Amot CEO Sees Office Market Revival Despite Challenges Outside Tel Aviv

Amot CEO Shimon Avudraham reported a noticeable revival in the office real estate market during the second quarter of 2024, following the ceasefire after Operation "Roaring Lion." This update came as Amot, a leading Israeli commercial real estate company partly owned by Alony Hetz Holdings, released its financial results for Q2. Despite a slight decline in overall office occupancy rates from 84.3% in Q1 to 83.7% in Q2, with a forecasted 86.7% by the end of 2025, demand remains strong particularly in Tel Aviv's central business district (Ma'ar).

Avudraham highlighted progress at Amot's ToHa2 tower in Tel Aviv, expected to be occupied by early 2027, where contracts and advanced negotiations cover about 75% of leasable space. However, he cautioned that these negotiations are not yet binding. The company also signed initial leases at The Park project in Bnei Brak, a 45-story office and retail tower, with occupancy expected by March 2027. Anchor tenant Google committed to leasing 20 floors at ToHa2 for approximately 115 million shekels annually over ten years. Occupancy at Amot's Holon campus rose by 10% to nearly 70%, and a major security firm is close to signing a lease at Amot View in Modiin's tech park.

Financially, Amot's net operating income (NOI) increased by 3% to 270 million shekels in Q2 compared to the previous year, driven by higher income from existing assets despite some decline from asset sales. Funds from operations (FFO) rose 4% to 212 million shekels, and net profit grew 10% to 329 million shekels. Despite these gains, Amot's stock has fallen about 26% since the start of 2024, underperforming the TA Real Estate Index, which declined 10%. Avudraham noted ongoing difficulties closing deals outside Tel Aviv's prime areas, especially in the second and third rings, but expressed optimism about the market's gradual recovery.