Azrieli Group ((IL:AZRG)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Azrieli Group’s recent earnings call conveyed a sense of optimism and strategic growth, despite some challenges. The company reported strong performance in net operating income (NOI) growth, driven by data centers and malls, alongside high occupancy rates. However, these positive aspects were tempered by a decrease in funds from operations (FFO) and impacts from tenant vacancies. Overall, the sentiment was buoyed by the company’s strategic growth plans and investments.
Record NOI Growth
Azrieli Group achieved a record Net Operating Income (NOI) with a notable 12% increase year-over-year. This impressive growth was primarily driven by the data center segment and strong performance in the mall segment, highlighting the company’s successful strategies in these areas.
High Occupancy in Malls and Senior Housing
The company reported extremely high occupancy rates in its mall segment at 99%, with a 4% rise in store sales compared to 2024. Similarly, senior housing projects are experiencing high occupancy rates, with existing homes also at 99% occupancy.
Data Center Segment Expansion
Data center operations were a significant contributor to the company’s success, with an almost 100% increase in NOI from the previous year. This growth was fueled by a major deal with TikTok and continued expansion efforts in Germany and other regions.
Strategic Investments
Azrieli Group invested approximately NIS 650 million in the third quarter and NIS 2.5 billion in the first nine months of 2025. These investments spanned various projects, including the Spiral Tower and data centers in the UK, Germany, and Norway, reflecting the company’s commitment to strategic growth.
Successful Lease-Up in Sarona Tower
The company successfully leased around 80% of the vacated space by Meta at higher prices, primarily to high-tech companies. This demonstrates strong demand and the company’s ability to capitalize on market opportunities.
Promising Developments in Senior Housing
Azrieli Group anticipates a significant increase in FFO with the opening of the fifth senior home in Rishon LeZion in December 2025, signaling promising developments in the senior housing sector.
Decrease in FFO
Despite the positive developments, FFO excluding senior housing showed a slight decrease of 3%, attributed to increased financing expenses and one-time items related to data center operations.
Impact of Meta Vacancy
The office segment faced challenges due to the departure of a large tenant, Meta. However, the company managed to re-lease 80% of the space, mitigating the impact of this vacancy.
Challenges in Senior Housing FFO
The senior housing sector experienced a 7% decline in FFO due to a decrease in the inventory of apartments available for sale, posing a challenge for the company.
Forward-Looking Guidance
Looking ahead, Azrieli Group remains focused on maintaining high portfolio standards and capitalizing on growth opportunities. The company anticipates a boost from the opening of a new senior home in Rishon LeZion by December 2025. Strategic investments totaling approximately NIS 650 million in the third quarter and NIS 2.5 billion in the first nine months of 2025 underscore their commitment to development across various sectors, including properties in Israel and data centers in the U.K., Germany, and Norway.
In conclusion, Azrieli Group’s earnings call reflected a positive outlook with strategic growth initiatives and strong performance in key segments. Despite facing some challenges, the company’s investments and expansion plans underscore its commitment to long-term growth and development.