Big Shopping Centers (BIG) Q2 2024 earnings summary

Executive summary

• Focus on long-term asset holding, active management, and cash flow growth in core sectors: retail, offices, and rental housing, with non-core assets slated for divestment.

• Effective NOI for H1 2024 reached ₪816M, up from ₪669M year-over-year; FFO for H1 2024 was ₪443M, up from ₪385M year-over-year.

• Occupancy rates remain high: ~100% in Israeli retail, 97-99% in Europe, and ~91% in offices.

• Major acquisitions in Poland and Serbia, and sale of Chandler Village stake in the US at book value.

• Geographic diversification: 48% of asset value in Israel, 18% in Romania, 18% in Serbia/Montenegro, 7% in Czechia, and 7% in Poland.

Financial highlights

• Equity attributable to owners rose to ₪11.46B as of Q2 2024, up from ₪10.95B at end-2023.

• Fair value of investment property reached ₪31.94B in Q2 2024, up from ₪28.73B at end-2023.

• Rental and management income for H1 2024 grew 16.5% to ₪1,078M; Q2 2024 up 17.2% to ₪562M year-over-year.

• Net cash from operating activities in H1 2024 was ₪420M, up from ₪394M year-over-year.

• EPRA NAV stood at ₪13.48B, or ₪393.2 per share, with a 40% premium over the market price as of August 18, 2024.

Outlook and guidance

• Projected managed area to reach 2.85M sqm by 2026, with further growth expected from new projects.

• Management expects continued strong cash flow from core operations and maintains a positive liquidity outlook.

• Dividend policy: at least 30% of management FFO (excluding FFO from AFI Properties) to be distributed annually, subject to distributable profits.

• Multiple development projects underway, with expected completion dates in late 2024 and 2025, and projected yields between 7% and 13%.

• Fair value and NOI projections account for potential government purchase of office floors, which would reduce managed area and NOI.