Continue to make progress on its strategy while strengthening financial position

TEL-AVIV, Israel, March 27, 2017 (GLOBE NEWSWIRE) -- Gazit-Globe (NYSE:GZT) (TSX:GZT) (TASE:GZT), a leading global real estate company focused on the ownership, management, acquisition, development and redevelopment of supermarket-anchored shopping centers in major urban markets, announced today its financial results for the year-end and fourth quarter ended December 31, 2016.

Highlights:
  • Rental income totaled NIS 4,801 million (US$ 1,249 million) compared to NIS 4,809 million (US$ 1,251 million) in 2015.
  • NOI for 2016 totaled NIS 3,194 million (US$ 831 million) compared to NIS 3,196 million (US$ 831 million) in 2015.
  • FFO for 2016 totaled NIS 586 million (US$ 152 million), or NIS 3.00 per share (US$ 0.78), compared to NIS 627 million (US$ 163 million), or NIS 3.51 per share (US$ 0.91) in 2015. The decrease in FFO is mainly due to the effects of exchange rates, the sale of shares in subsidiaries and a loss attributable to the sale of the Company's shares in Dori Construction.
  • 2016 profit attributable to shareholders totaled NIS 787 million (US$ 205 million), or NIS 3.96 per diluted share (US$ 1.03), compared to NIS 620 million (US$ 161 million), or NIS 3.45 per diluted share (US$ 0.90 per share) in 2015.
  • Investments in acquisition, development and redevelopment of real-estate in 2016 totaled NIS 4.6 billion (US$ 1,195 million). In addition, in 2016 the Company disposed of non-core assets totaling NIS 1.5 billion (US$ 381 million).
  • Same Property NOI for the Group in 2016, excluding the effects of foreign exchange rate, increased by 1.2% compared to 2015 (or 2.1% excluding Russia). The occupancy rate as of December 31, 2016, remained high at 95.6%, compared to 95.8% as of December 31, 2015.
  • The net fair value gain of investment property and investment property under development was NIS 885 million (US$ 230 million), compared to a fair value loss of NIS 372 million (US$ 97 million) in 2015.
  • Consolidated cash flow from operating activities totaled NIS 1,909 million (US$ 457 million), compared to NIS 1,514 million (US$ 394 million) in 2015.
  • Shareholders' equity as of December 31, 2016, increased and totaled NIS 8,158 million (US$ 2,122 million), or NIS 41.7 per share (US$ 10.8), compared to NIS 7,512 million (US$ 1,954 million), or NIS 38.4 million per share (US$ 10.0), as of December 31, 2015.
  • EPRA NAV per share as of December 31, 2016, was approximately NIS 56.5 per share (US$ 14.7), compared to approximately NIS 52.9 per share (US$ 13.8) as of December 31 2015.
  • As of December 31, 2016, the Group had cash, cash equivalent and unused revolving credit facilities in the aggregate amount of NIS 12.1 billion (US$ 3.15 billion), of which NIS 3.2 billion (US$ 0.83 billion) was at the Company level.
  • The Group's net debt to total assets (LTV) as of December 31, 2016, was 50.1%, compared to 51.3% as of December 31, 2015.
  • As was previously announced, Gazit Globe's US subsidiary Equity One (NYSE:EQY) completed the merger transaction with Regency Centers Corporation (NYSE:REG) pursuant to which REG is the surviving entity. Gazit Globe is the largest shareholder in the combined company, which is the largest high-quality shopping-center REIT in the US and was recently added to the S&P 500.
  • The Company will distribute a quarterly cash dividend of NIS 0.35 per share (approx. US$ 0.09 per share), payable on April 24, 2017 to shareholders of record on April 12, 2017.

Dori J. Segal, Vice-Chairman and CEO Commented: "2016 was a very busy year for Gazit Globe, in which Equity one and Regency Centers merged into the largest, high quality shopping center REIT in the US, we exited the construction business in Israel and as part of our new strategy, we invested heavily in Brazil and in Israel increasing the private real estate part of the balance sheet from 19% to 25%. Our European subsidiaries continued to significantly improve their business and all those together strengthen our platform and financial position and increased our Shareholders' Equity. I want to thank Rachel Lavine; today, our company is better than it was in 2015.

2017 is off to a good start; we have completed the merger transaction in the US and took further steps to strengthen and increase our financial position and flexibility, which will greatly help us to continue executing our strategy in the near term."

Additional highlights for the fourth quarter of 2016:

  • Rental income totaled NIS 1,208 million compared to NIS 1,225 million in the same quarter last year. Excluding the effect of foreign exchange rate fluctuations, the rental income decreased by 0.1% compared to the same quarter last year.
  • NOI for the quarter totaled NIS 789 million compared to NIS 804 million in the same quarter last year. Excluding the effect of foreign exchange rate fluctuations, NOI decreased by 0.6% compared to the same quarter last year.
  • FFO for the quarter totaled NIS 165 million, or NIS 0.84 per share, compared to NIS 146 million, or NIS 0.82 per share, in the same quarter last year.
  • Consolidated cash flow from operating activities totaled NIS 742 million, compared to NIS 344 million in the same quarter last year.

Acquisition, Development, Redevelopment and Capital Recycling Activities:
  • During 2016, the Group invested NIS 4,594 million, which included NIS 2,454 million invested in the acquisition of 15 income-producing properties totaling 111 thousand square meters, as well as NIS 2,140 million in development and redevelopment projects.
  • As of December 31, 2016, the Group had 3 properties under development with a gross leasable area (GLA) of 76 thousand square meters and a total investment of NIS 1.0 billion, and 21 properties under redevelopment with a GLA of 225 thousand square meters and a total investment of NIS 4.9 billion. The additional cost to complete the properties under development and redevelopment totaled NIS 1.8 billion.
  • Subsequent to balance sheet date, Gazit Globe's US subsidiary Equity One (NYSE:EQY) completed the merger transaction with Regency Centers Corporation (NYSE:REG). Gazit Globe is the largest shareholder in the combined company, which is the largest high-quality shopping-center REIT in the US.
  • During the fourth quarter of 2016, Gazit Brasil completed the acquisition of 33% of Shopping Cidade Jardim in Sao Paulo, Brazil for R$ 410M (approx. USD 130 million).

Financing Activities:
  • The average interest rate on outstanding debt was 4.0%, compared to 4.3% in 2015.
  • The Company will distribute a quarterly cash dividend of NIS 0.35 per share, payable on April 24, 2017 to shareholders record as of April 12, 2017.
  • During the fourth quarter of 2016, the Company extended and increased its credit facility with Citibank by approximately US$150 million to US$360 million.

ACCOUNTING AND OTHER DISCLOSURES

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".

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 Monday, March 27, 2017 at 5:00 pm Israel Time / 4:00 pm Central European Time / 10:00 US Eastern Time, to review the year-end and fourth quarter 2016 financial results. Shareholders, analysts and other interested parties can access the conference call by dialing: United States 1888 668 9141, Canada 1866 485 2399, United Kingdom 0800 917 5108, International / Israel +972 3 9180644

A presentation and replay of the call will be available on the company's website under "Investor Relations" at: www.gazitglobe.com

Webcast link: http://www.veidan-stream.com/?con=Gazit_Globe_Q4_2016_Results_Conference_Call

About Gazit-Globe

Gazit-Globe is a global owner, developer and operator of high quality necessity-driven supermarket-anchored retail properties in urban markets. Gazit-Globe is listed on the New York Stock Exchange (NYSE:GZT), the Toronto Stock Exchange (TSX:GZT) and the Tel Aviv Stock Exchange (TASE:GZT) and is included in the TA-35 index in Israel. As of December 31, 2016 Gazit-Globe owns and operates 426 properties in more than 20 countries, with a gross leasable area of approximately 6.6 million square meters and a total value of approximately 22 US$ billion.

FOR ADDITIONAL INFORMATION

A comprehensive copy of the Company's financial report is available on Gazit-Globe website at www.gazitglobe.com

Investors Contact: IR@gazitgroup.com, Media Contact: PR@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 applicable securities laws. In the United States, 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 and the Canadian Securities Administrators. Except as required by applicable 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.

Below please find excerpts from our year-end and Q4 2016 financial report. For our full year-end and Q4 2016 report in English, please go to http://www.gazitglobe.com/investor-relations/financial-reports.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
      December 31,
      2016   2015
  Note   NIS in millions
           
ASSETS          
CURRENT ASSETS          
Cash and cash equivalents 3    1,520    2,125
Short-term investments and loans 4a    96    203
Marketable securities 4b    212    38
Financial derivatives 36c    98    77
Trade receivables 5    163    467
Other accounts receivable 6    329    363
Inventory of buildings and apartments for sale 7    14    522
Income taxes receivable      26    24
       2,458    3,819
Assets classified as held for sale 8    21,132    826
       23,590    4,645
NON-CURRENT ASSETS          
Equity-accounted investees 9    2,097    2,996
Other investments, loans and receivables 10    1,223    754
Available-for-sale financial assets 11    384    771
Financial derivatives 36c    516    702
Investment property 12    55,982    70,606
Investment property under development 13    2,113    2,587
Fixed assets, net 14    152    170
Intangible assets, net 15    815    900
Deferred taxes 25p    15    105
       63,297    79,591
       86,887    84,236
           
The accompanying notes are an integral part of these consolidated financial statements.

      December 31,
      2016     2015*)
  Note   NIS in millions
LIABILITIES AND EQUITY          
CURRENT LIABILITIES          
Credit from banks and others 16    775      1,062  
Current maturities of non-current liabilities 17    3,043      2,279  
Financial derivatives 36c    47      45  
Trade payables 18    377      833  
Other accounts payable 19    1,820      1,521  
Advances from customers and buyers of apartments 7    -      326  
Income taxes payable      93      111  
       6,155      6,177  
Liabilities attributed to assets held for sale 8    7,024      50  
       13,179      6,227  
NON-CURRENT LIABILITIES          
Debentures 20    27,319      29,480  
Convertible debentures 21    296      921  
Interest-bearing loans from banks and others 22    8,183      11,457  
Financial derivatives 36c    50      93  
Other liabilities 23    283      402  
Deferred taxes 25p    3,809      4,661  
       39,940      47,014  
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY 27        
Share capital      249      249  
Share premium      4,992      4,983  
Retained earnings      5,699      5,207  
Foreign currency translation reserve     (3,257 )   (3,103 )
Other reserves      496      197  
Treasury shares     (21 )   (21 )
       8,158      7,512  
Non-controlling interests 27g    25,610      23,483  
Total equity      33,768      30,995  
       86,887      84,236  
           
*)  Reclassified, refer to Note 2ff.          
           

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
      Year ended
      December 31,
      2016     2015*)   2014*)
  Note   NIS in millions
    (except for per share data)
Rental income 30    4,801      4,809      3,725  
Property operating expenses 31    1,607      1,613      1,269  
Net operating rental income      3,194      3,196      2,456  
Fair value gain (loss) from investment property and investment property under development, net      885     (372 )    400  
General and administrative expenses 32   (542 )   (568 )   (386 )
Other income 33a    37      27      52  
Other expenses 33b   (236 )   (795 )   (57 )
Company's share in earnings of equity-accounted investees, net 9b    142      164      3  
Operating income      3,480      1,652      2,468  
Finance expenses 34a   (1,600 )   (1,586 )   (1,835 )
Finance income 34b    325      849      144  
Income before taxes on income      2,205      915      777  
Taxes on income (tax benefit) 25q    434     (79 )    282  
               
Net income from continuing operations      1,771      994      495  
Net income from discontinued operations, net 9d,9g    1,409      1,312      588  
Net income      3,180      2,306      1,083  
               
Attributable to:              
Equity holders of the Company      787      620      73  
Non-controlling interests      2,393      1,686      1,010  
       3,180      2,306      1,083  
Net earnings (loss) per share attributable to equity holders of the Company (NIS): 35            
Basic earnings (loss) from continuing operations      2.70      1.36     (0.70 )
Basic net earnings from discontinued operations      1.33      2.11      1.11  
Total basic net earnings      4.03      3.47      0.41  
Diluted earnings (loss) from continuing operations      2.63      1.35     (0.72 )
Diluted net earnings from discontinued operations      1.33      2.10      1.11  
Total diluted net earnings      3.96      3.45      0.39  
               
*)  Reclassified, refer to Note 2ff        
               
The accompanying notes are an integral part of these consolidated financial statements.
 

The table below presents the calculation of the Company's FFO, calculated according to the recommendations 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 endedDecember 31
  2016   2015   2014   2016   2015
  NIS in millions (other than per share data)
                   
Net income attributable to equity holders of the Company in the period  787      620      73      587      206  
                   
Adjustments:                  
Fair value gain from investment property and investment property under development, net (2,081 )   (711 )   (1,053 )   (969 )   (231 )
Capital loss (gain) on sale of investment property (6 )    106      65     (1 )    15  
Changes in the fair value of financial instruments, including derivatives, measured at fair value through profit or loss  120     (693 )    156     (227 )   (97 )
Adjustments with respect to equity-accounted investees (15 )   (50 )    324     (8 )   (36 )
Loss on disposal of investees -      1,533      1     -     -  
Deferred taxes and current taxes with respect to disposal of properties  576      138      399      219      64  
Gain from bargain purchase, net of goodwill impairment  23     (1,026 )   (47 )    23     39  
Acquisition costs recognized in profit or loss  4      41      6      1      7  
Loss from early redemption of interest-bearing liabilities and financial derivatives  76      78      154     -      11  
Non-controlling interests' share in above adjustments  917      395      267      455      132  
                   
Nominal FFO (EPRA Earnings)  401      431      345      80      110  
                   
Additional adjustments:                  
CPI and exchange rate linkage differences (24 )   (77 )   (5 )   (21 )   (57 )
Depreciation and amortization  16      21      13      4      6  
Adjustments with respect to equity-accounted investees -      -     (3 )   -      0  
Other adjustments (1)  193      252      248      102      87  
                   
FFO according to the management approach (Adjusted EPRA Earnings)  586      627      598      165      146  
Basic FFO per share according to the management approach (in NIS)  3.00      3.51      3.39      0.84      0.82  
Diluted FFO per share according to the management approach (in NIS)  3.00      3.51      3.39      0.84      0.82  
Number of shares used in the basic FFO per share calculation (in thousands) (2)  195,493      178,426      176,459      195,516      178,433  
Number of shares used in the diluted FFO per share calculation (in thousands) (2)  195,567      178,601      176,546      195,566      178,581  

1 Income and expenses adjusted against the net income for the purpose of calculating FFO, which include the adjustment of expenses and income from extraordinary legal proceedings not related to the reporting periods (including a provision for legal proceedings), non-recurring expenses arising from the termination of engagements with senior Group officers, as well as income and expenses from operations not related to income-producing property (including the results of Luzon Group in the comparative periods), and the cost of debt with respect thereto, non-recurring restructuring expenses, and internal costs (mainly salary) incurred in the leasing of properties. 2  Weighted average for the period.

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