Alony Hetz Properties & Investments : Q3 FINANCIAL REPORTS 2023

QUARTERLY REPORT

Q3 2023

Alony Hetz Properties & Investments ltd.

ONE CONGRESS, BOSTON

QUARTERLY REPORT

Q3 2023

Board of Directors' Report on the State of Corporate Affairs Concise Coznsolidated Financial Statements

Report on the Effectiveness of Internal Control of Financial Reporting and Disclosure

Reference to the Report on the Corporation's Liabilities by Repayment Dates

Attachment of the Financial Statements of an Associate - Carr Auditor's Consent Letters

Description of

the Corporation's

Business

Alony Hetz Properties & Investments ltd.

Image of ToHa 2, Tel Aviv

Ramat Gan, November 19, 2023

Board of Directors' Report for the Nine- and Three-Month Periods ended

September 30, 2023

The Board of Directors of Alony-Hetz Properties and Investments Ltd. (hereinafter: "the Company") is pleased to submit the Company's Board of Directors' Report for the nine- and three-month periods ended September 30, 2023 (hereinafter - "The Reporting Period"). This Board of Directors' Report and the updates therein, were prepared on the assumption that the reader has the Company's Periodic Report for 2022, published by the Company on March 13, 2023 (Ref: 2023-01-026136), including the chapter "Description of the Corporation's Business", the "Board of Directors' Report on the State of the Corporation's Business" and the "Consolidated Financial Statements" (hereinafter, collectively - the "Periodic Report for 2022").

1. Concise description of the Group

The Company and its consolidated companies (hereinafter - the "Group") have two areas of activity:

• Main area of activity - long-term investments in income-generating property companies in Israel and in western countries. As of the publication date of this report, the Group operates in the following markets: Israel, the United States, and the United Kingdom.
• Additional area of activity - investment in renewable energies. The Group has income-generating investments in the fields of photovoltaic energy and wind energy, as well as in the development and initiation of electricity generating facilities in Israel, Poland and in the United States.

1.1 The Group's main income-generating property investments as of September 30, 2023:

Activity in Israel

Holdings at a rate of 53.8% in Amot Investments Ltd. (hereinafter - "Amot"), a publicly traded income- generating property company whose securities are listed on the Tel Aviv Stock Exchange Ltd. For additional information, please see Section 2.3.4 below.

Activity in the United States

• Holdings of 47.7% of the equity rights of Carr Properties (hereinafter - "Carr"), a private company and 50% in the control, a private company that operates in the income-generating property field whose income- generating properties are located in the United States, in the Washington D.C. area, in Boston and in Austin, Texas. For additional information, please see Section 2.3.5 below.
• Holdings of 55% of the equity rights and 50% of the control in three property companies in the Boston metropolitan area (hereinafter - "AH Boston"). Two of the properties are in the Boston CBD and one is in East Cambridge. For additional information, please see Section 2.3.6 below.

Activity in the UK

• Holdings of 83.4% in Brockton Everlast Inc. Limited (hereinafter - "BE"), a private company that operates in the income-generating property field in the UK, in the London metropolitan area, Cambridge and Oxford in the UK. For additional information, please see Section 2.3.7 below.
• Holdings in three UK real estate funds from the Brockton Group.

Board of Directors' Report 1

1.2 The Group's investments in the renewable energy field as of September 30, 2023:

Holdings of 50.4% in Energix - Renewable Energies Ltd. (hereinafter - "Energix"), a public company whose securities are listed for trading on the Tel Aviv Stock Exchange Ltd. Energix engages in the initiation, development, financing, construction, management and operation of facilities for the generation and storage of green and clean electricity from renewable energy sources (photovoltaic systems and wind farms) and the sale of electricity generated in these facilities, with the intention of holding them for the long term. As of the date of the report, Energix has operations in Israel, Poland and the United States. For additional information, please see Section 2.3.8 below.

1.3 The following are the Group's main holdings close to the date of publication of the report:

Renewable

Real Estate

Energies

50.4%	47.7%(*)	55%(**)	53.8%	5%, 25%	83.4%
Energix Renewable Energies	CARR		Amot Investments	Holdings in real estate	BROCKTON
AH Boston	investment funds, including
Ltd.	PROPERTIES	Ltd.	EVERLAST
	joint management

• The Company and JP Morgan (through SSPF Investment Fund, managed by JP Morgan) have joint control in Carr.

• Joint holdings with Oxford Properties in three property companies that own office buildings in Boston. The Company and Oxford Properties have a joint control agreement.

1.4 Stock Market Indices

The Company's shares are traded on the Tel Aviv Stock Exchange Ltd. (hereinafter - the "TASE"). The main stock market indices to which the Company's securities belong are: TA-125, TEREAL, TA-Investment Properties in Israel, Tel-Div, the various TelBond indices, TA 125 - Fossil-Fuel-Free Climate index and the Tel Aviv - Maala index.

Board of Directors' Report 2

1.5 Main events from the beginning of 2023 to the date of publication of the report

Alony-Hetz

(the Company expanded solo)

BROCKTON EVERLAST

CARR PROPERTIES

• Issuance of bonds for a total gross consideration of NIS 1.1 billion (with a weighted duration of 7.4 years, a weighted effective interest rate of 6.4% for a NIS debt and 3.7% for a CPI-linked debt).
• Subsequent to the balance sheet date, the Company reduced approx. 40% of its foreign exchange hedging transactions (increasing its exposure to foreign exchange), following the sharp devaluation of the NIS against the USD and the GBP at the beginning of the Iron Swords War - for information, please see Section 2.7.3 below.
• During the reporting period, the Company recognized a loss from negative revaluations of investment property in its investees in the amount of NIS 1.3 billion NIS (before the effect of tax). For information, please see Section 2.3.3 below.
• As of the date of publication of the report, BE is working to promote plans for a significant increase in building rights and the establishment of office complexes and laboratories for the Life Science industry in the Cambridge Science Park area over several years.
• While implementing the plan, BE is working to locate a strategic investor that will join, as a non-controlling interest, for its operations in that area.
• City Building Plan approval for the Telephone House building in Shoreditch, London - In July 2023, BE received City Building Plan approval from the local committee for the construction of a new building with an area of 230 thousand sq.ft., replacing an area of 130 thousand sq.ft. in the existing building.
• Sale of the residential rental building, The Elm, in Bethesda in the Washington D.C. metropolitan area for USD 250 million.
• Completion of construction of the One Congress tower (75% owned by Carr) with an area of 1 million sq.ft. As of the date of publication of the report, the fully leased tower is in advanced occupancy stages. Delivery of most the rental areas in the tower is expected to be completed in 2023 and the remainder in 2024.

Energix
Renewable	 Engagement in financing transactions in the amount of over NIS 3.16
Energies	billion1 - Of this amount, approx. NIS 1.9 billion is in respect of an engagement
	in a series of financing transactions and tax partner investment with an
	international bank that specializes in the financing of photovoltaic projects in
	the United States with a total capacity of approx. 416 MWp in Virginia and
	Pennsylvania, which are in the midst of the construction stage2.

____

• Of that amount, NIS 740 million was in respect of an engagement in non-binding memorandums of understanding.

• Regarding the balance, please see Sections 2.3.8.2(1)(b), 2.3.8.2(2)(c) and 2.3.8.2(1)(d) below.

Board of Directors' Report 3

• An increase of approx. NIS 1.8 billion in the amount of investments in projects in development and initiation during the reporting period, mainly in the United States and in Israel.
• Activity in the United States -
• • Engagement with First Solar for the purchase of additional panels in 2026-2030 with a capacity of approx. 5 GWp for future photovoltaic projects, most in the United States. The purchase cost of the panels is estimated by Energix at a total of approx. USD 1.5 billion, most of which will be paid close to their delivery.
• Activity in Israel -
• • Start of construction work on the winning projects in Competitive Procedure 2 for the construction of photovoltaic facilities with combined storage capacity (approx. 111 MWp and 400 MWh) and engagement in agreements with a private supplier for the sale of electricity, instead of Competitive Procedure 2 (photovoltaic facilities with storage) at electricity prices that are significantly higher than the winning rate to which the projects are entitled under the competitive procedure.
  • Construction of a wind farm in the Golan Heights with a capacity of 104 MW (the ARAN project): Against the backdrop of the Israeli Druze community's opposition to the project's construction (which is mainly based on claims unrelated to the project) and in the context of the security situation in Israel, the construction work is expected to extend beyond the original schedules.
• Activity in Poland -
• • Update to the electricity sales agreements of all of Energix's wind farms in Poland - Engagement with the local broker to whom Energix sells electricity in a financial transaction for the unwinding of price fixing agreements signed between the parties that refer to the months of February 2023 to December 2023, inclusive, against a one-time compensation payment to Energix in the amount of approx. NIS 153 million.

Board of Directors' Report 4

1.6 Summary of the main data - the Group

Main Financial Results - Consolidated	Unit	1-9/2023	1-9/2022	Q3/2023	Q3/2022	2022	% Change3
Statements
Revenues from rental fees and management of	NIS thousands	989,800	875,493	335,452	301,940	1,219,178	13.1
investment property
Fair value adjustments of investment property	NIS thousands	(353,769)	506,941	(133,622)	50,078	685,918
Group share in losses of associates, net	NIS thousands	(920,541)	(291,511)	(352,456)	(233,793)	(953,589)
Revenues from sale of electricity and green	NIS thousands	543,943	330,879	122,470	129,005	525,437
certificates4
Net profit (loss) for the period	NIS thousands	(884,884)	568,739	(409,156)	12,023	338,572
Net profit (loss) for the period attributed to	NIS thousands	(1,129,701)	176,944	(459,381)	(101,978)	(281,467)
Company shareholders
Total comprehensive income (loss) for the	NIS thousands	(931,306)	366,847	(481,372)	(178,268)	(53,496)
period attributed to Company shareholders
FFO according to the management approach	NIS thousands	463,637	422,771	139,387	151,054	612,952	9.7
attributed to Company shareholders5
Total balance sheet	NIS thousands	37,774,641	34,534,208			36,314,037	4.0
Equity (including non-controlling interests)	NIS thousands	12,483,227	13,791,301			13,591,420	(8.2)
Financial debt (bank credit and bonds)6	NIS thousands	21,141,063	17,010,299			19,032,307	11.1
Net financial debt7	NIS thousands	19,998,766	15,734,047			17,337,606	15.3
Ratio of net financial debt to total balance sheet8	%	54.6	47.3			50.1
Main financial results - Expanded Solo9
Total balance sheet	NIS thousands	12,632,566	13,534,707			13,311,610	(5.1)
Equity attributed to Company shareholders	NIS thousands	6,549,227	8,185,299			7,709,979	(15.1)
Financial debt (bank credit and bonds)6	NIS thousands	6,093,400	4,932,916			5,513,779	10.5
Net financial debt7	NIS thousands	5,767,734	4,436,310			5,027,172	14.7
Net financial debt ratio to balance sheet total7	%	46.9	34			39.2
Earnings (loss) per share data
Earnings (loss) per share - basic	NIS	(6.29)	1.01	(2.56)	(0.58)	(1.60)
Comprehensive income (loss) per share - basic	NIS	(5.18)	2.10	(2.8)	(1.0)	(0.30)
FFO per share - according to the	NIS	2.58	2.42	0.78	0.86	3.48	6.6
management approach5
Current dividend per share10	NIS	0.96	0.94	0.32	0.32	1.26	2.1
NAV per share	NIS	36.44	45.54			42.90	(15.1)
NNAV per share11	NIS	41.86	51.8			48.53	(13.7)
Price per share at end of period	NIS	26.10	42.75			35.80	(27.1)

____

1. Balance sheet data of September 30, 2022 compared to December 31, 2022. Result data of 1-9/2023 compared to 1-9/2022
2. Electricity revenues in the nine-month period ended September 2023 and of 2022 presented above include revenues from the unwinding of electricity price hedging agreements in the amount of NIS 153 million and NIS 23 million, respectively.
3. For the definition of FFO according to the management approach and for additional information regarding the FFO according to the Securities Authority approach, please see Section 2.5.1 below.
4. Financial debt also includes assets/liabilities of derivative transactions carried out by the Group.
5. Financial debt presented net of cash balances. The Company's financial debt (expanded solo) as of September 30, 2022 and December 31, 2022 is the financial debt net of the cash balance and net of a loan balance to a consolidated company in the amount of NIS 27 million and NIS 77 million, respectively.
6. Net financial debt as a percent of total balance sheet, net of cash balances. The Company's net financial debt (expanded solo) as of September 30, 2022 and December 31, 2022 is the financial debt net of the cash balance and net of a loan balance to a consolidated company in the amount of NIS 27 million and NIS

1. million, respectively.

1. In the expanded solo balance sheet, the investment in Amot, Energix and BE is presented on an equity basis instead of the consolidation of their statements with the Company's statements (the remaining investments are presented unchanged in the statement presented in accordance with IFRS principles).
2. The above dividend amount does not include an additional dividend for 2022 in the amount of NIS 0.18 per share, which was paid in March 2023, and an additional dividend in respect of 2021 in the amount of NIS 0.44, which was paid in April 2022.
3. In the NNAV per share calculation, the Company's tax reserves (expanded solo) were neutralized, as was the Company's share in the tax reserves of investees.

Board of Directors' Report 5

1.7 Summary of the main data - Investees

		1-9/2023	1-9/2022	Q3/2023	Q3/2022	2022	Change%12
	Unit
Investment in Israel - Amot Investments
Ltd. (rate of holdings 53.8%)13
Number of income-generating properties	Unit	114	114			114
Value of investment property (not including	NIS thousands	16,850,753	16,200,779			16,623,086	1.4
property in self-construction)
Weighted discount rate derived from	%	6.36	6.28			6.20
investment property
Occupancy rate at end of period	%	93.5	94.8			94.4
Value of investment property in self-	NIS thousands	2,678,361	2,201,897			2,341,725	14.4
construction
Ratio of net financial debt to total balance	%	44.0	43			41.9
sheet
NOI14	NIS thousands	754,730	687,578	255,417	239,951	930,996	9.8
FFO15 per share - according to the	NIS	1,287	1,187	0,428	0,417	1,604	8.4
management approach
NAV per share	NIS	18.55	17.96			18.68	(.7)
Price per share at end of period	NIS	18.45	20.51			20.65	(10.7)
Investment in the United States - Carr
Properties Corporation (rate of holdings -
47.7%)16
Number of income-generating properties	Unit	16	17			17
Value of investment property (not including	USD thousands	2,168,900	3,143,985			2,835,655	(23.5)
property in self-construction)
Occupancy rate at end of period17	%	86.90	85.2			87.90
Number of properties in development	Unit	1	1			2
Value of property in development	USD thousands	782,931	699,107			697,253	12.3
Ratio of net financial debt to total balance	%	57.4	46.2			51.2
sheet
NOI 18	USD thousands	127,959	112,475	41,048	37,967	148,670	13.8
FFO15	USD thousands	56,743	55,842	16,387	16,917	70,988	1.6

____

1. Balance sheet data of September 30, 2022 compared to December 31, 2022. Result data of 1-9/2023 compared to 1-9/2022
2. The main figures for Amot are from the Amot's expanded consolidated financial statements published in Amot's Board of Directors' Report (hereinafter - "Amot's Pro Forma Reports"). Amot's Pro Forma Reports are Amot's reports presented according to IFRS principles, with the exception of the implementation of IFRS 11 "Joint Arrangements", which came into effect on January 1, 2013. In Amot's Pro Forma Reports, the investments in investees, presented based on the equity method in Amot's Financial Statements, are neutralized and presented according to the relative consolidation method, similar to their treatment prior to IFRS coming into effect.
3. Net operating income
4. Funds from operations.
5. The financial data presented above includes Carr's economic share in its assets and liabilities and those of all its investees, including of companies that are not consolidated in its financial statements prepared in accordance with IFRS principles.
6. In the calculation of the occupancy rate as of September 30, 2023, the occupancy rate of the One Congress tower is included, which is fully leased and on the date of publication of the report it is in occupancy stages.
7. Including NOI from property management.

Board of Directors' Report 6

1.7 Summary of the main data - Investees (continued)

	Unit	1-9/2023	1-9/2022	Q3/2023	Q3/2022	2022	% Change19
Investment in the United Kingdom - Brockton
Everlast Inc. Limited (rate of holdings - 83.4%)20
Number of income-generating properties	Unit	12	13			13
Value of investment property	GBP thousands	900,125	942,575			1,081,515	(16.8)
Occupancy rate at end of period	%	98.6	97.5			96.6
Value of land for initiation	GBP thousands	297,745	232,750			208,000	43.1
Ratio of financial debt to total balance sheet	%	31.1	28.5			30.7
NOI	GBP thousands	31,125	25,492	10,105	8,701	42,31121	22.1
FFO	GBP thousands	11,387	8,916	3,060	3,236	2119,521	27.7
Investment in renewable energy - Energix
Renewable Energies Ltd. (rate of holdings -
50.4%)
Installed capacity from connected photovoltaic	Unit	566.0	468			554	2.2
systems (MWp)
Installed capacity from connected wind systems	Unit	301.0	244			245.2	22.8
(MW)
Balance of connected electricity-generating	NIS thousands	3,412,651	2,665,554			2,910,128	17.3
facilities - according to book value
Price per share at end of period	NIS	11.24	13.98			11.08	1.4

____

1. Balance sheet data of September 30, 2022 compared to December 31, 2022. Result data of 1-9/2023 compared to 1-9/2022
2. As of September 30, 2023, the Dovetail project, which is in the process of evacuating tenants in preparation for the start of initiation, is presented as land for initiation.
3. The NOI and the FFO for 2022 include net revenue in the amount of approx. GBP 5 million in respect of previous periods for the end of an arbitration procedure came to an end for updating rental fees (in accordance with the Rent Review mechanism), mainly in one of BE's properties in central London (Waterside house).

Board of Directors' Report 7