Azrieli Group Ltd. Announces Third Quarter 2014 Results

- FFO from the Real Estate Business[1] Totaled NIS 195 Million, Up 2% compared with NIS 192 Million in Same Quarter Last Year.

TEL AVIV, Israel, Nov. 19, 2014 /PRNewswire/ --

Highlights for third quarter 2014

"The Azrieli Group continues to display good performance also in the current challenging business and security environment, including during Operation Protective Edge in this quarter. Our performance reflects continued growth and improvement in NOI, FFO and all operating metrics," stated Yuval Bronstein, CEO of Azrieli Group (TASE: AZRG IT). "The Group's growth strategy, which focuses on improving our income-producing properties and expanding our portfolio through acquisitions and development, is reflected in our investment of about NIS 922 million since the beginning of the year and in significant progress on the development pipeline, which will begin to contribute to NOI in 2015: The Azrieli Holon Center Phase B, the Azrieli Ramla Mall, and construction of the second floor at the Ayalon Mall and in 2017 the Azrieli Sarona Center. At the same time, the Group continues to work on reducing its costs, including the financing costs, by taking advantage of the favorable interest environment in the Israeli market to refinance existing loans and raise financing for the Group's development momentum."

Data Summary for Q3 and 1-9/2014:

Core Business:
Israel
Retail Centers and Malls Segment

The increase in NOI and in same property NOI mainly derives from a rise in the index, an actual increase in rent and operational streamlining at the management companies, which was partially offset mainly by a decline in the NOI of the Be'er Sheva Mall and by cost-increasing regulation in the cleaning sector.

Office and Other Space in Israel Segment

The increase in NOI and in same property NOI mainly derives from a rise in the index, an actual increase in rent, population of areas in the Azrieli Holon Center and operational streamlining at the management companies, and despite cost-increasing regulation in the cleaning sector.

U.S.
Income-Producing Property segment

Most of the increase in NOI derives from the purchase of a new property, a rise in the occupancy rate that was partially offset against a sale of a property in Houston and the strengthening of the Shekel against the Dollar (strengthened by 4% in this quarter versus the same quarter).

Property Acquisitions, Enterprise and Development and Improvement

It is emphasized that the lease-up pace is satisfactory and even exceeds the Company's earlier forecasts.

In light of the success in marketing, the Company has pushed forward the construction of Phase B and has pushed forward its scheduled completion to 2015.

Balance Sheet (on an extended standalone basis) as of September 30, 2014

Non-Core Business
Granite Hacarmel (holding of 100%) – In Q3/2014, Granite recorded a net profit of NIS 9 million, compared with NIS 40 million in the same quarter last year. The decrease is mainly attributed to the sale of Tambour (in Q2/2014) and as a result of losses from GES's business in Central America.
In the first three quarters of 2014, it recorded a net profit of NIS 138 million, compared with a net profit of NIS 108 million in the same period in 2013. In the Report Period, Granite declared a 280 million Shekel dividend.

Financial Holdings
Bank Leumi (holding of 4.8%) – In Q3/2014, the share price on TASE rose by 11%, a rise of NIS 80 million in the value of the holding in the bank, after tax.
The value of the Group's holding in the bank, as of September 30, 2014, is NIS 1,054 million.
Leumi Card (holding of 20%) – During the period, the Group received a dividend of NIS 10 million from Leumi Card. The book value of the holding as of 30.09.2014 was NIS 588 million, according to an external appraiser.
The cost of the investment on the Group's books (dividend-adjusted) is NIS 334 million.

For further details:
Moran Goder
Head of Investor Relations, Azrieli Group
Office: +972-3-6081310
Mobile: +972-54-5608151
[email protected]

About Azrieli Group
Azrieli Group Ltd. owns and operates one of Israel's largest groups of malls, retail centers and office properties in Israel. The Company is traded on the Tel Aviv Stock Exchange under the symbol AZRG IT and is included in the TA-25, TA-100 and TA Real Estate 15 indices. It is the only Israeli stock included in the EPRA Index, which is the European index of the world's largest income-producing property companies. As of September 30, 2014, the Company has a market value of approx. $4.1 billion. The Company operates mainly in Israel, and owns and manages properties with a gross leasable area of 807,000 sqm; the Company holds 14 retail centers comprising 267,000 sqm of leasable space across Israel, 11 office properties comprising 353,000 sqm of leasable space across Israel and 6 properties overseas (mainly in Houston, Texas) comprising 187,000 sqm of leasable space. In addition, the Company has 8 projects under development comprising 442,500 sqm of leasable space in Israel. 90% of the fair value of the investment property and the property under development relate to properties in Israel. Over the past 30 years, the Group has been specializing in the development, acquisition, and management of retail centers and office spaces. For further information, please visit the Company's website at www.azrieli.com.

Disclaimer

[1] For details see Section 1.1.6 of the Board of Directors' Report as of September 30, 2014.