Income-producing real estate company Gazit-Globe Ltd. (NYSE: GZT; TASE: GZT; TSX: GZT) today reported a NIS 787 million net profit for 2016, following a NIS 620 million net profit in the preceding year. The company's profit raised its shareholders' equity by 9% to NIS 8.2 billion, amounting to 37% of the book value of its properties.
The company is due to report a NIS 1 billion addition to its equity in the first quarter of 2017, which will end shortly, as a result of ending the consolidation of its results with those of its North American subsidiaries. Gazit-Globe's shareholders' equity will thus reach the NIS 9-10 billion range as of March 31, 2017, while the company itself has a market cap of NIS 7.25 billion.
Through the subsidiaries it controls, Gazit-Globe operates commercial centers in North America, Europe, Israel, and Brazil. In early March, the company completed the merger of its Equity One subsidiary, which handles its US business, into its Regency Centers competitor, while reducing its stake in First Capital Realty (FCR), which handles the group's business in Canada, to 32.7%.
Proportion of private real estate business rises to 5%
Gazit-Globe vice-chairman and CEO Dori Segal says, "2017 began very positively for us. In addition to closing the merger deal in the US, we continued our measures for reinforcing our balance sheet and financial flexibility, which will have an effect in the near future."
Segal adds that during 2016, the company made investments in Israel and Brazil that increased the proportion of the private real estate it owned from 19% at the beginning of the year to 25% at its end, as part of the strategy for increasing the proportion of private properties its owns, rather than its ownership of public companies under its control. At the same time, Gazit-Globes has already put its three private income producing properties in Germany, listed in its balance sheet at a value of €95 million, up for sale. The company is selling these properties because it has decided against making Germany an important territory for it.
Gazit-Globe has two public subsidiaries operating in Europe, which will continue to be consolidated in its reports for the first quarter of 2017: Atrium, which operates in Eastern Europe, and Citycon, which operates in Scandinavia. Gazit-Globe also owns 32.7% of FCR in Canada and 11.6% of Regency Centers in the US, which acquired Equity One.
At the same time, according to Gazit-Globe chairman and controlling shareholder Chaim Katzman, "We expect increasing the proportion of our private real estate to be our primary focus, with special attention to finding investments in the US in the coming years. This market has been, and remains, the world's most liquid market, and I believe that our experienced financing team will have an abundance of opportunities in the major cities there from which we can benefit."
Published by Globes [online], Israel Business News - www.globes-online.com - on March 27, 2017
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