95% of the 53,000 square meters in the ToHa project in Tel Aviv has been leased, according to the quarterly report by real estate company Amot Investments Ltd. (TASE:AMOT), controlled by Alony Hetz Property and Investments Ltd. (TASE: ALHE).
Amot, led by CEO Avi Mosler, owns the ToHa tower, located at the corner of Yigal Allon Street and Hashalom Road, jointly with Bayside Land Corp. Ltd.(Gav Yam) (TASE: BYSD1). The tower is now in the final construction stages, with occupancy scheduled to begin in early 2019. Amot expects net operating income (NOI) from the tower to be NIS 94-100 million when fully occupied (Amot's share will be NIS 47-50 million).
Amot says that three months ago, in August, the Tel Aviv Local Planning and Building Commission approved ToHa2, the second stage of the ToHa project, for deposit. The original urban building plan stipulates construction of a 70-storey office tower with 140,000 square meters next to the first one. Amot estimates the investment needed to build the second tower (including payments for the land) at NIS 2 billion (Amot's share will be NIS 1 billion).
Amot's NOI in the third quarter totaled NIS 170 million, 6% more than in the corresponding quarter last year, while funds from operation (FFO) grew 9% to NIS 120 million. Amot's third quarter net profit jumped 46% to NIS 92 million. The occupancy rate for Amot's properties at the end of September was 97.1%.
Amot finished the first three quarters of 2018 with NIS 508 million in NOI, 7.3% more than in the corresponding period in 2017, and NIS 359 million in FFO, a 13% increase. Net profit in this period was up 33% to NIS 340 million.
The company will distribute an NIS 80 million dividend (NIS 0.23 per share) in early December.
Amot's share price responded to the company's results with a 1.6% rise, boosting its market cap to NIS 6.5 billion, following an 80% rise in the share price over the past three years.
Commenting on his company's results, Mosler said, "In the last quarter, we continued to strengthen our grip in logistical tenders, the growth of which is consistent with the entry of more and more retail companies into activity in Israel and the spread of online shopping. The company regards this area as an important growth engine for the coming years, and will continue looking for relevant business opportunities."
Amot holds 102 income-producing properties in Israel (53% office space, 22% commercial space, and 17% logistics space) with an aggregate total of 1.3 million square meters, plus a number of land parcels zoned for development, among them three projects in the construction stages (in Tel Aviv, Holon, and Modi'in). The company's prominent properties include the Amot Atrium Tower in Ramat Gan, Amot Investments Tower (formerly IBM House), Beit Amot Mishpat, Amot Insurance House, Kanion Arim Mall in Kfar Saba, Kiryat Ono Mall, Pelephone House, and a portfolio of 36 supermarkets all over Israel.
Value Base reiterates "Buy" recommendation
Following the publication of Amot's results, Shay Lipman, senior research analyst at the Value Base investment house, repeated his "Buy" recommendation for Amot's share with a target price of NIS 23.90, 27% higher than the market price.
"The company's growth looks promising, also because of both purchases of properties, but mainly because it does its own developing in the projects it is carrying out now. We believe that the company is well managed, with properties spread around both geographically and between different sectors. It is on a promising growth track, has an efficient 47% leverage rate, and enjoys strong backing from the Alony Hetz group, a stable anchor. It is a fine representative of the income-producing real estate sector in Israel in investment portfolios," Lipman wrote.
Published by Globes, Israel business news - en.globes.co.il - on November 8, 2018
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