Melisron Ltd (TASE:MLSR)

Change:

Change

Change percentage

Last Update:

at:

Melisron and its subsidiaries (the “Company”) owns and manages high-quality income-producing properties situated in the centers of Israel’s big cities.

The Company focuses on retail properties in central locations at the heart of big cities and on office complexes that are mainly marketed to international and Israeli high-tech companies.

As of  September 30, 2021, the Company owns and manages 28 income-producing properties spanning approx. 871 thousand sqm of leasable space with high occupancy rates of approx. 98%, and 26 thousand parking spaces in addition thereto.

The Company’s shares are listed on the TA-35 Index, the flagship index of the Tel Aviv Stock Exchange (TASE), which includes the 35 companies with the highest market cap on TASE that meet the Index’s threshold conditions, as well as on the Tel Aviv Real Estate Index and the Tel-Dividend Index.

The Company’s Objectives and Goals

The Company operates and manages its business for the betterment of its properties, for maximum income generation from such properties and in order to bring about the development and growth of the Company’s business. In order to reach these objectives, the Company operates in the following manner:

  • Making frequent investments in the upgrading and appearance of the properties, diversification and adjustment of the mix, improvement of the existing properties and exhaustion of the existing rights therein.
  • Continuing to invest in the development of a strong and effective customer club, “My Ofer”, and creating marketing campaigns in collaboration with the Company’s customers.
  • Infusing the malls’ activities with innovation and creativity, with an emphasis on digitization, while creating additional value for tenants and visitors.
  • Maintaining the financial robustness while extending the average duration of the debt, reducing financing costs and maintaining direct access to the capital market.
  •  Continuing the development and construction of projects according to original schedules.
  •  Implementing the Company’s strategic plan to strengthen and maintain its core business through betterment of the malls and promotion of processes supportive of the core business, alongside development of operations in new areas, both by way of betterment of existing properties through multi use and by way of entry into new real estate segments.

From the CEO

During Q3, the Company’s malls continued to operate fully and with almost no restrictions, making it possible to continue to demonstrate Melisron’s strength and the great appeal of its malls, which drew in millions of visitors per month. The Company continues to present record results for the second consecutive quarter:

  • The NOI owners’ share was ILS 281 million compared with ILS 230 million in Q3/2020 and ILS 274 million in Q3/2019. The FFO was ILS 201 million compared with ILS141 million in Q3/2020 and ILS 180 million in Q3/2019.
  • Starting from the reopening of the malls on February 21, 2021 with the end of the third lockdown, and until the end of Q3, the Company’s malls returned to presenting impressive results with an increase of approx. 6% in the tenants’ store revenues (despite 11 days of military fighting in May of this year), compared with the same period in 2019[1], prior to Covid-19. The increase in store revenues was especially noticeable in the fashion and footwear area, which recorded an increase of approx. 13%, and in home design stores which recorded an approx. 8% Even the restaurants and fast-food presented a nice increase in store revenues this quarter, and it seems that the trend of improvement is also evident in this branch with the return of visitors to frequent and dine in malls. The movie theatres operating in the Company’s regional malls are still impacted by the Covid-19 restrictions, and their operations are relatively limited.
  • During the first nine months of 2021, the Company signed 594 new contracts, with an approx. 5% increase in rent in real terms, and it maintained very high occupancy rates in the malls and office complexes.
  • The Company is experiencing lively demand on the part of the tenants for expansion of the retail spaces.

Due to such results, the value of the Company’s properties increased by approx. ILS 600 million during the period.

In the office operations, we are experiencing huge demand as a result of the bullish hi-tech market and the “unicorn” IPOs. During the quarter, the Company signed the first contract in the Landmark project in Sarona, Tel Aviv (which is held with a partner in equal parts) in an approx. 16,500 sqm area spread out over six floors. The Company is holding advanced negotiations for all of the office spaces in Tower A, a project whose construction is expected to be completed at the end of 2023, and also for office spaces in Tower B, whose construction is expected to end in 2025. In view of these negotiations, the NOI forecast for the project was updated, assuming full occupancy, to ILS 290 million, which is an increase of approx. ILS 100 million compared with the forecast from December 31, 2020. In the Ofer Park Petah Tikvah and in Ofer Hacarmel, negotiations for large areas are in progress. In addition, the Company is continuing to promote a number of zoning plans for the development of land and exercise of rights in the Company’s existing properties, totaling approx. 370 thousand sqm for office, retail, and residential uses, some of which are nearing the issuance of building permits.

With the closing of the acquisition of Grouper, since August 2021 the Company has begun developing a digital arm, and we are in the stage of research and planning to understand the opportunities and preferences and also to choose appropriate technologies for the fast and efficient implementation of Ofer’s digital vision and our client loyalty program.

With the ebb of the fourth Covid-19 wave and the return to full normal operations, the Company estimates that the momentum in its business will continue, concurrently with the implementation of the strategic plan to diversify the sources of its revenues, for the continued growth and development of the Company.

[1] The increase in store revenues is measured compared with the same period in 2019, net of revenues of movie theaters, which only opened at the end of the previous quarter