Revenues for real estate development company Habas Investments shrunk 82.5% last year compared to 2010 revenues. The company had completed its two key Tel Aviv projects last May.
With activities in Israel and abroad, Habas issued its financial statements for 2011 and the fourth quarter yesterday. The company's flagship projects in Tel Aviv - the luxurious residential Yoo Tel Aviv and 1 Rothschild Boulevard - contributed NIS 112 million in revenue in 2011, compared with some NIS 800 million in 2010.
Revenues from income-generating properties, through its subsidiary Habas Swiss Investments III, brought in NIS 35 million, compared with NIS 41 million the previous year. Properties sold included two Swiss shopping centers and an office building in Basel.
Habas, led by chairman Hertzel Habas and CEO Ronen Akavia, managed to limit the drop in annual profits from ongoing activities to 25%. These totaled NIS 186 million, with the company registering NIS 144 million in other revenues, arising mostly from trading in subordinated debt; profits from the sale of stock in the Swiss subsidiary; profits from a merger between the Dutch NSI real estate investment fund and VastNed Offices/Industrial; and the repurchase of NSI shares. Net income attributable to shareholders in 2011 totaled NIS 57.5 million, a 30% drop from the previous year.
Habas, which develops and manages real estate for sale and leasing, trades on the Tel Aviv Stock Exchange at a NIS 190 million value. With the merger between NSI and VastNed, the company signaled a change of operational strategy, transferring its business focus to income-generating property and real estate debt investments in Western Europe, and preparing the ground to begin branch operations in North America.
"In the framework of the strategic decision, we reduced our exposure to the local market with the completion of projects in Israel," said Akavia. "We are intensifying our efforts to continue utilizing the group's high level of cash resources and human capital to implement our plans in each of our areas of operation. Carrying out this strategy involves the continuous understanding and assessment of market conditions along with return on capital targets on our horizon."
Operating cash flows in 2011 totaled NIS 76.3 million, as opposed to about NIS 220 million in 2010, and included a dividend from NSI, rents from the group's income-generating properties, and proceeds from a transaction involving property-backed debt. In 2010, cash flows included a considerable inflow of purchase payments from Yoo Tel Aviv and 1 Rothschild Boulevard apartment buyers.
In the last quarter of 2011, the company's turnover shrunk 96% from the corresponding quarter the previous year, to just NIS 10.5 million. However, other revenues, totaling NIS 52 million, led to operating income of NIS 55 million and softened the drop for this parameter to just 30% when compared with fourth quarter 2010 results. The bottom line was net income attributable to shareholders totaling NIS 8.5 million for the last quarter, compared with NIS 32 million the same quarter the previous year.
Pay costs for the group's top six executives totaled NIS 13 million in 2011. Controlling owner Hertzel Habas cost the company NIS 3.4 million - NIS 1.8 million in management fees and NIS 1.6 million for his bonus. Compensation costs totaled about NIS 1 million for Akavia; NIS 2.7 million for Habas USA CEO Eyal Reggev; and NIS 3.3 million for Habas Star CEO Amir Nitzani. VP Sales and Marketing Dafna Katzir's pay cost NIS 1.35 million, while CFO Shachar Klein received NIS 1.3 million.
"In 2011 we increased the company's capital despite distributing a NIS 55 million dividend, improved the ratio of capital to assets, and maintained a handsome level of profitability," stated Akavia.