Big Shopping Centers (BIG) Q4 2023 earnings summary

Executive summary

• FY2023 operating performance remained resilient: effective-basis NOI was ₪1,396m and FFO was ₪770m, while effective assets reached ₪35bn.

• Geographic diversification across Israel and Eastern Europe supported results amid the Israel war; management described activity as roughly evenly split between Israel and international markets.

• Strategy remains focused on retail, offices and rental housing, with long-term development and asset enhancement rather than short-term investment or expansion into unrelated businesses.

Financial highlights

• Effective NOI reached ₪1,396m in FY2023, versus ₪1,133m in 2022; effective FFO was ₪770m, versus ₪717m.

• Normalized FFO was ₪836.5m for FY2023, including a Q4 normalized FFO of ₪209.1m versus reported Q4 FFO of ₪190.6m; normalization excludes war impacts.

• Effective balance-sheet size was ₪35bn; equity attributable to owners was ₪10.95bn at year-end 2023.

• EPRA NAV was ₪12.84bn, or ₪525 per share; the March 18, 2024 share price of ₪389.5 was 35% below EPRA NAV per share.

• FY2023 effective NOI in Israel, excluding war effects, was ₪479.4m, up 6% YoY.

Outlook and guidance

• Management projected effective NOI of ₪1,941m and FFO of ₪1,027m for 2024; the forecasts depend on project openings and operating assumptions.

• Multiple retail, office and rental-housing developments were expected to complete or open during 2024, including projects in Glilot, Migdal HaEmek, Or Akiva, Karmi Gat, Gedera, Ashdod and Be'er Sheva.

• The company expected new projects to open near full occupancy; completion timing assumes no significant deterioration in security conditions that would constrain available workers.

• Management said most new acquisitions had been paused amid macro conditions, while construction of projects already in development continued; it was monitoring Eastern European acquisition opportunities.