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MishorimReal Estate Investments Ltd. Company Presentation to Investors Financial Statements as of March 31, 2019 Translated from Hebrew to English for convenience only. In the case of contradiction, the Hebrew version is the determining version
Financial Statements as of March 31, 2019
Translated from Hebrew to English for convenience only. In the case of contradiction, the Hebrew version is the determining version
Mishorim Real Estate Investments Ltd. | The Company's presentation to the capital market
All forward looking information is intended solely and exclusively as of the date to which it relates and except for a commitment to reveal information which is required under the Securities Law, the Company does not undertake to update or to change any information that is included in this presentation, whether as a result of new information, a future event or other reasons. Furthermore, it is clarified that the Company's plans and strategies, which are included in this presentation are correct as of the time of their publication and they may change pursuant to decisions by the Company's Board of Directors, astheymay be fromtime to time. Except for trademarks that are owned by the Company, the trademarks that are mentioned in this presentation are the property of their owners and they are used in the presentation for the purpose of understanding the connection alone. The use of such trademarks should not be interpreted as confirmation or as verification in relation to the Company'splans, the Company's servicesorthe Company'ssecurities. This presentation does not purport to encompass or to include all of the information that may be relevant for the purpose of making any decision whatsoever regarding an investmentinthe Company'ssecurities. In order to remove any doubt, it is clarified that the Company does not undertake to update the informationthatisincludedinthe presentation. This presentation does not constitute or contain part of any offer or invitation whatsoever to purchase the Company's securities and it does not constitute or contain part of an invitation to receive such offers. Such an offer may be made solely and exclusively by means of a prospectus that the Company may publish, after the receipt of the permits that are required from the Securities Authority and the Stock Exchange. In any case in which there is a discrepancy or lack of correlation between that stated in this presentation and the prospectus, that stated in the prospectus shall prevail. Furthermore, the presentation does not constitute any recommendation and/or any advice whatsoever in relation to the Company'ssecurities.
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This presentation has been prepared by Mishorim Real Estate investments Ltd. (“the Company") asa general presentationregardingthe Company. This presentation is not intended to replace the need to review formal reports, which have been published by the Company for the public on the Stock Exchange, which include the prospectus of February 27, 2018, before making a decision regarding an investment in the Company's securities. If there is a discrepancy between that stated in this presentation and that stated in the Company's reports, which are required pursuant to the law, that statedinthe saidreportsshall have precedence. The information that is included in the presentation does not constitute advice, a recommendation, an opinion or an offer regarding the feasibility of investing and it does not replace an independent check and personal advice in accordance with the special characteristicsof eachinvestor. This presentation may include forward looking information, as defined in the Securities Law – 1968, including forecasts, assessments, estimates and other information regarding future events and matters. In certain cases, forward looking information can be identified by the means of such terminology as: "expected", "is of the opinion", "believes", "may", "estimates", "expects", "intends", "continues", "may", "plans", "expects" and similar terms and expressions. The forward looking information in this presentation is based on the Company's management's up to date assessments and assumptions, as of the time of the presentation, which are uncertain by their very nature, even though the Company believes that they are reasonable. The forward looking information involves risks and uncertainties, including factors that are not under the Company's control, each of which, or a combination of which, may significantly impair the results of the Company's operations and cause the actual results to be significantly different from the forward looking information.
Mishorim Real Estate Investments Ltd. | The Company's presentation to the capital market
(*) Excluding Mishorim's share of Skyline's properties. (**) Excluding properties that have been acquired after the balance sheet date and the NOIS thereon.
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Mishorim's strategy focuses on investing in properties with significant value added potential. Mishorim has undergone a significant change, focusing its operations in the field of income-generating properties, all commercial and office space in Israel and in the USA. The results of the strategic focus were that on the first quarter of 2019, the company presented a positive FFO (extended Solo)for the first time for approximately of NIS 2 million per quarter. The Company's portfolio of properties in Israel has an average yield rate of approximately 14% on equity. The Company's portfolio of properties in the US has an average yield rate of approximately 29% on equity (**). In addition, Mishorim is the holder of the controlling interest in Skyline Investments, which specializes in real estate investments in the hospitality field in the USA and in Canada, with a focus on yield properties.
Mishorim Real Estate Investments Ltd. | The Company's presentation to the capital market
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According to new research from IHL Group, North American retailers will open 12,663 stores and close 8,828 stores in 2018, for a net increase of 3,835 store locations. The report found that a handful of retailers — 16 companies — represented 66% of the total number of store closings. “There has been a great deal of negative press about retail in the last two years, overall retail is very healthy… But there are vast differences in retail segments with some growing rapidly and others struggling.” Greg Buzek, president of IHL Group”
Stores that have been opened Stores that have been closed
The company invests in open shopping Plazas in the USA, with a focus on tenants in the field of discount or service stores, entertainmentand leisure. Tenantsof these 2 fields present an increase in store count growth during 2017-2018.
Mishorim Real Estate Investments Ltd. | The Company's presentation to the capital market
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* From the Calcalist site.
malls in the USA
that Mishorimpurchases.
in which Mishorim invests are a completely different product from the malls, and this finds expression primarily in the different mix of tenants.
The Company’s bonds have been rated at Market value Capital equity attributed to the shareholders
BBB+/Stable by Maalot S&P NIS 249 million
As of 23.05.2019 (8.28 per share)
Approximately NIS 463 million
(approximately NIS 15.4 per share)
* Excluding Mishorim'sshare of Skyline's properties.
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A portfolio of income-generating properties in Israel and in the USA with an overall value of
NIS 923
million*
The representative annual NOI flow in Israel and the USA is
Approximately NIS 71 million*
Mishorim Real Estate Investments Ltd. | The Company's presentation to the capital market
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Alex Shnaider Harel Insurance The public Gil Blutrich 37% 37% 18% 8%
Mishorim Real Estate Investments Ltd. | The Company's presentation to the capital market
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million (*)
The holding is together with partners, in 14 income-generating properties in the United States, primarily commercial areas with high potential for enhancement as well as an apartments project.
million (*)
Income generating properties in Israel, primarily 12 office buildings and commercial areas in high demanded areas in the center of the country.
million (*)
13 hotels in the Marriott Courtyard chain, another two hotels in Cleveland, 3 resorts in Canada with adjacent reserves of land for development and a ski resort in California in the USA.
Activity in USA and Canada
(Through Skyline(
Activity in Israel (*)
(Through Mishorim)
Operations the USA
(Through Mishorim)
(*) Mishorim's effective share of the value of the real-estate properties as of 03.2019. (**) The Company's share of Skyline's shareholders' equity
Mishorim Real Estate Investments Ltd. | The Company's presentation to the capital market
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* See Chapter 1.3.3 of the report by the Board of Directors for details regarding the Company's plans.
Locating an income-generating property in the areas in which the Company operates, which have potential for enhancement or a business opportunity
Improving performance and the positioning the income-generating property and creating added value
Continuation of the improvement of the cash flow. Examination of opportunities for realization or holding for the long-term
Mishorim Real Estate Investments Ltd. | The Company's presentation to the capital market
Operating activity in Israel and in the USA (the Company's relative share) – excluding Skyline
* The representative NOI is an estimation only and a forward looking information, as defined in the Securities Law – 1968.
In the last 3 years- 250% growth in the income-generating properties portfolio and 300% growth in the NOI which the properties create. The value of the assets in NIS millions NOI in NIS millions
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USA Israel USA Israel
Mishorim Real Estate Investments Ltd. | The Company's presentation to the capital market
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2015 2016 2017 2018 First quarter 2018 First quarter 2019
Consolidated with Skyline
332,723 479,658 480,424 723,264 146,722 179,025
Revenues
81,296 84,999 116,372 182,635 41,449 55,271
Gross profit
56,156 67,608 93,431 146,432 34,719 47,192
EBITDA
16,387 19,067 42,256 64,551 14,389 17,394
FFO
2015 2016 2017 2018 First quarter 2018 First quarter 2019
Expanded solo (*)
38,936 56,727 57,449 78,644 17,157 23,065
Revenues
24,142 30,576 43,602 55,603 11,993 16,990
Gross profit
15,691 20,306 31,525 39,422 9,222 12,354
EBITDA
( 7,818 ) ( 3,745 ) ( 2,164 ) 308) ) (280) 2,131 FFO
(*) Expanded solo, including data from the company's income-generating properties activity in Israel and the USA alone.
During the first quarter
continues to improve its results and presented a positive FFO (extended Solo) for the first time
Mishorim Real Estate Investments Ltd. | The Company's presentation to the capital market
The Company’s Equity has increased from NIS 238 million in December 2014 to NIS 463 million in March 2019, an increase of 100%!
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Equity and capital per share
Capital per share Equity
Equity per share
Mishorim Real Estate Investments Ltd. | The Company's presentation to the capital market
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The sale of properties that have exhausted the potential for enhancement and in particular lands that don’t generate income. The acquisition of income-generating properties, with potential for enhancement and improvement in the cash flows in the short-intermediate term ▪ Constant improvement in the company’s properties occupancy, acquisition of 3 additional properties and realization of 4 properties which have exhausted their potential for enhancement, improved and stabilized the actual NOI and EBITDA which increased in 33% compared to same quarter last year. ▪ The company presents for the first time a positive FFO during the first quarter of 2019 (excluding Skyline activity) of NIS 2M (annual rate of NIS 8M). ▪ The occupancy rate and the NOI on properties has improved the value of properties significantly in 2018- reappraisal of properties for approximately NIS 31 Million in Israel and approximately NIS 34 Million in the US. ▪ On 2017-2018 the company purchased 10 new properties in Israel and in the US, and realized 7 properties which have exhausted their potential for enhancement, total of 17 transactions in 2 years! All sales were approximately according to the company’s book values.
(*) Expanded solo, including data from the company's income-generating properties activity in Israel and the USA alone.
Mishorim Real Estate Investments Ltd. | The Company's presentation to the capital market
Specializing in the purchase of assets with a low occupancy rate and enhancing them by significantly increasing the occupancy rate, in a short-intermediate period of time and accordinglyincreasing the NOI on the assets and strengthening the cash flows
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Most of the assets that are purchased are open shopping plazas, which are located close to growing and known cities in the South-EasternUSA.
Most of the Company's principal tenants are from two main categories:
area, restaurants, fitness centers and movie theaters.
meaning supermarket chains such as: Food Lion and Bravo and others or chain stores with a national network, such as Dollar Tree, Family Dollar, Burlington, Jo-Ann, TJ MAXX, Marshalls and others
The Company believes that the tenants in these categories are less vulnerable to a fall in the retail sales, following the increase in on- line sales in the USA and that they will also be less vulnerable if and when there is a recession in the USA. As of the reporting date, the Company does not have any tenants that are giant retails store chains in the USA such as Walmart, Sears and others.
Mishorim Real Estate Investments Ltd. | The Company's presentation to the capital market
The Company has 14 properties in the USA, most of which are concentrated in the south- east.
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Virginia North Carolina Alabama Florida Oklahoma Tennessee
Mishorim Real Estate Investments Ltd. | The Company's presentation to the capital market
All of the data are presented in NIS thousands (1) as of 31.03.2019 and relate to the Company's share alone:
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(1) At an exchange rate of 3.63. (2) The representative NOI is an estimation only and a forward looking information, as defined in the Securities Law – 1968. (3) Since all of the equity that had been invested has been recovered, so the yield on equity is infinite.
NOI rate on a cash basis – yield on equity LTV Debt Occupancy rate NOI rate
Representa tive NOI (2) Current fair value NOI at the time of the purchase Purchase cost Year purchased Ownership %
Property
70% 63% 5,656 90% 12% 738 9,007 525 6,289 2012 70% Los Pasados, Nevada 35% 56% 31,844 100% 12% 4,945 57,171 2,334 41,977 2015 60% University, Alabama 13% 54% 8,567 85% 7% 962 15,749 1,027 12,956 2015 60% Dolley Madison, N. Carolina (3) 58% 33,411 95% 14% 4,342 57,228 2,242 30,548 2016 60% Denbigh, Virginia (3) 60% 16,070 100% 20% 3,100 26,752 1,215 15,580 2016 60% East Orlando, Florida 26% 67% 67,918 99% 10% 8,455 102,059 6,174 86,557 2016 100% Raleigh, N. Carolina 64% 61% 4,903 100% 9% 454 8,063
2016 50% Centro, Florida 23% 60% 13,291 99% 11% 2,111 22,006 1,804 19,821 2017 60% Richmond, Virginia 62% 23% 7,124 95% 28% 3,460 30,951 1,251 12,207 2017 60% Regency court, Florida 22% 58% 12,299 98% 10% 1,976 21,050 1,561 19,210 2017 65% Battle Bridge, N. Carolina 29% 53% 20,098 99% 13% 4,067 37,831 2,729 31,500 2017 65% Oak Creek, N. Carolina 22% 49% 18,977 92% 11% 3,241 38,698 2,398 29,513 2018 65% Hickory Hollow, Tennessee 7% 67% 44,363 NR 5% 3,632 66,284 2,542 67,164 2018 100% Miami parking Lot 25% 65% 15,281 91% 12% 2,744 23,665 2,373 23,665 2018 55% Lynnhaven Virginia 29% 58% 299,803 11% 44,226 516,514 28,175 402,178 Total Portfolio
57% growth in NOI, 28% increase in value
Mishorim Real Estate Investments Ltd. | The Company's presentation to the capital market
In the last years, the company realized several properties in USA, at the properties book value, on high profitability and while presenting impressive IRR yield on the invested capital
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Annual yield
IRR Profit on investment Total received compensation Compensation from realization Received flow until realization Overall cost Year of sale Year purchased
Property
83% 2,600 5,750 5,750 3,150 2013 2012 Sundance Plaza, Nevada 58% 7,911 12,533 10,525 2,008 4,622 2014/2018 2012 Crestwood, Alabama (*) 27% 3,997 6,942 6,094 848 2,945 2014/2018 2012 Grant Mill Station, Alabama (*) 12% 3,139 10,514 9,847 667 7,375 2014/2017 2013 Golden Gate, Alabama (*) 76% 5,862 14,404 13,737 667 8,542 2014/2017 2014 Terrace, Florida (*) 29% 9,347 28,654 25,791 2,683 19,307 2019 2015 Huntsville Alabama (**) 33% 32,856 78,797 77,744 7,053 45,941
(*) In 2014, 50% of each property was sold to a third party, at a significant value above the original cost, which returned most of the capital within 24 months. The remaining 50% of the property was sold in 2017/2018, realizing a 90% profit on the cost. (**) The property was financed in 2015 in 70% LTC and refinanced in 2017, therefore most of the invested capital was returned and improved the IRR.
Mishorim Real Estate Investments Ltd. | The Company's presentation to the capital market
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In a period of approximately one year, the Company has increased the property's occupancy rate to 95%, which has significantly increased the NOI that the property generates and the value has increased accordingly.
31.03.2019
At the time of the acquisition 11.2017
95% 34%
Occupancy rate
1.6 0.5
Annual NOI rate (in $ millions)
14.25 5
Value of the property (in $ millions)
Main points
was acquired with an occupancy rate of just 34%, with the purchase price reflecting a yield of 10%
Developments in the main parameters (data pursuant to 100% of the property)
Activity performed to enhance the property
property at an LTV of 68%.
Mishorim Real Estate Investments Ltd. | The Company's presentation to the capital market
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In a period of approximately six months, the Company has significantly increased the NOI that the property generates and the value has increased accordingly. During the second quarter of 2018 the Company received bank financing of 15.7 million dollars, which recovered the full amount of the equity that was invested in the property for the Company.
31.03.2019
At the time of the acquisition 02.2016
96% 55%
Occupancy rate
2.0 1
Annual NOI rate (in $ millions)
26.5 10.7
Value of the property (in $ millions)
Main points
contains a large amusement park, a bank branch and a dentist and numerous service businesses as well as the Burlington chain as an anchor tenant.
Developments in the main parameters (data pursuant to 100% of the property) Activity performed to enhance the property
existing rentals.
approximateto the costof the .investmentin the property.
Mishorim Real Estate Investments Ltd. | The Company's presentation to the capital market
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In a period of approximately eighteen months, the Company has increased the property's occupancy rate to 100%, which has significantly increased the NOI that the property generates and the value has increased accordingly. Eighteen months after the acquisition, banking finance was received returning the acquisition cost.
31.03.2019 31.12.2015
At the time of the acquisition 10.2014
99% 69% 47%
Occupancy rate
2.3 1.2 1.1
Annual NOI rate (in $ millions)
26.25 23.35 16
Value of the property (in $ millions)
Main points
has the Burlington chain as an anchor tenant
land with an area of approximately 90 thousand Sq.m.
acceptable in the proximate competitive environment, which affords the Company an additional upside in the futurewhen renewing contracts.
released its own finance resources.
Developments in the main parameters (data pursuant to 100% of the property) Activity performed to enhance the property
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Mishorim Real Estate Investments Ltd. | The Company's presentation to the capital market
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Main points
North Carolina. There are 2 anchor tenants in the property (a cinema and an amusement park). The center is built on part of a plot of land with an area of approximately 100 thousand Sq.m.
31.03.2019
At the time of the acquisition 11.2016
100% 83%
Occupancy rate
2.3 1.7
Annual NOI rate (in $ millions)
28.1 21.75
Value of the property (in $ millions)
a long-term agreement, and it subleases the said areas to the amusement park that was
agreement that was signed with the owner of the property.
Developments in the main parameters
Mishorim Real Estate Investments Ltd. | The Company's presentation to the capital market
The Company believes that the tenants in these categories afford maximum flexibility and the Company is not dependent
By renting medium-sized areas to numerous tenants, there are no significant empty areas left if a tenant leaves.
The Company specializes in the purchase of assets with a low occupancy rate and enhancing them by significantly increasing the occupancy rate, in a short-intermediate period of time and accordinglyto increase the NOI on the assets and strengthening the cash flows וצפוןבמרכז Most of the assets that are purchased are office buildings, which are located in main and developingcities in the Center and in the North of the Country. Most of the Company's principaltenants are in two main categories:
for areas to rent with potential for growth.
agencies and others.
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Mishorim Real Estate Investments Ltd. | The Company's presentation to the capital market
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All of the data are in NIS thousands as of 31.03.2019 267% growth in NOI, 40% growth in value
(1) The representative NOI is an estimation only and a forward looking information, as defined in the Securities Law – 1968. (2) 75% owned. (3) Since all of the equity that had been invested has been recovered, the yield on equity is infinite. NOI rate on a cash basis – yield on equity LTV Debt Occupancy rate NOI rate
Current NOI (2) Current fair value NOI at the time of purchas e Total cost Year purchased
Property
11%
11% 420 8,200 700 3,733 1998- 2002
Others
13%
13% 2,400 38,100 1,500 18,594 2006
Bilu Design
(3) 60% 34,819 87% 12% 4,000 58,000 1,000 32,240 2007
KiryatHa'Meda, Rehovot
61% 61% 16,695 100% 12% 2,350 27,600 900 19,911 2007
Kfar Saba
63% 59% 26,553 75% 8% 2,400 44,900
2008
KiryatMatlon, Petach Tikva
33% 59% 9,678 100% 10% 1,170 16,300
2009
KiryatArie, Petach Tikvah
(3) 72% 31,556 95% 11% 3,200 43,700 200 28,423 2013
Rosh Ha'Ayin (2)
8%
8% 2,700 36,000 2,100 33,989 2017
Afula
5% 52% 11,117 74% 4% 1,100 21,500 1,100 24,797 2017
IndustrialZone, Ra'anana
8%
8% 7,350 111,500
2017
Haifa
14% 32% 130,687 9% 27,090 405,800 7,500 292,187
Total
Mishorim Real Estate Investments Ltd. | The Company's presentation to the capital market
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31.03.2019 At the time of the acquisition 07.2017
80% 20%
Occupancy rate
7.35
111 58
Value of the property (in NIS millions)
Main points
Office buildings and a parking facility, which are located in the heart of the downtown in Haifa.
Activity performed in order to enhance the property
Sq.m. The Company acquired all of the ownership rights in the building, which is used for offices, storage, commercial areas and parking. As of the time of the signing of the purchase agreement, the occupancy rate in the building stood at just 20%.
rate having been increased to approximately 70%.
in the property that would enable it to build additional floors on the roof of the building, which would be used for residential purposes or as offices.
Developments in the main parameters
The property is in an excellent location, with high demand, and was acquired at a low
a year, the company has increased the yield occupancy rate, the NOI and the value has increased accordingly
Mishorim Real Estate Investments Ltd. | The Company's presentation to the capital market
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31.03.2019 At the time of the acquisition 04.2017
97% 70%
Occupancy rate
2.7 2.1
Annual NOI rate (in NIS millions)
36 30
Value of the property (in NIS millions)
Main points
most of the tenants are government ministries.
Activity performed in order to enhance the property
land with an area of approximately 5,500 Sq.m., with a constructed area of approximately 7,350 Sq.m., of which the Company acquired 5,457 Sq.m., most of which is used for offices, which are leased to various government ministries. In addition, the Company purchased approximately 100 parking spaces adjacent to the building, with an area of 900 Sq.m.
the rental of the empty areas in the building, such that at the time of the acquisition, it had already succeeded in renting out most of the empty areas and the property was effectively acquired at a significantly higher yield.
Developments in the main parameters At the time of the negotiations for the purchase of the property, the Company had increased significantly the
property generates.
Mishorim Real Estate Investments Ltd. | The Company's presentation to the capital market
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31.03.2019 31.12.2015 At the time of the acquisition 11.2013
100% 82% 12%
Occupancy rate
3.2 1.5 0.2
Annual NOI rate (in NIS millions)
43.7 34.8 18
Value of the property (in NIS millions)
Main points
A business and office building, which is located at 19 Ha'Malacha Street in the Park Afek Industrial Area in Rosh Ha'ayin.
Activity performed in order to enhance the property
adopting a modern design line.
compared with that which is generally acceptable in the nearby competitive environment (approximately NIS 40 – 55 per square meter per month), which affords the Company a future upside when renewing contracts.
part of the independent resources.
Developments in the main parameters
The Company has increased the value of the property and the NOI that the property generates. The Company's achievements in enhancing the property are particularly positive in light of the volume of vacant space in the area as well as the high level of competition in the nearby competitive environment.
Mishorim Real Estate Investments Ltd. | The Company's presentation to the capital market
To build one of the leading companies in North America specializing in investment in income-generating hospitality properties.
geographicalspread and reducing the impact of seasonality.
2019 signed acontract for the sale of shopping center at the same site for exchangeof CAN$ 34.1 (above the book value).
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Mishorim Real Estate Investments Ltd. | The Company's presentation to the capital market
2018 2017 2016 2015 In US$ thousands
50,628 52,937 51,127 49,236 Revenues 13,792 14,920 14,508 13,121 NOI 27% 28% 28% 27% Ratio of revenues to NOI
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Main points
by Marriott brand for a consideration of US$ 135 million.
purposes of the transaction.
approximately 3,200 managedhotel rooms.
Since the acquisition of the portfolio the company:
approximately USD 19.7 million on 2018 finance reports
Mishorim Real Estate Investments Ltd. | The Company's presentation to the capital market
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185,534 47,079 50,528
Revenues from yield properties
46,722 194 6,039
Revenues from real estate sales for residential and other
232,256 47,273 56,864
Total company revenues
41,551 11,072 12,767
NOI from yield properties only
36,983 9,335 12,569
Adjusted EBITDA
20,330 5,366 7,108
FFO
47,079 50,825
Revenues from same assets
11,072 12,767
NOI from same assets
Mishorim Real Estate Investments Ltd. | The Company's presentation to the capital market
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131
Debt against properties in Israel
406
Income-generating properties in Israel
300
Debt against properties in the USA
517
Income-generating properties in the USA
475
Debt to bondholders
36
Other assets
906
Total gross financial debt
142
Liquid balances
79
Other liabilities, net (primarily deferred taxes)
347
Share of Skyline's shareholders' equity
463
Equity – attributed to the shareholders in the Company
1,448
Total liabilities and equity at an expanded solo level
1,448
Total assets at an expanded solo level
Mishorim Real Estate Investments Ltd. | The Company's presentation to the capital market
properties, all commercial and office space in Israel and in the USA.
year and at the same time realized of four properties which exhausted their yield potential.
the first time for approximately of NIS 2 million per quarter.
discount stores. The tenants from these categories are expected to be less vulnerable to a decline in the retail sales field as a result of increased on-line sales in the USA and also to be less vulnerable if and when there is a recession in the US.
by increasing the
holdings in land that does not generate income and is focusing on select service type hotels, which generate stable cash flows and are less exposed to seasonal fluctuations.
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