Azrieli Group: Fourth Quarter and 2014 Results

- FFO from real estate activity totaling approx. NIS 787 million, up approx. 4% from 2013

- FFO from real estate activity[1] totaling approx. NIS 207 million in the quarter, compared with NIS 197 million in the same quarter last year, up approx. 5%

- NOI totaling NIS 1,134 million in 2014, up approx. 3% from 2013

TEL AVIV, Israel, March 18, 2015 /PRNewswire/ --

2014 Highlights

Yuval Bronstein, CEO of Azrieli Group (AZRG.TA): "The Group continues to present good performance also this year, which reflects continued growth and improvement in the NOI, in the FFO and in all of the operating parameters. The Group's growth strategy, which focuses on improving the income-producing property and developing new projects, is expressed both in these results and in the significant progress in the development projects: continued lease-up of the Azrieli Holon Center, where we have signed, thus far, contracts for approx. 71,000 sqm, the opening of the Azrieli Ramla mall and of the second floor of the Ayalon mall several days ago, both of which are in fact fully leased-up. The Group is continuing its development momentum in Israel, manifested by the significant projects in Sarona and Rishonim. Alongside the development activity in the Group's core segments, we continue to develop the senior housing segment, in which in this quarter, we won a tender of the ILA for the purchase of land for the development of a senior housing facility in Lehavim. We see this sector as another growth engine and as synergetic with the Company's traditional business."

Summary Financials for Q4/2014:

Core Business Operations:
Retail centers and malls in Israel segment

This quarter saw a moderate rise in the NOI, which was partially offset by a decline in the NOI of Beer Sheva Mall.

Office and other space in Israel segment – consistent growth trend continues

The increase in the NOI and in the same property NOI mainly derives from an increase in rent and operational streamlining at the management companies.

Income-producing property in the U.S.A. segment

The increase in the NOI mainly derives from the purchase of the asset in Houston, and the increase in the same property NOI mainly derives from the weakening of the NIS against the dollar (down by around 1.9% in this period). Net of exchange rate changes, the overseas segment NOI rose by approx. 31%.

Acquisitions, Development and Redevelopment of Property

Financing

In February 2015, the Group issued marketable bonds on the Tel Aviv Stock Exchange, in an amount of approx. NIS 623 million, for a period of 10 years, with a duration of around 5.5 years. The bonds were rated AA+ by S&P Maalot for an issuance of up to NIS 700 million.

The interest rate set in the tender was 0.65%, and the series is not secured by a pledge.

Balance Sheet (on an extended standalone basis) as of December 31, 2014

Non-Core Business Operations

Granite Hacarmel (100% held) – In Q4/2014, Granite recorded a net profit of approx. NIS 20 million, compared with approx. NIS 22 million in the same quarter last year.

In 2014, it recorded a net profit of approx. NIS 158 million compared with a net profit of approx. NIS 130 million in 2013. The increase is attributed, inter alia, to the capital gain from the sale of Tambour which closed in Q2/2014 in consideration for approx. NIS 500 million.

In January 2015, Granite received the consideration for the sale of Supergas' solar business in the sum of approx. NIS 174 million, and recorded a capital gain (net of tax) of approx. NIS 30 million that was recognized in Q4/2014.

Financial Holdings

Bank Leumi (4.8% holding) – In Q4/2014, the share price on TASE declined by approx. 10%, a decrease of approx. 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 December 31, 2014, is approx. NIS 945 million.

Leumi Card (20% holding) – In 2014, a net profit of NIS 200 million was recorded, similarly to the net profit recorded in 2013. In the report period, the Group received a dividend of NIS 10 million from Leumi Card.

The value of the holding on the books as of December 31, 2014, was approx. NIS 593 million, compared with a value of NIS 588 million on December 31, 2013, according to an external assessor.

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 portfolios of malls, shopping centers and office properties nationwide. The Company is publicly traded on the TASE 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 December 31, 2014, the Company has an equity market capitalization of about $4 billion. The Company operates mainly in Israel, and owns and manages properties with a gross leasable area of approx. 807,000 square meters; the Company holds 14 malls and shopping centers comprising 268,000 square meters of leasable space across Israel, 10 office properties comprising 352,000 square meters of leasable space across Israel and 6 properties overseas (mainly in Houston, Texas) comprising 187,000 square meters of leasable space. In addition, the Company has 9 projects under development comprising around 484,500 square meters of leasable space in Israel. Approx. 90% of the fair value of the investment property and the property under development relates to domestic properties (in Israel). The Group has been specializing in shopping center and office space development, acquisition, and management for the past 30 years. For further information, please visit the Company's website at www.azrieli.com.

Disclaimer

[1] Part of the FFO increase, in the amount of approx. NIS 7 million, is due to one-time tax effects. For details see Section 1.1.8 of the Board of Directors' Report as of December 31, 2014.