Real estate company Gazit-Globe Ltd. (NYSE: GZT; TASE: GLOB) posted a 5% drop in rental income in 2014, to NIS 4.913 billion. The company explains this by falls in the value of the US dollar, the Canadian dollar, and the euro against the shekel.
Gazit-Globe posted a net profit of NIS 73 million for 2014, compared with NIS 927 million for 2013. The fall in profit is mainly due to an accounting loss on the revaluation of derivative financial instruments (mainly in currency hedging deals) of NIS 190 million, compared with a profit of NIS 431 million for this item in 2013. The company also posted a NIS 154 million loss on early debt repayment, and a NIS 146 million loss arising from losses in Dori Group.
NOI fell 4% to NIS 3.329 billion. The occupancy rate in the company's properties was 95.9% last year. Cash flow form regular activities totaled NIS 1.026 billion in 2014, compared with NIS 1.189 billion in 2013, the decline being mainly due to a higher loss in 2014 on contracting work.
The interesting story in Gazit-Globe's financial statements is the huge salary cost of its senior management. Chairman Chaim Katzman had a salary cost of NIS 15.82 million last year, made up of a NIS 5.02 million salary and share-based compensation of NIS 10.8 million. His deputy Dori Segal had a salary cost of NIS 22.71 million, consisting of NIS 2.78 million salary, NIS 4.93 million share based compensation, and a one-time payment of NIS 14.99 million for the termination of his work as CEO of FCR. CEO Roni Soffer had a salary cost of NIS 7.36 million.
Altogether, the company's six highest paid executives had a salary cost of NIS 73.6 million, which is more than the company's annual profit.
Published by Globes [online], Israel business news - www.globes-online.com - on March 24, 2015
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