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Azrieli Group Ltd. announces fourth quarter and year-end results for 2012



  Azrieli Group Ltd. announces fourth quarter and year-end results for 2012

  PR Newswire

  TEL AVIV, Israel, March 20, 2013

TEL AVIV, Israel, March 20, 2013 /PRNewswire/ --

      Reports a 7% increase in NOI, totaling NIS 275 million in Q4/2012.

   FFO from real estate activity, totaling NIS 181 million, amounts to a 4%
                  increase compared with fourth quarter 2011

Azrieli Group Ltd. (TASE: AZRG IT) today reported its results for the quarter
ending December 31, 2012.

Fourth Quarter Financial Highlights

  * NOI for the third quarter increased by approx. 7%, totaling NIS 275
    million , compared with NIS 258 million in the same quarter in 2011.
  * Increased same-property net operating income (NOI) of 3.1% over the fourth
    quarter of 2011, mainly due to the occupation of space in the Galleria
    Towers in Houston.
  * Funds from Operations (FFO) from real estate activity ^[ ^1] (relating to
    the Group's income-producing real estate business only) totaled NIS 181
    million in Q4/2012, compared with NIS 174 million in the same quarter in
    2011, a 4% increase.
  * Quarter closed with an occupancy rate of 100% in all Israel segments
    including malls, shopping centers, offices and others, and for assets in
    the USA segment, at approx. 90%.
  * Net profit (attributed to the shareholders) of NIS 369 million in Q4/2012
    compared with a net loss of NIS 129 million in the same quarter in 2011
    (mainly due to a rise in tax liability in Israel (Trajtenberg Committee).
  * Comprehensive profit (attributed to the shareholders) totaled an amount of
    NIS   469   million in Q4/2012 compared with a comprehensive loss of NIS
    201 million in the same quarter in 2011.
  * In December 2012, S&P Maalot re-approved Azrieli Group's credit rating of
    (AA/Stable).

Management Review

Shlomo Sherf, Azrieli Group's CEO : "We are closing 2012 with very good
results, which reflect continued growth and value creation, as well as a
significant improvement in the NOI, FFO and all the operating parameters.
These results, alongside the significant scope of investments and development,
reflect the Group's growth strategy, which focuses on the improvement of
existing properties, initiation, construction and development of new
income-producing properties and the seizing of business opportunities".

Year-End 2012 financial results summary:

                                         NIS in millions
      change      2011         2012
        11%        982        1,087      NOI
       3.8%        936          972      Same property NOI
                                         FFO from real estate
        11%        646          716      activity
                                         Change in fair value of
                                         income producing real
       (65%)       696          247      estate, net of tax
         8%        109          118      EPRA NAV per share

--------------------------------------------------

1. For details see Section 1.1.7 of the Board of Directors' report as of
December 31, 2012. Funds from operations (FFO) are a widely accepted
supplemental measure of the performance of income-producing real estate
companies and REITs.

9-12 2012 financial results summary:

                                         NIS in millions
      change     Q4 2011     Q4 2012
         7%         258         275      NOI
       3.1%         258         266      Same property NOI
                                         FFO from real estate
         4%         174         181      activity
                                         Change in fair value of
                                         income producing real
       (45%)        317         173      estate, net of tax
         8%         109         118      EPRA NAV per share

Core Business Operations

Fourth quarter operating results for the shopping centers, offices and others,
and the assets in the U.S segments:

Shopping Center Portfolio in Israel

  * Total net operating income (NOI) totaled NIS 177 million, an increase of
    1.1% over the parallel quarter of 2011;
  * Same-property NOI increased by 1.1% over the parallel quarter of 2011;
  * The average occupancy rate in this segment remains close to 100%; and
  * The increase in these parameters during the quarter continues to show the
    consistent growth trend recorded in recent quarters.

Office Space and Others Portfolio in Israel

  * Total net operating income (NOI) totaled NIS 73 million, an increase of
    2.8% over the equivalent quarter in 2011;
  * Same-property NOI increased by 1.4% over the parallel quarter of 2011;
  * The average occupancy rate in this segment remains close to 100%; and
  * The increase in these parameters during the quarter continues to show the
    consistent growth trend recorded in recent quarters.

Income-Producing Real Estate Portfolio in the   U.S.A.

  * Total net operating income (NOI) totaled NIS 25 million, an increase of
    NIS 13 million over the parallel quarter of 2011;
  * Same-property NOI increased by 41.7% over the parallel quarter of 2011;
  * The average occupancy rate in this segment was approx. 90%; and
  * The NOI increase is attributed to the increase in the NOI in the Galleria
    Towers and to the acquisition of the Plaza property in Houston, Texas.  

Acquisitions, Development and Redevelopment Activities

  * During the quarter, the Group's investments in income-producing real
    estate totaled NIS 225 million. The investments were made in relation to
    new acquisitions, enhancement of existing properties, and investments
    towards properties under development.
  * In calendar year 2012, the Group's investments in income-producing real
    estate totaled NIS 837 million.
  * The Company has 7 projects under development totaling NIS 4.2-4.4 billion
    , of which NIS 1.2 billion have already been invested; the estimated
    cost-to-completion as of 31.12.2012 is NIS 3.0-3.3 billion.
  * Azrieli Center Sarona, Tel Aviv   - excavation shoring work started at the
    site.
  * Azrieli Rishonim mall   - excavation shoring work started at the site.
  * In October 2012, the group completed the acquisition of its partner's
    share (50%) in the Petah-Tikva Science and Technology Project, for NIS 49
    million. The cost represents an annual yield of approx. 11.5% allowing the
    NOI from the acquired share.
  * Purchase of land at 146 Menachem Begin Road, Tel Aviv (Northern Central
    Business District) from Clalit Health Services   - in November 2012, the
    Company purchased land on an area of 10,000 sqm, designated for the
    construction of a project of 75,000 sqm (48,000 sqm of offices, 10,000 sqm
    retail space and 17,000 sqm residential) and 1,500 parking spaces, for a
    consideration of NIS 240 million.

The Company paid the first installment (20%) for the land in the sum of NIS 48
million. Another 25% will be paid on June 15, 2013 and the balance on the
handing over date.

The handing over of the lot is scheduled for no later than December 31, 2014.
However, the seller may postpone the handing over date by one year, against a
predetermined payment. The construction costs (initial estimate) are expected
to amount to NIS 700 million.

Balance Sheet (extended standalone) as of 31 December 2012

  * The Group's cash and cash equivalents totaled NIS 533 million.
  * The Group also has financial investments available for sale in Bank Leumi
    and Leumi Card, with a fair value of approx. NIS 1.4 billion.
  * The net debt totaled NIS 4.3 billion.
  * The value of the Company's income-producing properties totaled some NIS
    14.7 billion, compared with approx. NIS 13.9 billion at 31.12.2011.
  * The value of the Company's assets under development totaled NIS 1.16
    billion compared with approx. NIS 905 million at 31.12.2011.
  * Shareholders' equity totaled approx. NIS 11.9 billion compared with NIS
    11.0 billion at 31.12.2011. The increase is attributed to the profit
    during the period, and remains high, considering the dividend paid in
    April 2012 (NIS 240 million).
  * Equity per share totaled approx. NIS 97.9 compared with approx. NIS 91.0
    at 31.12.2011.
  * The equity to balance sheet ratio is approx. 62%.
  * The Company owns unpledged assets worth NIS 10.2 billion.
  * EPRA NAV per share totaled NIS 118, compared with NIS 109 as of 31.12.2011
    - approx. 8% increase.

Non-Core Operations

Granite HaCarmel  (100% holding) - Net profit of NIS 42 million in Q4/2012,
compared with a net loss of NIS 19 million in Q4/2011 (attributed to the
shareholders).

Net profit totaled NIS 124 million in 2012, compared with a net profit of NIS
39 million in 2011 (attributed to the shareholders).

In September 2012, a full tender offer for Granite's publicly-held shares was
accepted. As of the Report release date, Granite is a private company.

Financial Holdings

Bank Leumi (approx. 4.8% holding) - In Q4/2012, the share value on TASE
increased by 16%, a NIS 122 million increase in the Group's holding value in
the Bank. Net of tax, the increase was NIS 100 million.

From the end of the quarter until the date of release of the Report, the share
value increased by 4% representing an increase of NIS 30 million in the
Group's holding (net of tax).

Leumi Card (20% holding) - The holding book value as of 31.12.2012 stood at
NIS 514 million compared with NIS 483 million as of 31.12.2011 according to an
external appraiser.

Looking ahead

The Company remains committed to its core business objectives:

  * Increasing shareholder value through the ownership, management, and
    selective acquisition of malls, shopping centers and office space - mainly
    in Israel.
  * Continued examination of business opportunities in Israel and overseas, in
    connection with the expansion of its business, mainly in the real estate
    sector, including the acquisition of land reserves, the purchase of
    additional properties, and the improvement of existing properties.
  * Maintaining a high occupancy rate and accelerated promotion through
    marketing of the leasable space in the properties under development and
    construction.
  * Maintaining financial strength despite acquisitions and massive
    development projects.

Conference Call

The Company will hold its annual conference call, hosted by the Company's
senior management on Wednesday, March 20, 2013 at 16:00 Israel local time
(15:00 CET; 14:00 United Kingdom time and 10:00AMNew York time). The call will
include a review of the Company's Q4/2012 performance, as well as a discussion
of the Company's strategy and expectations for the future.

A Question & Answer session will follow the discussion.

To participate, please dial 03-9180644 from Israel, 1-888-281-1167 from the
US, 0-800-917-9141 from the UK,   0-800-022-9568 from the Netherlands
1-866-485-2399 from Canada and +972-3-9180644 internationally.

A replay will be available for 2 days by dialing 03-9255927 from Israel,
1-888-295-2634 from the US and Canada 0-800-028-6837 from the UK,
0-800-023-4246 from the Netherlands and +972-3-9255927 internationally.

Access to the presentation will be available through the Company's website at
http://www.azrieli.com under "Investor Relations → Presentations."

For Additional Information

Full copies of the Company's financial statements are available on the Azrieli
Group's website at http://www.azrieli.com , in the IR (Investor Relations)
section. To be included in the Company's e-mail distributions, and to receive
press releases, news and other Company notices, please send e-mail addresses
to Mr. Moran Goder, Head of Investor Relations, at morango@azrieli.com , Tel:
+972-3-6081310.

About Azrieli Group

Azrieli Group Ltd. owns and operates one of Israel's largest portfolio of
malls, shopping centers and office properties nationwide. The Company is
publicly traded on the TASE under the symbol AZRG IT and is included in the
TA-25 and TA-real-estate 15 indices. It is the only Israeli stock included in
the EPRA Index. As of December 31, 2012, the Company has an equity market
capitalization of about $3.1 billion. The Company operates mainly in Israel,
and owns and manages properties with a gross leasable area of approx. 718,000
square meters; the Company had interests in 13 shopping centers comprising
256,000 square meters of leasable space across Israel, 8 office properties
comprising 283,000 square meters of leasable space across Israel and 6
properties overseas (mainly in Houston, Texas) comprising 179,000 square
meters of leasable space. In addition, the Company has 5 projects under
development comprising 400,000 square meters of leasable space in Israel.
Approx. 90% of the fair value of investment properties and properties under
development relates to domestic properties (in Israel).

The   Group   has been specializing in shopping center and office space
development, acquisitions, and management for the past 30 years. For further
information, please visit the Company's web site at   http://www.azrieli.com .

Accounting and Other Disclaimers

The Company believes that publication of the FFO, which is calculated
according to EPRA best-practice recommendations, better reflects the operating
results of the Company, since the Company's financial statements are prepared
in conformity with IFRS. In addition, publication of the FFO provides a better
basis for a comparison of the Company's operating results between different
reporting periods and strengthens the uniformity and the comparability of this
financial measure to that published by European real estate companies.

As clarified in the EPRA and NAREIT position papers, the FFO measures do not
represent cash flows from current operations according to accepted accounting
principles, nor do they reflect the cash held by a company or its ability to
distribute that cash, and they are not a substitute for the reported net
income (loss). Furthermore, it is also clarified that these measures are not
part of the data audited by the Company's independent auditors.

Forward Looking Statements

This press release may contain forward-looking statements relating to Azrieli
Group's operations and the environment in which it operates that are based on
Azrieli Group's expectations, estimates, forecasts and projections. These
statements may be identified by their use of forward-looking terminology such
as "believes", "expects", "may", "should", "would", "will", "intends",
"plans", "estimates", "anticipates" and similar words. These statements are
not guarantees of future performance and involve risks and uncertainties that
are impossible to control or predict. Actual outcomes and results may differ
materially from those expressed or implied in these forward-looking
statements. We refer you to our latest annual report and current interim
financial statements, both of which are available on Azrieli Group's website,
for a discussion of the risks and uncertainties associated with
forward-looking statements. Therefore you should not place undue reliance on
any such forward-looking statements. Further, these forward-looking statements
speak only as of the date on which such statements are made except as required
by laws and regulations. Azrieli Group undertakes no obligation to publicly
update any such statement or to reflect new information or the occurrence of
future events or circumstances.

The Company refers you to the documents filed by the Company from time to time
with the Israel Securities Authority, specifically the section titled "Risk
Factors" in the Company's Annual Report for the year ended December 31, 2011,
as may be updated or supplemented in the Company's immediate filings, which
discuss these and other factors that could adversely affect the Company's
results.

Please note that this document should not be regarded as a substitute for
reading the original Hebrew version of the Company's reports in full. The
financial data in this document relates to the solo extended report
(unaudited) unless otherwise stated. The full and legal version of the
Company's reports, in Hebrew, were released by the Company on November 21 ^st
, 2012 and may be reviewed on the Israeli MAGNA website at
http://www.magna.isa.gov.il
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