Azrieli Group Reports Higher Mall Revenues but Net Profit Drops Sharply in Q2 2026
Azrieli Group, led by Dana Azrieli, reported a slight increase in net rental income (NOI) for the second quarter of 2026, reaching approximately 651 million shekels compared to 648 million shekels in the same period last year. The company’s funds from operations (FFO) also rose modestly to about 426 million shekels. Azrieli operates 23 malls and commercial centers in Israel, totaling around 387,000 square meters of leasable space, where a sharp 8.3% rise in sales was recorded this quarter. This increase followed a recovery from the temporary mall closures during Operation "Roaring Lion," which impacted results by about 7 million shekels.
The NOI in the retail and mall sector increased to 261 million shekels from 239 million shekels last year, influenced by the June 2025 Operation "With the Lion" effects. However, the NOI was negatively affected by a 3,000 square meter reduction in Azrieli Mall’s retail space due to construction connecting it to the Spiral building. These works are expected to upgrade the mall and add approximately 16,000 square meters of retail space.
In the data center sector, mainly overseas, NOI declined to 103 million shekels from 115 million shekels year-over-year. Despite this, the segment remains significant, with two new agreements in London and Norway expected to generate an annual NOI of about 125 million shekels. Occupancy rates remain high across sectors: 99% in retail and malls, 99% in data centers, 97% in senior housing and rental housing, and 96% in office spaces in Israel. In contrast, U.S. investment properties showed a lower occupancy rate of about 64%.
Despite operational gains, Azrieli’s net profit fell sharply to 155 million shekels from 320 million shekels in Q2 2025. The decline was mainly due to a 202 million shekel drop in revaluation gains on investment properties, increased administrative, general, marketing, and financing expenses, and a 5 million shekel decrease in NOI. Offsetting these losses were a 65 million shekel rise in equity income from affiliated companies, a 30 million shekel increase in gross profit from Tzemach, an 18 million shekel growth in other net income, and a 65 million shekel reduction in tax expenses.
