Azrieli Group (AZRG) Q1 2024 earnings summary

Executive summary

• Q1 revenue was NIS 749M vs. NIS 707M; NOI rose ~2% to NIS 533M, and same-property NOI increased ~4% to NIS 527M.

• Net profit attributable to shareholders rose ~23% to NIS 464M from NIS 377M; management-method FFO increased to NIS 393M from NIS 350M.

• Growth reflected higher NOI and lower financing expenses, partly offset by reduced fair-value gains and higher tax expense.

Financial highlights

• Total revenues were NIS 1,069M vs. NIS 1,075M; rental, management, maintenance and sales revenue rose to NIS 749M from NIS 707M.

• Net financing expenses fell to NIS 121M from NIS 239M; tax expense rose to NIS 122M from NIS 117M.

• Fair-value gains were NIS 253M vs. NIS 362M; share of results of equity-accounted companies was a NIS 40M loss vs. a NIS 77M loss.

• Operating cash flow was NIS 512M vs. NIS 301M; investment cash outflow was NIS 799M and financing cash outflow was NIS 378M.

• Comprehensive income was reported at NIS 300M vs. NIS 329M, and at NIS 302M vs. NIS 330M in another presentation; exchange-rate effects contributed to the decline.

Outlook and guidance

• Short-term developments and vacant-space lease-up could raise annualized NOI from NIS 2,132M to NIS 2,868M and FFO from NIS 1,571M to NIS 2,106M; calculations assume full occupancy and March 2024 rents, not forecasts.

• Green Mountain bookings indicate 150MW operating capacity through Q1 2026 and annual NOI of NIS 513M; existing sites have potential growth of 600MW, subject to project and market conditions.

• Development pipeline includes 10 Israeli projects totaling ~650,000 sqm; Lot 21 received a completion certificate and occupancy began after quarter-end.

• First 30MW for TikTok Norway AS was expected during H1 2024; a potential ~120MW contract with an international technology company remained under negotiation.

• Further 2024 growth was anticipated from data-center project launches and expansions; construction delays and costs remained subject to uncertainty.