Bloomberg News

Gazit-Globe Says Profit Surges on Real-Estate Value

May 28, 2007

Gazit-Globe Ltd. (GLOB), an Israeli property company, said first-quarter profit surged as a new accounting rule increased the value of real estate. Shares of Gazit-Globe rose as much as 4.7 percent.

Net income climbed to 235.3 million shekels ($58.4 million), or 1.93 shekels a share, from 40.3 million shekels, or 0.38 shekel, in the same period a year earlier, Gazit-Globe said today in a statement. The Tel Aviv-based company said the new accounting standard, which took effect in January, added 344 million shekels to the ``fair value'' of its property.

Gazit-Globe invested 1.5 billion shekels in acquiring real estate during the first quarter, and its European affiliate Citycon Oyj invested 500 million shekels in acquisitions. Gazit-Globe will pay a dividend of at least 1.08 shekel a share this year, 15 percent more than last year.

Shares of Gazit-Globe rose to as high as 56.59 shekels and traded at 56.20 shekels at 11:39 a.m. in Tel Aviv.

Rental income fell to 643.8 million shekels from 661.3 million because of the weakness of U.S. and Canadian dollars compared with the Israeli shekel and after the company sold some of the real estate it held a year ago.

Funds from operations fell to 65 million shekels, or 0.55 shekel a share, from 70 million, or 0.69 shekel. Funds from operations is a measure of profitability for real-estate investment trusts and represents net income after preferred dividends plus depreciation on real estate income-producing assets.

Gazit-Globe owns about 460 properties in the U.S., Canada, Europe and Israel, and focuses on shopping malls and housing for the elderly. Its offer in January to recapitalize Mills Corp. with $1.1 billion failed after the target's board accepted a bid of $1.64 billion from Simon Property Group Inc.

To contact the reporter on this story: Gwen Ackerman in Jerusalem at gackerman@bloomberg.net.

To contact the editors responsible for this story: Lars Klemming at lklemming@bloomberg.net.


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