Shopping malls company Melisron Ltd. (TASE: MLSR) today reported a good second quarter, with profit jumping almost six-fold to NIS 287 million. The company's properties were upwardly revalued, and its current activity improved. The company's profit improved despite a 37% increase in financing expenses and taxes.
The upward revaluation in the company's properties totaled NIS 286 million, almost the same as its net profit, compared with a NIS 80 downward revision in the corresponding quarter in 2016. The company, controlled by chairperson Liora Ofer, attributed the increase in the value of its properties to a reduction in the discounting rate and an improvement in the net operating income (NOI) for them, combined with obtaining a building permit for more space in the Ramat Aviv shopping mall.
Melisron's revenue grew 18% to NIS 380 million in the second quarter, and its gross profit was up 19% to NIS 283 million. The company attributed the improvement in these figures to the acquisition of Eli Lahav's 50% stake in Ofer Grand Canyon in Beer Sheva for NIS 145 million in the second half of 2016, a 23% increase in its share of Ofer Park in Petah Tikva at a cost of nearly NIS 200 million, and improvement in the results of its shopping malls. Melisron's NOI from same properties rose 3.3% to NIS 259 million in the second quarter, supporting a 12% rise in funds from operations (FFO) to NIS 343 million and a 19% increase in revenue to NIS 757 million.
Second largest real estate company on the TASE
Melisron CEO Avi Levy expressed satisfaction with the continued improvement in his company's results, adding that Melisron "continued its widespread activity in the capital market, and conducted a number of bond issues, extensions, and replacements amounting to over NIS 2.4 billion, and designed to optimally service the replacement of the company's debt, while reducing its long-term financing costs."
Melisron also announced the distribution of a NIS 60 million dividend. The company's share price has climbed 13% this year, pushing its market cap up to NIS 8 billion and making it the second largest TASE-listed real estate company after Azrieli Group Ltd. (TASE: AZRG). Melisron owns 25 income-producing properties with 732,000 square meters in total space - almost completely occupied, including the Ramat Aviv mall, in which Melisron's stake is worth NIS 2.3 billion, and the Kiryon mall in Kiryat Bialik, with a NIS 2.2 billion value. The company has 10 projects in development that are likely to boost the value of its properties by NIS 2 billion, the most prominent of which is the Sarona Tower in central Tel Aviv with a total of 147,000 square meters, completion of which is slated for 2021.
Melisron also reported a 0.7% increase in proceeds from tenants in the first half of 2017, which is "more moderate than in the preceding quarters." Levy says, "The trend continues to be positive, albeit at a slightly slower place. There are two reasons for the recent slowdown in growth - opening many new sites, and an increase in the number of people traveling overseas, which affects business at malls in Israel. In the aggregate, however, the increase in proceeds at our malls is nearly 20%."
Published by Globes [online], Israel Business News - www.globes-online.com - on August 8, 2017
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