G City : Thired Quarter

THIS DOCUMENT IS AN ENGLISH TRANSLATION OF THE HEBREW VERSION OF THE COMPANY'S FINANCIAL STATEMENTS AND THE MANAGEMENT DISCUSSION AND ANALYSIS FOR THE THIRD QUARTER OF 2022 (THE "REPORTS"). THE HEBREW VERSION OF THE REPORTS IS THE BINDING VERSION AND THE ONLY VERSION HAVING LEGAL EFFECT. THE ENGLISH TRANSLATION HAS BEEN CREATED FOR THE PURPOSE OF CONVENIENCE ONLY. THE APPROVAL OF THE COMPANY'S BOARD OF DIRECTORS WAS GIVEN TO THE HEBREW VERSION ONLY AND NO SUCH APPROVAL HAS BEEN GIVEN TO THE ENGLISH TRANSLATION. THE ENGLISH TRANSLATION WAS NOT PUBLISHED AND HAS NOT BEEN SUBMITTED TO THE ISRAELI SECURITIES AUTHORITY FOR ITS REVIEW.

QUARTERLY REPORT as of September 30, 2022:
	Page
Directors' Report on the Company's Business	2
Update of Description of the Company's Business	33
Consolidated Financial Statements as of September 30, 2022	38
Separate Financial Statements as of September 30, 2022	61
Quarterly Report on the Effectiveness of Internal Control over Financial Reporting and	72
the Disclosure

G CITY LTD.

DIRECTORS' REPORT ON THE COMPANY'S BUSINESS

G CITY LTD.

Directors' Report to the Shareholders

For the period ended September 30, 2022

The Board of Directors of G City Ltd. (formerly Gazit Globe Ltd.) (the "Company") is pleased to present the Directors' Report of the Company for the period ended September 30, 2022 (the "Reporting Date):

The scope of this report is limited and is prepared under the assumption that the Company also has the periodic report of the Company for the year ended December 31, 2021 which was published on March 23, 2022 (reference number: 2022-01-033577) (the "Periodic Report").

It is clarified that the description in this report includes only information which, in the Company's opinion, is material information. However, in some cases, for the sake of completeness, additional information is included which is not necessarily material information.

1. The Company and its Operations

1.1. Overview

The Company, directly and through its public and private investees1 (collectively: the "Group"), engages in acquisition, improvement, development and operating of income-producing properties for mixed-use, including retail, office and residential located in in North America, Israel, Brazil, Northern, Central and Eastern Europe with the focus on densely populated urban cities. In addition, the Company evaluates opportunities within its core business and similar fields in other regions.

The Group's strategy is focusing on properties which have a potential to for value appreciation and cash flows growth by proactive management, improvement, addition of uses, development and redevelopment, while simultaneously, the Group also takes measures to sell non-core properties which it believes have a limited growth potential and/or are in regions in which the Company wishes to reduce its activity, whether by selling an individual property and/or group of properties, and/or via selling part of its holdings in the companies that own properties in these areas.

On May 18, 2022, the company changed its name from Gazit Globe Ltd. to G City Ltd.

The Company's shares are listed on the Tel Aviv Stock Exchange Ltd. ("TASE" or "Tel Aviv Stock Exchange") under the "GCT" ticker.

Currently, the Company operates mainly through its wholly-owned private subsidiaries that are consolidated in its financial statements and in which the Company outlines the strategy, is responsible for their financing activities, and oversees their operations. These operations are conducted through the Company (the Company's activity in the field of real estate in Israel will hereinafter be referred to as "G- Israel"), through G City Europe (formerly: Atrium European Real Estate Limited.) ("G Europe")2. through the Company's subsidiaries in Brazil ("Gazit Brasil"), through Gazit Horizons Inc. ("Gazit Horizons") in the U.S.A and a subsidiary operating in Canada ("Gazit Canada"), including through partnership "G Tripllle"

Additionally, Public entity operates under the Company's control with a similar strategy that are consolidated in its financial statements, in which the Company is the largest shareholder. These operations are conducted through Citycon Oyj. ("CTY").

In accordance with this strategy, on February 18, 2022, a wholly owned subsidiary of the Company (in this paragraph: "the Subsidiary") merged into G Europe, a wholly owned subsidiary of the Company under which the subsidiary acquires all G Europe shares not owned by the Company, constituting 25% G Europe's share capital at a price of EUR 3.63 per share and an estimated total consideration of EUR 376 million (NIS 1.4 billion) in cash payment. The proposed price was adjusted for the distribution of a special dividend which G Europe distributed in the amount of EUR 0.6 per share. For further details, refer to Note 3b2 to the financial statements.

Further to the aforesaid, in October 2022 the company announced as part of its strategic plan for the sale of non- core properties in the amount of NIS 3.6 billion, it is in the advanced stages of negotiations regarding the sale of 6 properties with for a total value of NIS 1.8 billion, similar to their book value (IFRS). The Company estimated that it will complete some of the sales transactions by the end of 2022 and that 40% of the aforementioned consideration may be received by the company by the end of the year. Out of the above mentioned properties, the company announced on November 15, 2022, that G Europe entered into an agreement to sell a property in the city of Torun

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G CITY LTD.

DIRECTORS' REPORT ON THE COMPANY'S BUSINESS

in northern Poland for a consideration of EUR 127 million (NIS 449 million), expected to be paid by the end of 2022. The sale price is 3.3% lower than the value of the property in the company's books as of June 30, 2022 (IFRS), where no changes in the value of the property were recorded for the duration of the Covid pandemic.

Below is a breakdown of the five additional properties:

• Europe - G Europe received letters of intent (non-binding) in relation of two properties with a total value of NIS 0.7 billion.
• Brazil - a wholly owned subsidiary of the company received letters of intent (non-binding) in relation of two properties with a total value of NIS 180 million.
• USA - negotiations and due diligence are underway for the sale of one property with a value of NIS 545 million.
  In addition to these properties, the company put up for sale three additional properties with a total value of NIS 1.8 billion according to the following breakdown:
• Europe (G Europe) - one property with a value of NIS 820 million.
• Brazil - one property with a value of NIS 500 million.
• USA - one property with a value of NIS 520 million.
  In addition, the company has unencumbered properties in an expanded Solo basis in the value of 9.4 billion NIS (NIS 7.0 billion in G Europe, NIS 1.0 billion in Brazil, NIS 1.0 billion in the US and NIS 0.4 billion in Israel) and the company is working to obtain secured financing for some of these properties.
  The company's estimations regarding the sale of properties, including the scope of realized properties, the consideration that will be received for them and the dates of realization as well as the receipt of financing for them, as mentioned above, constitute forward-looking information as defined in the Securities Law, 1968. These estimations are based on assumptions and assessments of the company and the group companies as of the reporting date and based on the current economic situation and market conditions. The aforementioned estimates are uncertain, may not materialize and are largely beyond the company's control and depend, among other things, on the economic situation and the real estate market in the various markets where the properties are located and in which the company operates. As the aforementioned market conditions change, there may be delays in the realization of properties beyond the detailed below.

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1 Reference to investees includes, unless stated otherwise, companies that are fully consolidated by the Company and companies that are presented according to the equity method.

2 For details regarding the acquisition of G Europe's minority shareholders and its transformation into a private company, in February 2022, refer to Note 3b2 to the financial statements.

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G CITY LTD.

DIRECTORS' REPORT ON THE COMPANY'S BUSINESS

1.2. The impact of the Covid-19virus and Russia and Ukraine Conflict on the group's activities

1. The Covid- 19 Virus- At the beginning of 2020, the Covid-19 virus spread to many countries across the globe, including those where the Company holds commercial assets, and the World Health Organization declared it a pandemic. Many countries dealt with rapid outbreak of the virus in various ways, mainly by imposing a partial or complete lockdown on the population. The directive of the governments in those countries, together with the response of the capital, oil, interest and foreign currency markets to such extreme uncertainty led to extreme uncertainty that brought about a global economic crisis. During the first quarter of 2022, there was a sharp increase in the incidence of morbidity in Corona, but in light of the high immunization rates and the improvement in the ability to cope with the epidemic, their impact on economic activity in the economy was more moderate. In addition, at the end of the first quarter of 2022 and thereafter, there was a significant decrease in the volume of morbidity, although during the second quarter of the year there was a certain increase in the volume of morbidity, though it seems its effect on the population decreased significantly and throughout the entire period of the report and as of the date of publication of the report all the Group's compounds in the world open to full trade, without significant restrictions. A renewed aggravation of the extent of the disease, however it may be, may adversely affect the Group's operations and its business and financial condition. For further details regarding the impact of the epidemic on the Group's activities, see section 1.2 of the Company's Board of Directors' Report for 2021.
2. The Russia and Ukraine conflict- Starting February 2022, fighting is taking place between the Russian and Ukrainian armies. As part of this, Western countries banded together and imposed a series of different financial and economic sanctions on Russia and Belarus, as well as on Russian companies, individuals and businessmen. These new sanctions join international sanctions that were already in force, but currently it is characterized by a substantial, almost unprecedented aggravation, creating a new economic, commercial and political reality in Europe.
   As part of this, sanctions were imposed on trade with Russia, restrictions on the financial system in Russia, including disconnection of Russian banks from the clearing system (Swift) and a ban on transactions with the Central Bank of Russia (CBR), restrictions on technology exports to Russia and transportation restrictions, including "Closing the sky" in Europe to the Russian national airline. At the same time, many private entities (including banks and credit card companies) have announced the severance or termination of commercial relations with entities in Russia and Belarus. The Russian government also imposed various restrictions on capital movements from Russia (including restrictions on dividend distribution, a ban on repaying foreign currency debt). Further sanctions may be imposed in the future. There is also a concern the war will lead to the involvement of other countries.
   The Group has properties in Russia, held through G Europe, amounting EUR 305 million (2.7% of the Company's total properties) which in 2021 and during the reporting period, generated NOI amounting EUR 28.4 million and EUR 23.3 million, respectively. Russia's occupancy as the reporting date was 91.8% and the collections for the reporting date was 95.0%. During the reporting period, G Europe's activity in Russia were marginally impacted.

G Europe has performed a full external valuation of its income producing assets in Russia as of March 31 2022 and as of June 30 2022, which resulted in an increase of EUR 21.1 million in the reporting period. Due to the Russia- Ukraine conflict and impact of sanctions, a high degree of judgment has been applied in determining the estimated cash flows used in Russia. The fair value as detriment by external, independent real estate valuation expert as of March 31 2022 and as of June 30 2022, have used all available information from reliable sources in developing appropriate assumptions to determine the fair value of investment properties. Also, based on stable operating results of G Europe in Russia during the quarter, there was no change in Russia's property value.

Nevertheless, in the Company's view, in the event the war between Russia and Ukraine continues and economic sanctions continue, even worsen, as described above, they are highly likely to adversely affect the value of the Group's assets in Russia (including due to the increase in the interest rate), as well as G Europe's ability to transfer receipts outside Russia. In addition, the sanctions imposed on Russia, could lead to an economic crisis in Russia, and adversely affect the rate of revenue in assets, and accordingly the expected revenues from them.

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G CITY LTD.

DIRECTORS' REPORT ON THE COMPANY'S BUSINESS

The Company's estimates regarding the impact of the Covid-19 Pandemic and global economic crisis on between Russia-Ukraine conflict on its business, revenue, profits and financial position are forward- looking information, as defined in the Israel Securities Law, 1968. These estimates are based on assumptions and assessments of the Company and the Group companies, but they are uncertain, may not materialize and are largely beyond the Company's control. If the global economic crisis continues and even worsens, and if the Covid-19 pandemic or new variants of the virus occur, and/or the conflict between Russia and Ukraine and the effect of the sanctions should worsen, there could be a significant deterioration in the Group's actual business and financial results.

For details regarding macroeconomic changes in territories where the company operates, primarily high inflation rates and increases in interest rates, and their impact on the company, refer to section 3.1 (2) below.

.1.3. Group Properties as of September 30, 2022

				Income-	Properties		GLA (square
	Country of		Holding	producing	under	Other	meters in
	operation		interest	properties	development	properties	thousands)
CTY	Finland, Norway, Sweden,	52.1%	35	1	-	1,065
Estonia and Denmark
	Poland, Czech Republic and	100.0%	24	-	-	743
G Europe	Russia
Gazit Brasil	Brazil (Sao Paulo)	100.0%	7	-	1	176
G Israel	Israel	100.0%	13	-	-	161
Gazit		100.0%	11	3	1	71
Horizons	USA
Gazit Canada	Canada	100.0%	1	-	-	18
Total carrying				91	4	2	2,234
value
Jointly controlled properties (proportionate				-	-	109
consolidation)				9
Total				100	4	2	2,343
	The balance of investment properties and investment properties under development
					Properties
			Income-producing	under
			properties	development1	Lands	Total
	Country of
	operation				NIS million
CTY	Finland, Norway, Sweden,			13,158	1,552	-	14,710
Estonia and Denmark
G Europe	Poland, Czech Republic and			7,927	408	521	8,856
Russia
Gazit Brasil	Brazil (Sao Paulo)			2,551	-	106	2,657
G Israel	Israel			3,696	261	614	4,571
Gazit Horizons	USA			1,576	932	163	2,671
Gazit	Canada			208	-	-	208
Canada
Total carrying				29,116	3,153	1,404	33,673
value
Jointly controlled properties (proportionate
		2,107	203	-	2,310
consolidation)
Total				31,223	3,356	1,404	35,983

1 Includes expansions of income producing properties.

Below is a breakdown of the properties classified as assets held for sale included in the group properties as of September 30, 2022:

	Country	Number of Properties	Carry amount in NIS
CTY	Norway	2	437
G Europe	Poland	4	1,115
Czech Republic	1
Gazit Brasil	Brazil (Sao Paulo)	1	36
Total carrying value			1,588

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