Azrieli Group (AZRG) Q4 2023 earnings summary

Executive summary

• FY2023 NOI rose 8% to NIS 2,113M; excluding NIS 35M of tenant relief, NOI was NIS 2,148M, up 10%.

• Management-method FFO rose 7% to NIS 1,461M; net profit attributable to shareholders reached NIS 2,218M versus NIS 1,792M in 2022.

• Average occupancy was 99% in malls, 98% in Israeli offices and 97% in senior housing, excluding properties in initial occupancy stages.

• Development, betterment and property investment totaled ~NIS 4.2B in 2023, including ~NIS 1.3B in Q4.

Financial highlights

• 2023 revenue was NIS 2,943M versus NIS 2,690M in 2022; Q4 revenue was NIS 722M versus NIS 708M.

• Annual NOI was NIS 2,113M versus NIS 1,953M; Q4 NOI was NIS 494M versus NIS 511M, including NIS 35M of war-related tenant relief.

• 2023 management-method FFO was NIS 1,461M versus NIS 1,360M; excluding senior housing, FFO was NIS 1,358M versus NIS 1,275M, up 7%.

• Q4 FFO was NIS 356M, down 2% YoY; excluding senior housing, it was NIS 314M, down 6%.

• 2023 same-property NOI rose 5%; same-property store revenues increased 2.2% on the stated comparable basis, excluding Mall HaYam and Azrieli Town retail space.

Outlook and guidance

• Illustrative post-development and occupancy calculations indicate NOI of NIS 2,845M versus 2023 actual NOI of NIS 2,113M, a stated 35% increase; assumptions include full occupancy and December 2023 rents, and are not forecasts.

• The same illustrative analysis estimates management-method FFO of NIS 2,098M versus 2023 actual FFO of NIS 1,461M, a stated 44% increase; assumptions include full occupancy and a 23% tax rate.

• Development plans cover more than 1 million sqm; short-term projects under construction total 41,500 m², with NIS 595–635M estimated costs and expected 2024 completion.

• Broader under-construction projects total 357,430 m², with estimated costs of NIS 6.3–6.64B; Spiral Tower construction is progressing.

• A NIS 1,000M dividend, including a distribution related to the Compass holding exercise, was declared for May 2024, equivalent to NIS 8.25 per share.