HERZLIYA, Israel, Aug. 27, 2020 /PRNewswire/ -- Optibase Ltd. (NASDAQ: OBAS) (the "Company") today announces financial results for the second quarter ended June 30, 2020.

Revenues from fixed income real estate totaled $3.8 million for the quarter ended June 30, 2020 compared to revenues of $4 million for the second quarter of 2019.

Net Income attributable to Optibase Ltd shareholders for the quarter ended June 30, 2020 was $1.8 million or $0.34 per basic and diluted share compared to loss of $188,000 or $0.04 per basic and diluted share for the second quarter of 2019.

For the six months ended June 30, 2020 revenues totaled $7.9 million compared to revenues of $8.1 million for the six months ended June 30, 2019. Net income attributable to Optibase Ltd Shareholders for the period was $1.9 million or $0.37 per basic and diluted share, compared to a loss of $379,000 million or $0.07 per basic and diluted share for the six months ended June 30, 2019.

Weighted average shares outstanding used in the calculation for the periods were approximately 5.2 million basic and diluted shares for each period.

As of June 30, 2020, we had cash and cash equivalents of $27.4 million, and shareholders' equity of $76.5 million, compared with $12.6 million, and $71.8 million, respectively, as of December 31, 2019.

On July 9,2020, we announced the successful closing of a transaction to sell the Company's portfolio in Germany comprised of twenty seven (27) separate commercial properties, located mostly in Bavaria, Germany, for a total consideration of EUR 35 million (app. $38.9 million). For the quarter ended June 30, 2020 the Company recorded a net gain of approximately $2.3 million resulting from the closing of the first 6 properties and is expected to record an additional net gain of approximately $5.5 million in the third quarter of 2020 with the closing of the sale of the remaining 21 properties. For further details on the Transaction, see the Company's report on Form 6-K as filed with the Securities and Exchange Commission on July 9, 2020.

Amir Philips, Chief Executive Officer of Optibase commented on the second quarter results: "This quarter our fixed income real estate rent remained stable with a slight decrease compared to the second quarter of 2019. This quarter we generated net income of $1.8 million mainly attributed to the gain on sale of operating properties related to our German portfolio sale transaction, compared to net loss of $188,000 for the second quarter of 2019. For the second quarter of 2020, we generated NOI of $3.1 million compared to $3.3 million for the second quarter of 2019. For the second quarter of 2020, our Recurring FFO decreased to $862,000 compared to Recurring FFO of $1.3 million for the second quarter of 2019. The decrease in our Recurring FFO is mainly due to a decrease in our fixed income real estate rent due to our German portfolio sale transaction and due to an increase in our equity share in losses of associates, net, related to our investment in 300 River Holdings," LLC. Mr. Philips concluded: "We are pleased with this quarter and year to date results as we continue showing stability in our operating results. Furthermore, the recent sale of our German portfolio provides evidence of our ability to produce accretive returns on our investments."

ACCOUNTING AND OTHER DISCLOSURES

Non-GAAP Net Operating Income, or NOI, is a non-GAAP financial measure. The most directly comparable GAAP financial measure is operating income, which, to calculate NOI, is adjusted to add back real estate depreciation, and amortization, general and administrative expenses and other operation expenses less gain on sale of operating properties. We use NOI internally as a performance measure and believe that NOI (when combined with the primary GAAP presentations) provides useful information to investors regarding our financial condition and results of operations because it reflects only those income and expense item that are incurred at the property level.

We consider the NOI to be an appropriate supplemental non-GAAP measure to operating income because it assists management, and thereby investors, to understand the core property operations prior to depreciation and amortization expenses and general and administrative costs. In addition, because prospective buyers of real estate have different overhead structures, with varying marginal impact to overhead by acquiring real estate, we consider the NOI to be a useful measure for determining the value of a real estate asset or groups of assets.

The metric NOI should only be considered as supplemental to the metric operating income as a measure of our performance. NOI should not be used as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends or make distributions. NOI should also not be used as a supplement to, or substitute for, cash flow from operating activities (computed in accordance with generally accepted accounting principles in the United States).

Non-GAAP Funds from operation, or FFO, is a non-GAAP financial measure. The most directly comparable GAAP financial measure is net income, which, to calculate FFO, is adjusted to add back depreciation and amortization and after adjustments for unconsolidated associates. We make certain adjustments to FFO, which it refers to as Non-GAAP recurring FFO or recurring FFO, to account for items we do not believe are representative of ongoing operating results, including transaction costs associated with acquisitions. We use FFO internally as a performance measure and we believe FFO (when combined with the primary GAAP presentations) is a useful, supplemental measure of our operating performance as it's a recognized metric used extensively by the real estate industry. We also believe that Recurring FFO is a useful, supplemental measure of our core operating performance. The company believes that financial analysts, investors and shareholders are better served by the presentation of operating results generated from its FFO and Recurring FFO measures.

We consider the FFO and Recurring FFO to be an appropriate supplemental non-GAAP measure to operating income because it assists management, and thereby investors, in analyzing our operating performance.

The metric's FFO and Recurring FFO should only be considered as supplemental to the metric net income as a measure of our performance. FFO (i) does not represent cash flow from operations as defined by GAAP, (ii) is not indicative of cash available to fund all cash flow needs, including the ability to make distributions, (iii) is not an alternative to cash flow as a measure of liquidity, and (iv) should not be considered as an alternative to net income (which is determined in accordance with GAAP) for purposes of evaluating our operating performance.

Reconciliation of GAAP to Non-GAAP (Unaudited) Supplemental Financial Data

A reconciliation of operating income to NOI is as follows:


Six months ended

Three months ended


June 30

June 30

June 30

June 30


2020

2019

2020

2019


$

$

$

$


Unaudited

Unaudited

Unaudited

Unaudited






GAAP Operating income

5,498

3,098

3,789

1,559






Adjustments:





Real estate depreciation and amortization

1,759

2,151

888

1,073






General and administrative

1,512

1,339

712

646






Gain on sale of operating properties

(2,317)

-

(2,317)

-






Non-GAAP Net Operating Income NOI

6,452

6,588

3,072

3,278






A reconciliation of net income to FFO and Recurring FFO is as follows:


Six months ended

Three months ended


June 30

June 30

June 30

June 30


2020

2019

2020

2019


$

$

$

$


Unaudited

Unaudited

Unaudited

Unaudited






GAAP Net income (loss) attributable to Optibase LTD

1,894

(379)

1,777

(188)






Adjustments :





Real estate depreciation and amortization

1,759

2,151

888

1,073






Pro-rata share of real estate depreciation and         amortization from unconsolidated associates   

1,644

1,457

817

750






Non-controlling interests share in the above adjustments

(598)

(577)

(303)

(287)






Non-GAAP Fund From Operation (FFO)

4,699

2,652

3,179

1,348






Gain on sale of operating properties

(2,317)

-

(2,317)

-






Non-GAAP Recurring Fund From Operation (Recurring FFO)    

  

2,382

2,652

862

1,348











Amounts in thousands





About Optibase 

Optibase invests in the fixed-income real estate field and currently holds properties and beneficial interest in real-estate assets and projects in Switzerland, Texas, Philadelphia, PA, Miami, FL, and in Chicago, IL, USA and is currently looking for additional real estate investment opportunities. Optibase was previously engaged in the field of digital video technologies until the sale of its video solutions business to Optibase Technologies Ltd., a wholly owned subsidiary of VITEC Multimedia in July 2010. For further information, please visit www.optibase-holdings.com.

This press release contains forward-looking statements concerning our marketing and operations plans. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. All forward-looking statements in this press release are made based on management's current expectations which involve risks, uncertainties and other factors that could cause results to differ materially from those expressed in forward-looking statements. These statements involve a number of risks and uncertainties including, but not limited to, difficulties in finding suitable real-estate properties for investment, availability of financing for the acquisition of real-estate, difficulties in leasing of real-estate properties, insolvency of tenants, difficulties in the disposition of real-estate projects, risk relating to collaborative arrangements with our partners relating to our real-estate properties, risks relating to the full consummation of the transaction for the sale of our video solutions business, general economic conditions and other risk factors. For a more detailed discussion of these and other risks that may cause actual results to differ from the forward looking statements in this press release, please refer to Optibase's most recent annual report on Form 20-F. The Company does not undertake any obligation to update forward-looking statements made herein.

Media Contacts:
Amir Philips, CEO, Optibase Ltd.
011-972-73-7073-700
info@optibase-holdings.com  

Investor Relations Contact:
Marybeth Csaby, for Optibase
+1-917-664-3055 
Marybeth.Csaby@gmail.com

Optibase Ltd.

Condensed Consolidated Statement of Operations

For the Period Ended June 30, 2020


Six months ended

Three months ended


June 30

June 30

June 30

June 30


2020

2019

2020

2019


$

$

$

$


Unaudited

Unaudited

Unaudited

Unaudited






Fixed income real estate rent

7,895

8,107

3,788

4,027

Cost and expenses:





Cost of real estate operation

1,443

1,519

716

749

Real estate depreciation and amortization

1,759

2,151

888

1,073

General and administrative

1,512

1,339

712

646

       Total cost and expenses

4,714

5,009

2,316

2,468






Gain on sale of operating properties

2,317

-

2,317

-






Operating income

5,498

3,098

3,789

1,559






Other Income

148

448

148

128

Financial expenses, net

1,164

1,366

563

661

Income before taxes on income

4,482

2,180

3,374

1,026

Taxes on income

105

768

447

425

Equity share in losses of associates, net

942

707

535

246











Net income

3,435

705

2,392

355






Net income attributable to non-controlling interests

1,541

1,084

615

543

Net income (loss) attributable to Optibase LTD

1,894

(379)

1,777

(188)






Net income (loss) per share :





Basic and Diluted

$0.37

$(0.07)

$0.34

$(0.04)











Number of shares used in computing earnings losses per share





Basic

5,186

5,186

5,186

5,186

Diluted

5,186

5,186

5,186

5,186











Amounts in thousands.





 

 

Condensed Consolidated Balance Sheets


June 30,

2020

December 31,

2019


$

$


Unaudited

Audited

Assets






Current Assets:



Cash and cash equivalents

27,423

12,564

Restricted cash

990

32

Trade receivables, net

468

536

Other accounts receivables and prepaid expenses

1,062

628

Property held for sale

14,865

29,727

Total current assets

44,808

43,487




Long term investments:



Other long term deposits and other assets

2,472

2,678

Right-of-use assets

315

376

Investments in companies and associates

10,566

11,657

Total Long term investments

13,353

14,711




Real estate properties, net

181,482

181,109




Total assets

239,643

239,307




Liabilities and shareholders' equity






Current Liabilities:



Current maturities of long term loans and bonds

7,982

28,803

Other accounts payable and accrued expenses

24,463

5,170

Liabilities attributed to discontinued operations

2,061

2,061

Total current liabilities

34,506

36,034




Long term liabilities:



Deferred tax liabilities

13,533

13,801

Land lease liability, net

6,199

6,110

Operating lease liabilities

192

257

Long term loans, net of current maturities

107,293

108,406

Long term bonds, net of current maturities

1,415

2,845

Total long term liabilities

128,632

131,419




Shareholders' equity:



Shareholders' equity of Optibase Ltd

54,453

51,844

Non-controlling interests

22,052

20,010

Total shareholders' equity

76,505

71,854




Total liabilities and shareholders' equity

239,643

239,307




 

 

Amounts in thousands



 

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SOURCE Optibase Ltd.

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