Aura Real Estate Faces Scrutiny Over Sales Figures Discrepancy
Aura, an Israeli real estate company, saw its stock price jump 8.8% following an optimistic press release announcing the sale of 720 apartments since the start of the year. However, a closer examination of the company's second-quarter financial report reveals a significantly different picture. As of June 30, the end of the second quarter, Aura had only sold 291 apartments, a 6% decrease compared to the same period last year.
The company's reported figure of 720 apartments includes 145 units sold in July and August, which will be accounted for in the third-quarter report. Additionally, Aura included 284 purchase requests from a promotion with the "Hevrat Ovdim" club. These are not finalized sales contracts but rather expressions of interest from individuals who have paid a deposit and are expected to sign agreements later, though cancellations are possible. These deals, if completed, will also be part of the third-quarter report.
Analysis of Aura's actual first-half sales, excluding these pre-quarter and pending deals, indicates the company, like the broader market, is struggling to sell apartments at full price. Of the 291 apartments sold, 141 were through its subsidiary Megido, acquired two years ago. Megido focuses on projects in peripheral areas, particularly under government housing programs like "Mechir L'Mishtaken" (Price for the Resident) and its newer iterations, "Mechir Matara" (Target Price) and "Dira B'Hanchah" (Discounted Apartment).
Specifically, 105 of Megido's sales were subsidized units in Ofakim and Bnei Ayish, offering buyers significant discounts of around NIS 500,000. These subsidized sales do not reflect the free market. Excluding Megido's sales, Aura itself sold only 150 apartments in the first half. More than a third of these, 52 apartments, were part of a single deal with the REIT fund Rent It, which also saw Aura become a stakeholder in the fund. In this transaction, Aura sold 52 apartments in its Hadera City project for NIS 108.5 million, with NIS 20 million effectively returning to the fund as an equity stake.
When combining the subsidized sales by Megido and the large transaction with Rent It, 54% of Aura Group's first-half apartment sales (157 units) were not standard free-market transactions. The deals with "Hevrat Ovdim," which occurred after the second quarter's end, also involved discounts of about 10% and favorable financing terms. These efforts by Aura and other developers to present a positive outlook cannot mask the complex reality of the housing market and the difficulty in selling apartments at full price.
