Azrieli Group (AZRG) Q4 2025 earnings summary

Executive summary

• Achieved record net income growth of 27% year-over-year, with comprehensive income reaching ILS 1.888 billion, and record NOI of ILS 2.527 billion, up 10% from 2024.

• Maintained high operational resilience and occupancy rates: 99% in retail, 97% in offices, 100% in senior housing, and 99% in data centers in Israel, despite security and economic challenges.

• Expanded data center segment, now accounting for 18% of total NOI, with major new contracts in Norway, Germany, and the UK, and contracted MW rising to 257.

• Closed acquisition of controlling interest in Tzemach Hammerman (ZMH Hammerman), consolidating results from Q4 2025 and expanding into residential sales.

• Continued investment in growth engines: data centers, senior housing, rental housing, and hospitality.

Financial highlights

• NOI for Q4 was ILS 575 million, down from ILS 630 million in Q4 2024, mainly due to a one-time ILS 70 million write-off in the retail segment.

• Annual NOI reached ILS 2.53 billion, up 10% year-over-year, driven by data center growth.

• FFO for 2025 was ILS 1.674 billion, slightly down from ILS 1.71 billion in 2024; adjusted FFO excluding write-offs would have been ILS 1.74 billion, a 2% increase.

• Net income for 2025 was ILS 1.888 billion, up from ILS 1.48 billion in 2024.

• Dividend distribution for 2025 totaled ILS 800 million, with ILS 850 million declared for 2026.

Outlook and guidance

• Focus remains on expanding data center operations in Europe, especially Germany and the UK, with expectations of double-digit development returns.

• Continued investment in income-producing properties and new projects, including senior housing, Spiral Tower, and integration of ZMH Hammerman.

• Development pipeline includes 10 projects totaling 687,000 sqm, with significant investments in mixed-use, senior housing, and hospitality.

• Anticipates further revaluation gains as data center projects progress.

• Macroeconomic forecasts for Israel indicate GDP growth of 5.2% in 2026 and 4.3% in 2027, supporting demand in key segments.