Our Debt

mers with a pleasant, healthy and safe shopping experience, and present improved business results in 2021.

Highlights

Financial Management

From the beginning of 2020 until the report release date, the Company has raised approx. ILS 1.9 billion in bonds and took approx. ILS 0.9 billion in loans from banking institutions. The Company has financial flexibility in debt raising with good conditions and long average duration, which also proved itself during the Covid-19 crisis, which further the Company’s continued initiation, betterment and development of additional projects and taking advantage of business opportunities.

The leading principles in management of the financial debt are:

1.     Maintaining liquidity advantages.

2.     Lowering the financing costs.

3.     Extending average duration of the debt,

4.     Maintaining a strong and stable balance sheet.

5.     Maintaining a high rating.

The Company’s debt includes: Publicly-traded bond series, private loans from institutional bodies, loans and credit facilities from banking sources and commercial paper.

The Company’s Financial Leverage

The decrease of leverage in recent years contributed to the decrease in the Company’s risks alongside maintenance of a leverage ratio which allows for business development and improvement of the return on equity.

In the Company’s opinion, a loan-to-value-ratio (LTV) of approx. 50% is right for the Company. The Company’s current leverage rate is approx. 47.5%. The decrease in the leverage rate compared with December 31, 2020 is mainly derived from the Company’s operating cash flow and the positive revaluation of the real estate.

Financial Challenges

In recent years, the Company has made it a priority to lower financing costs while extending average duration of the debt.

During the next four quarters, the Company has debt repayments in the sum of approx. ILS 2.9 billion (principal and interest) including a final repayment of Series H bonds (which is guaranteed by a first-ranking charge over the Ofer Grand Haifa mall) in January 2022, and repayment of the credit against the Ofer Ramat Aviv mall in March 2022.

As of March 31, 2021, the Company has a cash balance and liquid financial asset portfolio of approx. ILS 1.5 billion. In addition, the Company has unused approved credit facilities totaling approx. ILS 400 million. After the balance sheet date, the Company issued bonds (series Q) in the sum of ILS 664 million by way of expansion of an existing series. Furthermore, the Company has unmortgaged properties in the value of approx. ILS 6.3 billion

As of March 31, 2021, the net debt balance is ILS 8.9 billion (with no change since Dec. 31, 2020).

The financing component is one of the main factors of the Company’s success. Through diversification of the sources of financing and maintenance of high liquidity, the Company can continue its development momentum and succeed in periods of crisis like the one that the world is currently experiencing.

Rate of Current Payments of Principal Net of Secured Bullet Components

Total Blended Cost of Debt

The following specifies the weighted effective cost of debt (real interest recorded in profit and loss) and the nominal cost of debt (cash flow interest paid on the debt) as of the date of the statements and over the period of repayment of the group’s financial liabilities.

Breakdown of Mortgaged Property Value (Owners’ Share)

The Company has unmortgaged properties in the value of approx. ILS 6.3 billion, as well as mortgaged properties in the value of ILS 0.7 billion, with respect to which credit facilities have been provided that are completely unused as of the balance sheet date, and which are available for immediate release from the mortgage.

The mortgaged properties harbor the potential for debt expansion, as the ratio of the value of the collateral to the secured debt is approx. 60% and can be increased up to 80%.