Azrieli Group (AZRG) Q2 2024 earnings summary

Executive summary

• Strong operational performance in Q2 2024, with NOI up 5% year-over-year to NIS 553 million and FFO up 17% to NIS 419 million, driven by growth in all core segments.

• Net profit for Q2 2024 was NIS 156 million, down from NIS 419–490 million year-over-year, mainly due to lower revaluation profits.

• Dividend of NIS 1,000 million distributed in May 2024, including proceeds from the Compass sale.

• Continued expansion and investment, especially in data centers, with a strategic focus on growth, minority partners, and future IPO potential.

• Leadership transition underway, with CEO moving to lead the data center business and a search for a new CEO initiated.

Financial highlights

• Q2 2024 revenues were NIS 781 million, up from NIS 735 million in Q2 2023; NOI was NIS 553 million, up from NIS 527 million; FFO reached NIS 419 million, up from NIS 357 million.

• Net profit for the quarter was NIS 156 million, down from NIS 419–490 million year-over-year.

• Investment properties and properties under construction totaled NIS 46.7 billion, up NIS 2 billion during the period.

• Gross financial debt at NIS 22 billion, net financial debt at NIS 20–21.7 billion (38% of total assets), with a decrease of NIS 1 billion since end of 2023.

• Average occupancy across malls, offices, and senior homes remained high at 98–99%.

Outlook and guidance

• Additional NOI and FFO expected from the data center segment and development projects upon full occupancy.

• Short-term projects under development expected to increase annualized NOI by 31% and FFO by 26% after completion.

• Bank of Israel forecasts GDP growth of 1.5% in 2024 and 4.2% in 2025, with inflation rates of 3% and 2.8% respectively.

• Interest rate expected to remain high, with Bank of Israel rate at 4.25% in Q2 2025.

• Management highlights financial strength, low leverage, and high liquidity as key to navigating macroeconomic and geopolitical uncertainties.