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) |
____
- Balance sheet data of September 30, 2022 compared to December 31, 2022. Result data of 1-9/2023 compared to 1-9/2022
- 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.
- 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.
- Financial debt also includes assets/liabilities of derivative transactions carried out by the Group.
- 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.
- 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
- million, respectively.
- 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).
- 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.
- 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 |
____
- Balance sheet data of September 30, 2022 compared to December 31, 2022. Result data of 1-9/2023 compared to 1-9/2022
- 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.
- Net operating income
- Funds from operations.
- 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.
- 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.
- 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 |
____
- Balance sheet data of September 30, 2022 compared to December 31, 2022. Result data of 1-9/2023 compared to 1-9/2022
- 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.
- 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
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Alony-Hetz Properties & Investments Ltd. published this content on 01 January 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 January 2024 15:34:46 UTC.