Rent relief hits profits at Israeli shopping mall operator Azrieli

JERUSALEM, Nov 25 (Reuters)Azrieli Group AZRG.TA, one of Israel’s largest shopping mall operators, on Wednesday reported lower third-quarter profits, citing rent relief given to its retail tenants due to the coronavirus outbreak.

Azrieli said it earned 192 million shekels ($58 million) in the third quarter, down from 289 million shekels a year earlier. It said profit was also impacted by higher financing expenses.

The company said that excluding the lockdown periods in March, April, May and September aimed at containing the COVID-19 virus, store revenue between January and Sept 18 was up 1.2% over the same period last year.

The company invested 307 million shekels in the quarter in investment properties, both to develop and construct new properties and to upgrade existing ones.

CEO Eyal Henkin said the company’s office business continued to see strong demand. “The pace of new contract signings and option exercises during the year is similar to the pace pre-COVID-19,” he said.

Henkin said Azrieli was “continuing full steam ahead with development on a huge scale” and was investing in the growing data centres sector.

In July-September, net operating income (NOI) fell to 352 million shekels from 407 million a year earlier, mainly due to relief given to tenants while malls were closed in March and April at the onset of the pandemic. Malls reopened in May but were shut again in mid-September and remain closed.

Same-property NOI in the office division fell 13%.

Funds from operations fell to 282 million shekels from 321 million.

($1 = 3.3235 shekels)

(Reporting by Steven Scheer. Editing by Jane Merriman)

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