FORM 6-K
  
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
  
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
 
Date of Report: August 27, 2020
Commission File No.: 000-29992
 
OPTIBASE LTD.
(Translation of registrant’s name into English)

8 Hamenofim Street
Herzliya 4672559, Israel
+972-73-7073700
 (Address of principal executive offices)
 
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. 

Form 20-F ☒       Form 40-F ☐
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____ 
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____ 
 
Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. 
 
Yes ☒       No ☐
 
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- ________   
 
Attached hereto and incorporated by way of reference herein is a press release issued by the Registrant and entitled “Optibase Ltd. Announces Second Quarter Results”.
 
Signatures 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. 
 
 
 
OPTIBASE LTD.
(the “Registrant”)

By: /s/ Amir Philips
——————————————
Amir Philips
Chief Executive Officer
 
Date: August 27, 2020

 
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. ANNOUNCES SECOND QUARTER RESULTS

HERZLIYA, Israel, August 27, 2020 – 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.”

OPTIBASE REPORTS/2

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.
2

 
OPTIBASE REPORTS/3

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
                               

3

OPTIBASE REPORTS/4

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.

4

OPTIBASE REPORTS/5

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.
                               

5

OPTIBASE REPORTS/6

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
               

6
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