Release Date: March 24, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Azrieli Group Ltd (AZRGF) reported a 27% increase in NOI for Q4 2024 and a 9% increase for the entire year, indicating strong operational performance.
• The FFO, excluding senior housing, increased by 30% in Q4 and by 15% for the year, showcasing robust financial growth.
• The company maintained high occupancy rates of about 98-99% in its malls and offices, reflecting strong demand and effective management.
• Azrieli Group Ltd (AZRGF) invested over 3 billion shekels in development and improvements, demonstrating a commitment to growth and expansion.
• The data center segment showed significant growth, with NOI up 50% quarter over quarter, highlighting the potential of this business area.

Negative Points

• The company faced regulatory challenges, as a permit was not granted for a planned 120 megawatt campus, causing uncertainty in project development.
• There is increased uncertainty in the market, extending negotiation times for large deals, which could impact future growth.
• The NOI from US offices decreased by around 10 million due to downsizing and lower rent in renewed agreements, indicating challenges in this segment.
• The net profit for the year decreased to 1.48 billion from 2.22 billion the previous year, primarily due to a decrease in other revenue and increased expenses.
• The comprehensive income was affected by a 611 million loss in translation differences, mainly due to currency fluctuations, impacting overall financial results.

Q & A Highlights

• Warning! GuruFocus has detected 3 Warning Signs with AZRGF.

Q: Can you provide an overview of Azrieli Group's financial performance in Q4 2024? A: AL Henkin, CEO: In Q4 2024, we saw a 27% increase in NOI and a 30% increase in FFO, excluding senior housing. Including senior housing, FFO increased by 21%. The growth was driven by all segments, particularly malls, offices, and data centers. We maintained high occupancy rates and continued to invest over 3 billion shekels in development and improvements.

Q: What is the current status of the Green Mountain project and its impact on future growth? A: AL Henkin, CEO: Due to regulatory issues, we are exploring alternative sites for the Green Mountain project. While negotiations with a technology company are ongoing, there is no certainty of completion. However, we remain optimistic about the project's potential and its contribution to our data center segment.

Q: How did the shopping malls segment perform in 2024? A: AL Henkin, CEO: The shopping malls segment experienced a 25% year-over-year increase in NOI, with a 7% increase excluding war relief. We maintained a 99% occupancy rate and saw a 5.3% increase in traffic and a 12% increase in store revenues compared to 2023.

Q: What are the key factors driving growth in the data center segment? A: AL Henkin, CEO: The data center segment is benefiting from strong demand for cloud and AI services, leading to a 50% quarter-over-quarter increase in NOI. The sector's growth potential remains high, and we are focusing on developing our European platform, particularly in London, Germany, and Norway.

Q: Can you elaborate on the performance and future outlook of the senior housing segment? A: AL Henkin, CEO: The senior housing segment had a successful year, with a 20% increase in NOI and occupancy rates reaching 98%. We are nearing full occupancy in existing homes and are working on new projects, including a 350-apartment development in Tel Aviv, expected to open in Q4 2025.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.