441 million compared to NIS 843 million in the fourth quarter 2011

Acquisition, Development and Redevelopment Activities:

During the year, the Group acquired 30 income-producing properties totaling 224 thousand square meters and adjacent land parcels for future development in a total amount of NIS 3,836 million. The Group also invested an amount of NIS 1,856 million in new development and redevelopment projects.

As of December 31, 2012, the Group had 10 properties under development with a gross leasable area of 217 thousand square meters and 24 properties under redevelopment with a gross leasable area of 189 thousand square meters with a total investment of NIS 3,856 million. The additional cost to complete the properties under development and redevelopment totals NIS 1,138 million.

In 2012 the Group completed the arrangement with Gazit America (GAA) and First Capital Realty (FCR). The Company acquired the outstanding common shares of Gazit America not already owned by it and First Capital Realty acquired Gazit America's medical office and retail properties.

In August 2012 the Company's privately held subsidiary Royal Senior Care (60%) completed a transaction to sell 12 of its senior housing properties in the U.S. The properties were sold for a total gross consideration of US$ 230 million.

Financing Activities:
  • During 2012, the Group raised NIS 1.8 billion in equity and NIS 6.2 billion in debentuers and convertibale debentuers
  • The average cost of debt during 2012 was 5.2% compared to 5.7% during 2011
  • As of December 31, 2012, net debt to total assets (LTV) was 56.1%, compared to 58.0% as of December 31, 2011
  • During 2012 the credit rating of Atrium was upgraded by S&P and by Fitch to investment grade level of (BBB-) with a stable outlook. The credit rating of First Capital Realty was upgraded by DBRS to BBB (High) and by Moody's to Baa2 with a stable outlook and the credit rating Equity One was upgraded by Moody's to Baa2 with a stable outlook

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 Wednesday, March 20, 2013 at 17:00 Israel Time, 5:00 pm Israel Time/ 4:00 pm Central European Time/ 11:00 am Eastern Time, to review the fourth quarter and year-end 2012 financial results. Shareholders, analysts and other interested parties can access the conference call by dialing 1 866 966 9439 (U.S./Canada) or 0800 694 0257 (U.K.) or +44 (0) 1452 555 566 (International) or 1 809 216 057(Israel), conference ID 12830993, or on the Company's website www.gazit-globe.com .

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 and operators of supermarket-anchored shopping centers in the world. In addition, the Company is active in North America in the healthcare real estate sector. Gazit-Globe is listed on the New York Stock Exchange (NYSE:GZT) and the Tel Aviv Stock Exchange (TASE:GLOB) and is included in the TA-25 and Real-Estate 15 indices in Israel. Gazit Globe owns and operates over 600 properties in more than 20 countries, with a gross leasable area of approximately 6.8 million square meters and a total value of more than $20 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

FORWARD LOOKING STATEMENTS

This release may contain forward-looking statements within the meaning of the U.S. federal securities laws. 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. Except as required by 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.

Some historical numbers were retroactively adjusted due to new accounting standards

Exchange rate as of December 31, 2012 of 1 USD = 3.733 NIS

Below please find excerpts from our 2012 Annual Report. For our full 2012 Annual Report in English, please go to http://www.gazitglobe.com/financial-reports .
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
       
  December 31, January 1,
  2012 *) 2011 *) 2011
  NIS in millions
ASSETS      
       
CURRENT ASSETS      
Cash and cash equivalents 1,683 1,539 692
Short-term investments and loans 538 770 150
Marketable securities at fair value through profit or loss 87 97 50
Available-for-sale financial assets 14 67 42
Financial derivatives 81 84 110
Trade receivables 744 656 126
Other accounts receivable 216 291 202
Inventory of buildings and apartments for sale 712 697 --
Income taxes receivable 15 14 68
       
  4,090 4,215 1,440
Assets classified as held for sale 1,482 714 50
       
  5,572 4,929 1,490
       
NON-CURRENT ASSETS      
Equity-accounted investees 4,713 4,390 3,694
Other investments, loans and receivables 713 308 117
Available-for-sale financial assets 339 314 218
Financial derivatives 929 937 1,087
Investment property 55,465 51,014 41,242
Investment property under development 2,806 2,198 2,266
Non-current inventory 23 23 --
Fixed assets, net 187 157 99
Goodwill 100 101 110
Other intangible assets, net 17 68 10
Deferred taxes 198 160 75
       
  65,490 59,670 48,918
       
  71,062 64,599 50,408
       
*) Retroactively adjusted due to adoption of new IFRS standards.
 
 
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
       
  December 31, January 1,
  2012 *) 2011 *) 2011
  NIS in millions
LIABILITIES AND EQUITY      
       
CURRENT LIABILITIES      
Credit from banks and others 351 453 91
Current maturities of non-current liabilities 2,382 3,525 2,719
Financial derivatives 12 25 37
Trade payables 914 819 302
Other accounts payable 1,256 1,218 842
Advances from customers and buyers of apartments 257 277 --
Income taxes payable 52 53 33
       
  5,224 6,370 4,024
Liabilities attributed to assets held for sale 168 103 --
       
  5,392 6,473 4,024
       
NON-CURRENT LIABILITIES      
Debentures 18,500 15,379 13,768
Convertible debentures 1,197 1,121 739
Interest-bearing loans from financial institutions and others 19,433 18,973 14,644
Financial derivatives 472 339 128
Other financial liabilities 346 277 161
Employee benefit liability, net 7 8 2
Deferred taxes 3,066 2,401 1,751
       
  43,021 38,498 31,193
       
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY      
Share capital 219 218 208
Share premium 3,805 3,787 3,474
Retained earnings 4,699 3,904 3,422
Foreign currency translation reserve (913) (728) (1,313)
Other reserves 60 150 220
Loans granted to purchase shares of the Company **) -- **) -- (4)
Treasury shares (21) (21) (21)
       
  7,849 7,310 5,986
Non-controlling interests 14,800 12,318 9,205
       
Total equity 22,649 19,628 15,191
       
  71,062 64,599 50,408
       
*) Retroactively adjusted due to adoption of new IFRS standards.
**) Represents an amount of less than NIS 1 million.
 
 
CONSOLIDATED STATEMENTS OF INCOME
       
  Year ended December 31,
  2012 *) 2011 *) 2010
  NIS in millions (except for per share data)
Rental income 5,249 4,718 4,147
Property operating expenses 1,705 1,522 1,341
       
Net operating rental income 3,544 3,196 2,806
       
Revenues from sale of buildings, land and construction works performed 1,749 1,001 --
Cost of buildings sold, land and construction works performed 1,665 967 --
       
Gross profit from sale of buildings, land and construction works performed 84 34 --
       
Gross profit 3,628 3,230 2,806
       
Fair value gain from investment property and investment property under development, net 1,913 1,670 935
General and administrative expenses (648) (733) (569)
Other income 164 115 21
Other expenses (47) (110) (46)
Group's share in earnings of equity- accounted investees, net 299 334 171
       
Operating income 5,309 4,506 3,318
       
Finance expenses (2,214) (2,197) (1,764)
Finance income 120 72 525
       
Income before taxes on income 3,215 2,381 2,079
Taxes on income 681 328 390
       
Net income 2,534 2,053 1,689
       
Attributable to:      
Equity holders of the Company 957 719 831
Non-controlling interests 1,577 1,334 858
       
  2,534 2,053 1,689
       
Net earnings per share attributable to equity holders of the Company:      
Basic net earnings 5.80 4.65 5.89
       
Diluted net earnings 5.59 4.30 5.87
       
*) Retroactively adjusted due to adoption of new IFRS standards.
 
 
FFO (EPRA Earnings)
 
The table below presents the calculation of the Company's FFO, computed according to the directives of EPRA and the guidelines of the Israel Securities Authority, and its FFO per share for the stated periods:
 
  For the year ended December 31 For the 3 months ended December 31
  2012 *) 2011 *) 2010 2012 *) 2011
  NIS in millions (other than per share data)
           
Net income attributable to equity holders of the Company for the period 957  719  831  224  269 
Adjustments:          
Fair value gain from investment property and investment property under development, net (1,913) (1,670) (935) (441) (843)
Capital loss (gain) on sale of investment property and investment property under development 63  (13) 22 
Impairment of goodwill --  38  42  --  38 
Changes in the fair value of financial instruments, including derivatives, measured at fair value through profit and loss (36) 179  (474) (147) 74 
Adjustments with respect to equity-accounted investees (43) (131) 77  (7)
Loss from decrease in interest in investees -- 
Deferred taxes and current taxes with respect to disposal of properties 668  324  382  228  149 
Gain from bargain purchase (134) (102) --  --  (18)
Acquisition costs recognized in profit and loss 26  21  21  (3)
Loss from early redemption of interest-bearing liabilities 147  14  132  21 
Non-controlling interests' share in above adjustments 685  646  273  83  337 
Nominal FFO 366  102  141  171  39 
Additional adjustments:          
CPI and exchange rate linkage differences 94  133  115  (40) (15)
Depreciation and amortization 16  15  14 
Adjustments with respect to equity-accounted investees 67  (9) (13) 30 
Other adjustments 1 55  88  98  15  53 
FFO according to the management approach 533  405  359  137  111 
FFO according to the management approach per share (in NIS) 3.23  2.62  2.54  0.83  0.71 
Number of shares used in the FFO calculation 2 (in thousands) 164,912  154,456  141,150 165,136 155,817
           
*)  Retroactively adjusted due to the adoption of new IFRS standards.  
1Income and expenses adjusted against the net income for the purpose of calculating FFO, which include the adjustment of expenses and income from extra ordinary legal proceedings not related to the reporting periods, expenses arising from one-time payments relating to the termination of engagements with senior Group officers and also income and expenses from operations not related to income-producing property, also, with regard to the periods that are presented in 2011 and 2010 above, the data include the adjustment of income from the waiver of the bonus and the compensation with respect to the expiration of the employment agreement of the Chairman of the Board of Directors.
2Number of issued shares (weighted average for the period).

Exchange rate as of December 31, 2012 of 1 USD = 3.733 NIS
CONTACT: Gazit-Globe Ltd.         1 HaShalom Rd.         Tel Aviv, Israel 67892         +972 3 694 8000                  For additional information:         Gil Kotler,         Senior Executive VP and CFO

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