consumption

Buyers only: Despite the corona and online commerce, mall stocks are at their peak

Rumors of the mall's death were early: they said e-commerce would eliminate the shopping centers, then came the corona and closed them for a long time, and yet, the table does not lie: an examination of the shares of shopping center companies shows that whoever invested in them, made big profits.

How can it be?

Roast Greenberg

11/05/2022

Wednesday, 11 May 2022, 15:16 Updated: Thursday, 12 May 2022, 11:52

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From the obituary to Shir Hillel: The price of the shares of the mall companies and trading centers traded on the Tel Aviv Stock Exchange rose to its pre-Corona level, and with it also jumped the revenues and profits presented by the companies in their annual financial statements.

The share of the Israeli mall and office giant Azrieli, for example, which is traded on the Tel Aviv Stock Exchange at a value of NIS 31 billion and is controlled by the Azrieli family (55.62%), has jumped by 80.9% since the low price of the Koruna in March 2020, by 32.16% since the beginning of 2021. And at 8.15% since the end of 2019 - before the corona impact, until the date examined (see table).

The mall company Melisron, which is traded on the Tel Aviv Stock Exchange at a value of NIS 11 billion and is controlled by the Ofer family (51.49%), has jumped 122.27% since the low price in the Corona days, by 37.8% since the beginning of 2021, and by 9.76% since the end of 2019.

The indices, however, rose more compared to the pre-Corona period;

The Tel Aviv 35 index, for example, has risen by 11.34% in the last two and a half years, the Tel Aviv 125 index has risen by 20.58

%, and the Tel Aviv Index of Israel has risen by 29.97%.

Online purchases), it's a return to investor confidence, and not just them, but also buyers.

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The "malls index" shares of the shopping centers yielded a higher return than the leading indices (Photo: Walla !, no)

The periphery and the Arab sector flew the shares of Rani Zim

Apart from Melisron, the three other companies in the table showed a jump of up to 112% in their revenues compared to those achieved by them in 2019. Big Shopping Centers, which is traded on the Tel Aviv Stock Exchange worth NIS 9.6 billion, showed the highest increase in revenue by 2021. NIS 1.46 billion, an increase of about 112% compared to its revenues in 2019.

It should be noted, however, that the contribution to the results is not entirely due to the masses of Israel who stormed the shopping centers immediately after the masks were removed, but also to the real estate revaluations. In addition to millions of shekels in profit,

the one that showed the highest jump in profit was Rani Zim Shopping Centers, which is traded on the Tel Aviv Stock Exchange at a value of about NIS 889 million and is controlled by businessman Rani Zim (53.96%), which showed a net profit of about 105 million NIS in 2021 - an increase of about 221% compared to the profit it presented in 2019.

Rani Zim focuses on the Arab sector and the periphery and took advantage of the Corona period for development in these areas, while also entering the worlds of residential real estate, such as the 36 housing units it is building in the town of Fordis, and winning a target price tender in Kafr Qassem.

Raz Moore, Real Estate Analyst at Meitav Brokerage (Photo: PR)

Azrieli occupancy 99%

Raz Moore, a real estate analyst at Meitav Brokerage

, explained to Walla! Money and Maariv Business: "It is clear that there is a return to malls in terms of the number of visitors and the increase in redemptions of shopping centers, which increased by 6% compared to 2019 in Big open centers.

In the April 2022 exam, for example, we already see a growth of 8.5% in revenue compared to April 2019. But most of the growth is in open centers, and less in malls, and it is mainly attributed to the weather that suited these malls more than malls. And more. "

Despite this, Moore adds:" The malls have also been proven to be corona-resistant, with some companies also supporting their additional real estate activities.

Today, the malls have already stabilized, and Azrieli reports occupancy of about 99%, for example, alongside Melisron, which reported an 8% increase in new contracts alongside a 4% increase in options and contract renewals.

Which indicates that someone who is already renting space from her for the benefit of a store or trade, is looking to stay for a while.

However, there is no doubt that new construction of malls is not seen, which is due to the lack of space, but also due to concerns that the segment is in a kind of uncertainty.

The eyes are on this matter, among other things, on the TLV mall in Tel Aviv, which has been under low occupancy for several years and it is difficult for it to rise.

On the other hand, the demand for power centers (open centers), especially in Arab society and the periphery, is booming.

In these areas, Rani Zim, who identified the niche, works alongside Hanan Moore.

In addition, there are concerns about rising interest rates, the recession and the financing interest rate, which are raising capitalization rates, which may lead to a decline in growth in malls and some shopping centers. "

Is the return of Israelis to shopping abroad threatening local trade in malls? (Photo: ShutterStock, Shutterstock)

The enemy, shopping abroad

Moore also details our request regarding the post-Corona era, which may cause us to look for shopping thrills farther from home, and even if not, perhaps the holiday market re-inflates, it will be at the expense of shopping center purchases:

"Opening flights abroad is also a threat Credit cards in Israel until the epidemic were declining, with 90% of transactions in Israel and 10% abroad. During the epidemic, it was not possible to go abroad and the level of transactions in Israel rose to 96%, but the understanding is that the declining trend in Israel will return.

The latest figure, for example, is that of about a million people who flew abroad during the months of March-April, with about 690,000 of them flying in April

. Thus it is clear to what extent inbound tourism contributes to shopping centers and malls, but even if it has an impact - it is low.

Today, the malls and shopping centers are aimed at combining online purchases with the physical ones, mainly in terms of online ordering and in-store reception, along with Azrieli, which has invested in and develops an online website that utilizes the brand to develop a virtual mall for online purchases.

It should also be remembered that Israel is still at a high level of employment, and with a high purchasing power, which may be reduced in light of rising spending and the price of the consumer basket, but harm, however severe, will be relatively minor and shopping centers and malls can overcome.

The income-producing real estate companies, including the malls and shopping centers, are an important sector in the general investment portfolio, and the declines can be an opportunity to increase their share in the portfolio

, depending of course on the price of each share and further testing.

In offices and more, and its low leverage.This stock is perceived more as defensive in the investment portfolio.

Melisron

, on the other hand, has snatched more than the rest of the sector because of the trends in the pre-Corona and Corona light worlds, while it is more focused on trading. "

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• consumption

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Tags

• Azrieli Malls

• Ofer Malls

• Melisron

• Stock Exchange

• shopping mall