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 December 31, 2020, the Company owns and manages 26 income-producing properties spanning approx. 894 thousand sqm of leasable space with high occupancy rates of approx. 94.5%, 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
As a result of the outbreak of Covid-19 in 2020, and the repeated closures of the Company’s malls by the government of the State of Israel, the Company has been working while placing emphasis on assisting its customers, with the goal of helping them weather this period. At the same time, the Company is working to retain its financial strength and to continue property development and betterment. To achieve these goals, the Company is doing as follows:
- Collaborations with the Company’s customers in order to help them through the crisis
- Frequent investments in the renovation and appearance of the properties, varying and adapting the mix, upgrading the existing properties and realizing the available rights therein
- Continued investment in development of a strong and effective loyalty program (‘MY OFER’) and creation of marketing activities through cooperation with the Company’s customers
- Establishment of an innovation team for cutting-edge, creative development of the malls’ activity through the creation of added value for tenants and visitors alike
- Conservation of financial strength through extension of the average duration of the debt, reducing financing costs and maintaining direct access to the capital market
- Continued development and construction of projects according to original time tables
- Preparation of a strategic plan for the Company with the objective of diversifying its business by entering additional real estate sectors
From the CEO
Melisron has closed the most challenging year it has ever experienced. For 10 of the 12 months of the year, business was conducted in the shadow of the Covid-19 pandemic. On March 15, 2020, by government order, the Company’s malls were shut down for the first time in the life of the Company in view of the outbreak of the pandemic. During the first lockdown, the Company’s malls were closed for about 10 weeks, at the end of which (in May), they reopened. The reopening of the malls generated significant customer footfall, stores and chains resumed operations and activity was even stronger than in the same months in the previous year.
Due to another wave of the virus, the Company’s malls were shut down for a second time as of September 18, 2020. During the second lockdown, huge efforts were made vis-à-vis the various government agencies and with the assistance of the Malls and Retail Chains Forum, we conducted a successful pilot for opening the malls under stringent Purple Badge guidelines, under which all the Company’s malls were reopened at the beginning of December. This reopening was short-lived, despite strict adherence to stringent Purple Badge conditions, and continued for one month only. On December 27, 2020, the Company’s malls were shut down for the third time until their reopening on February 20, 2021. In total, in 2020, the Company’s malls were closed for about one half of the year (150 days!).
During 2020, for the reasons mentioned, the Company was forced to work under conditions of uncertainty, with decisions on lockdowns and restrictions being issued at very short notice. Furthermore, exits from the lockdowns were complex and challenging in terms of the instructions and limitations we were required to study and implement on site each time.
Throughout this challenging year, we considered it of the utmost importance to maintain our business activity in the malls and offices. To this end, we gave tenants relief during the lockdown periods that included exemption from rent as well as relief to support adaptation to the lockdown exits.
In the period between lockdowns, increases of about 2% were recorded in store revenues compared with the same period in the previous year. Occupancy rates throughout the year were high and exceeded 97% in the malls and approximately 95% in the high-tech centers and offices. Average rent in the contracts signed during the period rose by approximately 3%. Our customers continued to frequent the Company’s malls and during the summer months, monthly entries of 6 million visitors were recorded at the Ofer Malls on a cumulative basis.
Over the course of the year, we preserved the Company’s financial strength while maintaining a very high level of cash throughout the entire year of between ILS 1.2-1.7 billion. We issued bond series and took bank loans of approx. ILS 2 billion at low interest rates, and in so doing succeeded in reducing the average interest rate on the debt from 2.9% to 2.4% on annual calculation.
Alongside this activity, we are working to upgrade the Company’s properties, to maximize them and to enable a mix of uses therein, which will facilitate diversification of the many services we offer. We are also examining entry into new areas of activity that are synergetic with the Company’s capabilities, its long-term strategy, and its financial and managerial resources, so as to take advantage of its strengths and the strong and considerable confidence that Melisron enjoys in the Israeli market.
To our delight, we see that with the reopening of the economy in February 2021, all our mall tenants have resumed full operations.
We are pleased to again see the public frequenting the Company’s malls and enjoying the shopping and entertainment experience. The Company will continue to exercise great care on all the stringent Purple Badge standards as determined in the pilot for the malls by the Ministry of Health so as to protect its customers’ health.
We are supporting our tenants and employees in this period and believe that together we can continue weathering this challenging period, to provide our customers with a pleasant, healthy and safe shopping experience, and present improved business results in 2021.