Despite the war and economic uncertainty, income producing property company Bayside Land Corp. Ltd. (Gav Yam) (TASE:BYSD1), which focuses on developing and renting office space, has presented real growth in rental income and management fees in its latest results for the second quarter of 2024.
In June, Bayside even managed to close a huge leasing deal in which it will rent 20 floors in its ToHa2 high-rise project in Tel Aviv to Google, while Bayside CEO Jacobovitz tells "Globes" that the company is even buying land for the ToHa 3 tower. The company’s flagship Tel Aviv project directly across the Ayalon from Azrieli Towers, which it is developing together with Amot Investments (TASE: AMOT) includes the 30-floor ToHa1 tower, which has been built and occupied for some years. The 77 floor Toha2 tower, in which Google has leased 20 floors, is under construction and due to be completed in late 2026.
Jacobovitz says, "We are purchasing land in a rectangle that we call ‘Around ToHa." The complex will become the main business center (urban masterplan) of Tel Aviv. The first and second towers will have a total of about 300,000 square meters and over 20,000 people will work there. We need to be ready to create the next product and that will be ToHa3. When we complete the purchase of the land, we will be able to build another 120,000 square meters there, and it will be possible to build 300 housing units there too."
In the second quarter of 2024, Bayside reported revenue of NIS 197 million, up 5.3% from the corresponding quarter of 2023. In the second quarter NOI (net operating income) rose 5% to NIS 171 million. In the first half of 2024, NOI rose 7% from the corresponding period of 2023 to NIS 340 million and full year NOI is forecast to be NIS 685-705 million. In the second quarter Bayside reported net profit of NIS 263 million, up 6% from the corresponding quarter of 2023, and net profit of NIS 331 million in the first half of the year, down slightly from the first half of 2023.
Bayside owns 1.2 million square meters of income producing property with 96% occupancy and is developing 360,000 square meters more. The company has 400 tenants including Google, Amazon, Apple, Microsoft and Nvidia - five of the magnificent seven. Only Facebook and Tesla aren’t tenants and Jacobovitz says jokingly, "There is room for all of them."
On the Google deal worth NIS 155 million annually Jacobovitz says, "I always remained optimistic during the negotiations. It took us two years, when nobody around had patience, neither the capital market nor journalists. But we fought and got there."
Why did it take so long?
"Today, this is typical of negotiations with large companies that take more time than before. Those who manage the talks are the international companies themselves, and there is more inflexibility on their part. But ultimately, they are not giving up their companies' grip on the development centers they manage in Israel, and a large part of those centers are located in Bayside’s parks around the country that are a strategic focal point in the development efforts of those companies.
"The Google deal makes national news in the fullest sense because it is a vote of confidence in Israel, and in its human capital which is the best in the world. This is one of the strong things that have not changed here."
Bayside trades on the Tel Aviv Stock Exchange (TASE) with a market cap of almost NIS 6 billion, up 11% this year but only up 3% over the past three years. Property and Building Corp. Ltd. (TASE:PTBL), which is itself controlled by Discount Investment Corporation Ltd. (TASE:DISI), holds an 82.2% stake in the company.
Published by Globes, Israel business news - en.globes.co.il - on July 30, 2024.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2024.