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MIVNEINVESTORS PRESENTATION, March 2018
• This presentation was prepared by Jerusalem Economy Corporation ltd. and/or Companies under its control("the Company"), and does not constitute an offer for the acquisition or sale of the Company's securities, oran invitation to receive such offers. The statements made in it do not constitute a recommendation,statement of opinion or substitute for investor's discretion, and they are solely intended to relay information.
• The information included in this presentation is a summary only, and does not exhaust all of the dataconcerning the Company, and its operations, nor is it a substitute for an inspection of the annual report forthe year 2017 and the Company's current reports. The data in the presentation are based upon datapublished as of December 31, 2017, unless stated otherwise.
• This presentation includes information envisaging and aimed at the future, as defined in the Securities Law,5728-1968. Such information, as stated, includes the Company's current estimates and forecasts concerningfuture developments and events whose materialization is not certain and not under the Company's control.
• Information envisaging and aimed at the future is based upon the Company's point of view and assessment,which draws, among others, upon data and information that is at the Company's disposal at the time ofproducing this presentation. Information envisaging and aimed at the future is, by its very nature, subject tosignificant risks of non-materialization, and such information is uncertain, and its materialization or non-materialization is affected, among others, by the risk factors characterizing the Company's operations, as wellas by the developments in the general environment and in external factors affecting the Company'soperations. Consequently, the results of the Company's operations in the future might substantially differfrom those presented in the information provided in this presentation, thus envisaging and aimed at thefuture. Likewise, the Company does not undertake to update and/or to change any forecast and/orassessment as stated for those to reflect events or circumstances, which will occur after the date ofproducing this presentation. It is clarified that the Company will not bear liability for any damages and/orlosses, which might be caused as a result of using the information included in this presentation.
2
The Company owns million sq.m for rent in Israel
About Mivne Group
About tenants (not including associated companies)
office, commercial, industrial and logistic spaces and buildings in Israel
New and innovative projects in stages of construction and planning in Israel, spanning an area of
thousand sq.m which will be the growth engine of the Company in the next few years
Equity attributable to Shareholders of Jerusalem Economy Corporation billion NIS
Total value of real estate billion NIS. Value of land and additional rights
billion NIS
Mivne Group specializes in the initiation, acquisition, construction and management of structures and buildings for offices, high-tech,industry, logistics and commerce for rental or sale. In addition, the Group has several residential projects currently under construction.
3
1,781 thousand sq.m for rent
1,098 sq.m industry and logistics
212 thousand sq.m commercial space
609 million NIS NOI 1-12/2017Approx. 2,950 tenants
14 shopping complexes
Mivne Group - Operations in Israel
4
The above data includes equity accounted investees
471 thousand sq.m offices
Rental-Yielding Real Estate in Israel by sectorJerusalem Economic Corporation – Consolidated, in billion NIS
Offices2.7 billion NIS
Commercial2.0 billion NIS
Industry & Logistics 3.3 billion NIS
5
33%
25%
42%
557Million NIS
Commercial127
Offices190
Industry240
6
NOI (Net Operating Income) in Israel by sectorJerusalem Economy Corporation – Consolidated, in million NIS, 1-12/2017
1,986
1,5521,371
1,817
2,299
31/12/1731/12/1431/12/13 31/12/15 31/12/16
68%+
2,795
2,140
1,765
2,860
3,221
31/12/1731/12/1531/12/1431/12/13 31/12/16
82%+
Equity Attributable to Shareholders of Industrial Buildings Corporation ltd. (In million NIS)
31/12/2013
31/12/2017
7
Equity Attributable to Shareholders of Jerusalem Economy Corporation ltd. (In million NIS)
MIVNE GROUP - Significant Events During the Period (1-12/2017)
During the period 1-12/2017, the Company recorded a total comprehensive income of 213 million NIS. This profitincludes a one-time loss of 172 million NIS due to early redemption of loans from financial institutions and bankingcorporations, without which, it would record a total comprehensive income in the amount of 363 million NIS.
During the period 1-12/2017, Industrial Buildings Corporation (“IBC”) recorded a total comprehensive income in theamount of 208 million NIS.
The growth in the consolidated NOI Same Property (“NOI SP”) in Israel, over the period 1-12/2017, was 2.6%
In July 2017, IBC completed a fund raising round in the amount of 279 million NIS.
In June 2017, Midroog announced the raising of ranking of the bonds of Jerusalem Economic Corporation (“JEC”)from Baa1.il with a positive outlook to A3.il, with a stable outlook.
In July 2017, Maalot announced the raising of the ranking of IBC from A- ranking to A ranking, and set a stableforecast for all series of bonds.
During 2017, the Group issued bonds in total amount of 1.9 billion NIS with interest in the range of 2.6% - 3.2% and
terms of approx. 7-8 years
During the period 1-12/2017, the Group repaid bonds in the amount of 3.5 billion NIS, at an average interest rate of5.8%.
During 2017, assets were realized for total consideration of 957 million NIS abroad and 163 million NIS in Israel.
In November 2017, IBC sold shares of JEC for the amount of 86 million NIS.
8
Where Are We Headed?Strategy and Vision
Focus on Operations in Israel• Upgrade of the buildings in Israel, and realization of assets that are not at the core of the Groups operations• Focusing the Group's operations on geographical regions where it has a relative advantage • Continued streamlining of management and operational expenses
Facing the FutureThe Group ins process of implementing and planning, at an advanced stage, new projects spanning 190 thousand sq.m, as well as planning future projects spanning 400 thousand sq.m, which are predicted to increase the NOI of the Group over the coming years.
CONTINUED REALIZATION OF MOST OF THE GROUP'SASSETS ABROAD
DECREASING THE LEVERAGE RATE
CONTINUED GROWTH IN FFO AND NOI(for activity in Israel)
10
158 155 154160
202 204-207
31/12/2013 31/12/2014 31/12/2015 31/12/2016 31/12/2017 31/12/2018F
Increasing the FFO
Development of the FFO of JEC - Consolidated, in million NIS
11
225 221213
199
283 278-284
31/12/2013 31/12/2014 31/12/2015 31/12/2016 31/12/2017 31/12/2018F
Development of the FFO of IBC - Consolidated, in million NIS
Projects in planning and development in Israel
The Growth Engine
Major Projects under Development
Life Sciences Park, Haifa
Mivne Tower, Herzliya Pituach
Residential Project,Marom HaSharon
The Meytav in Tel Aviv, Bitzaron
HaSolelim Compound,Tel Aviv
Mivne Compound, Holon
Mivne Building,Or Yehuda
Mivne Ramat Siv, Petach Tikva
13
14
Projects Under Current Planning and Development
Estimated Building Costs (including land, in million NIS)
Expected NOI(in million NIS)
Estimated Date of Completion
Built-up Area (in sq.m)
Intended UseLocationProject Name
Short to Medium Term Projects Being Currently Planned and Constructed
1,550-1,60065-75
202366,500Office & commerceTel AvivHasolelim Compound, Tel Aviv
Not relevant32,000 / 360 unitsResidential HousingTel AvivHasolelim Compound, Tel Aviv
200-27016-18202230,000OfficesHaifaLife Sciences Park, Haifa *
85-957-8.5202113,000Offices - phase AHolonMivne Compound, Holon
333Not relevant202117,000Residential HousingTel AvivThe Meytav in Tel Aviv
60-654-520197,500OfficesOr Yehuda“Mivne” Building Or Yehuda
352-320196,000Industry & LogisticsKiryat GatKiryat Gat Logistics center
Long Term Projects Being Currently Planned and Constructed
TBDTBDTo Be Determined220,000Residential HousingOffices & Commerce
Tel AvivThe Meytav in Tel Aviv **
TBDTBDTBD30,000OfficesHaifaLife Sciences Park, Haifa *
TBDTBDTBD13,000OfficesPetach TikvaMivne Ramat Siv, Petach Tikva
TBDTBDTBD34,000Residential HousingOffices & Commerce
Herzliya PituachMivne Tower, Herzliya Pituach***
* 50% ownership** The Company is working to increase the rights to 370 residential units and 180 thousand sq.m of offices in accordance with the ‘Tel-Aviv 5000’plan which applies to this compound. At this stage, the scheme grants right to 56,500 sq. m. (over the ground) of offices*** The Company is working to submit an urban building scheme with a view to increasing the rights. At this point in time, the existing schemegrants rights to about 8,000 sq.m of (over-the-ground) built-up area consisting of offices and commercial spaces
Projects Under Current Planning and Development - Expected Impact on NOI
In million NIS
557Actual NOI for the year 2017 (in Israel)
112Additional NOI from construction projects(in the short to medium term, assuming full occupancy)
10Additional NOI from existing assets (on annual basis, excluding assets which were sold)
679Expected NOI after occupation of buildings under construction (in Israel)
15
557
679
22%+
The Meytav in Tel AvivBitsaron neighborhood, Tel Aviv
16
• Area of the lot: Approx. 23 dunams• Designation under existing urban building scheme: Residential
housing (Phase A) + Employment and Commerce (Phase B)• Total built-up area under urban building scheme:
Phase A: Approx. 17 thousand sq.m in the main compound (170residential units)
• Currently under implementation. Phase A expected completion:2021
• Total number of residential units sold to date: 126• Average selling price per sq.m (based on sales to date): 25,256 NIS• Total anticipated building costs to be expected for Phase A: Approx.
210 million NIS• Planning update (Phase B):
115 thousand sq.m including approx. 350 residential units and 2office towers (of which total built-up area of approx. 20 thousandsq.m). It appears that it will be possible to request and obtain, forthe remainder of the compound, rights following the Tel Aviv 5000Outline Plan which was recently approved. The Company expectsthat the updated approval will be issued within 3 years.
Hasolelim CompoundTel Aviv
17
• Area of the lot: Approx. 24 dunams
• Built-up area and designation:
o Residential housing: Approx. 32 thousand sq.m, 360
residential units
o Offices: Approx. 64 thousand sq.m
o Commerce: 2,500 sq.m
• Expected construction start date: 2018
• Expected investment cost: 1,550-1,600 million NIS
• On 22.11.2017, the Planning and Construction sub-committee
recommended to approve the Urban Building Scheme
TA/MK/3900. The Company is working to deposit the scheme
and obtain building permits as soon as possible.
Life Sciences ParkHaifa
• Area of the lot: Approx. 31 dunams
• GLA: Approx. 12 thousand sq.m
• Construction of the first building of five, of the five planned, has been completed. 4 additional structures (GLA - 56 thousand sq.m) are currently being planned
• Investment cost: Approx. 450-500 million NIS
• Ownership: 50%
The Company is working with Haifa City Council to obtain building permits for the next two buildings this year.
18
Mivne CompoundHolon
19
• Area of the lot: Approx. 59 dunams
• Built-up area and designation:
o Phase A - 12.3 thousand sq.m -Commercial spaces
o Phase B - 13 thousand sq.m -Employment and Offices
o Phase C (Potential phase) - 100 thousand sq.m office and commercial spaces
• Phase A - Completed and successfully occupied. Occupancy rate stands at 93%.
• NOI expected from Phase A: Approx. 10 million NIS
Mivne TowerHerzliya Pituach
20
• Area of the lot: Approx. 4 dunams
• GLA: 3 thousand sq.m of offices and commercial spaces
• Expected GLA: 34 thousand sq.m of residential housing, commercial and office spaces
• Urban building scheme was submitted to the District Committee. Expected to be approved within 2-3 years
RESULTS OF THE OPERATIONS
31/12/2017
Net Financial Debt and Debt to CAP
22
12,507 12,865 11,605
7,970 6,781
31/12/2013 31/12/2014 31/12/2015 31/12/2016 31/12/2017
78.4%82.5%
84.3%
71.0%
63.4%
25%-
JEC - Development of Debt to Capital Ratio and Net Financial Debt (Consolidated, in million of NIS)
5,449 5,204 4,850
4,304
3,680
31/12/2013 31/12/2014 31/12/2015 31/12/2016 31/12/2017
73.4%
77.1% 78.2%
70.5%
61.8%
21%-
IBC - Development of Debt to Capital Ratioand Net Financial Debt (in million of NIS)
1,282
364
194 241
470 455
2017 2018F 2019F 2020F 2021F 2022F
* Including early redemptions of bonds series 14 and 15
*
Loans in Israel
1.9 billion NIS
Loans Abroad
0.8 billion NIS
Bonds
5.1 billion NIS
25%
10%65%
Expected Repayment and Financial Debt Structure (After refinancing of payment terms and amortization tables)
Expected Repayments in Israel (JEC Solo in million of NIS)
Expected Repayments in Israel (IBC in million of NIS)
Debt Structure as of 31/12/2017 (consolidated, in billion of NIS)
23
775
208 135 129 129 129
2017 2018F 2019F 2020F 2021F 2022F
Summary of the Balance sheet as of 31/12/2017Jerusalem Economy Corporation Consolidated, In million NIS 15,63313,445Total Balance sheet
10,82810,306Fair Value of Investment Property and Investment Property under construction
904847Equity Accounted associated companies
670307Assets Held for Sale
186144Liabilities on Account of Assets Held for Sale
1,3191,151Net Deferred Tax Liabilities
7,9706,781Net Financial Debt
3,2523,918Total Equity
2,8603,221Total Equity Attributable to Shareholders
31/12/2017 31/12/2016
24
7,9837,275Total Balance sheet
1,121634Current Assets
6,8176,641Non-Current Assets
6,1996,152Fair Value of Investment Property and Investment Property under construction
309109Assets Held for Sale
1,4941,502Unsecured rental-yielding Assets
6,1415,001Total Liabilities
4,3043,680Net Financial Debt
1,7972,274Total Equity
31/12/201631/12/2017
25
Summary of the Balance sheet as of 31/12/2017Industrial Buildings CorporationIn million NIS
Summary of Profit and Loss StatementFor the period 1-12/2017Jerusalem Economy CorporationConsolidated, In million NIS
1-12/2017
1,087989Total Income from rent-yielding assets
789728NOI from rent-yielding assets
674691NOI SP from rent-yielding assets
62105Increase in value of investment property and investment property under construction
(126)(113)General and Administrative expenses
751694Operating Profit
(608)(615)Net financing expenses
-(172)Loss due to early redemption
222108Profit from Continuing operations
(652)-Loss from discontinued operation
(431)108Net Profit (Loss)
(431)280Net profit (loss), after eliminating loss due to early redemption
324213Total comprehensive income
1-12/2016
26
27
Summary of Profit and Loss StatementFor the period 1-12/2017Industrial Buildings CorporationIn million NIS
1-12/2017
600582Total Income from rent-yielding assets
438424NOI from rent-yielding assets
426416NOI SP from rent-yielding assets
6220Increase in value of investment property and investment property under construction
(51)(50)General and Administrative expenses
165416Operating Profit
(215)(160)Net financing expenses
-(93)Loss due to early redemption
(50)163Profit from Continuing operations
(28)218Net Profit (Loss)
(28)289Net profit (loss), after eliminating loss due to early redemption
245208Total comprehensive income
1-12/2016
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