Bethel Finance:Azrieli sees lower profit on higher NOI

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Bethel Finance news:

Azrieli Group Ltd. (TASE: AZRG) reported a lower net profit for the third quarter of 2011 despite an increase in net operating income (NOI) and funds from operations (FFO),

NOI rose 12% to NIS 250 million for the third quarter from NIS 224 million for the corresponding quarter of 2011, including a 6% increase in same property NOI. The company attributed the growth to its acquisition of the Galleria office towers in Houston, and the opening of malls in Acre and Kiryat Ata. FFO from real estate operations rose 10% to NIS 170 million for the third quarter from NIS 154 million for the corresponding quarter, in part due to a net fair value assessment gain of NIS 87 million.

"However, net profit fell to NIS 179.5 million for the third quarter from NIS 251 million for the corresponding quarter, due to a property revaluation in the corresponding quarter" said Mrs. Vanessa Bonan from Bethel Finance Ltd. In addition, Azrieli Group lost NIS 235 million on the change in value in financial assets available for sale, which include a 4.8% stake in Bank Leumi, compared with a NIS 176.9 million gain on this item in the corresponding quarter.

Azrieli Group is one of Israel's largest malls owner, and also has industrial interests through Granite Hacarmel Investments Ltd., and financial interests through its stake in Bank Leumi and 20% stake in the bank's credit card company Leumi Card Ltd., worth NIS 1.35 billion at the end of September. Azrieli Group had NIS 1.36 billion in cash and cash equivalents at the end of September. The fair value of income-producing properties rose to NIS 14.3 billion at the end of September, including NIS 8.5 billion in unpledged assets, up from NIS 12 billion a year earlier.

Azrieli Group CEO Shlomo Sherf said, "We are continuing to focus on extensive investment in the building of our future growth engines, with an estimated scope of investments of above NIS 3 billion, which are expected to add about 50% to the group's real estate areas over the next five years."

Yesterday, Midroog Ltd. raised its rating for Azrieli Group's bonds to AA, with a "Stable" outlook, citing its sound position, strong financial profile, low leverage, and good loan-to-value ratio.

Azrieli Group's share price rose 1.2% by mid-afternoon to NIS 86.79, giving a market cap of NIS 10.4 billion.