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Optibase Ltd. Announces Fourth Quarter Results

·10 mins read

HERZLIYA, Israel, April 1, 2020 /PRNewswire/ -- Optibase Ltd. (NASDAQ: OBAS) today announced financial results for the fourth quarter ended December 31, 2019.

Revenues from fixed income real estate totaled $4 million for the quarter ended December 31, 2019 compared to revenues of $4.1 million for the fourth quarter of 2018.

Net loss attributable to Optibase Ltd shareholders for the quarter ended December 31, 2019 was $1.1 million or $0.21 per basic and diluted share compared to net loss of $804,000 million or $0.16 per basic and diluted share for the fourth quarter of 2018.

For the year ended December 31, 2019 revenues totaled $16.1 million compared to revenues of $16.6 million for the year ended December 31, 2018. Net loss attributable to Optibase Ltd Shareholders for the year ended December 31, 2019 was $2 or $0.38 per basic and diluted share, compared to a net loss of $2.8 million or $0.54 per basic and diluted share for the year ended December 31, 2018.

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 December 31, 2019, we had cash and cash equivalents of $12.6 million, and shareholders' equity of $71.8 million, compared with $13.8 million, and $73.4 million, respectively, as of December 31, 2018.

Amir Philips, Chief Executive Officer of Optibase commented on the fourth quarter results: "This quarter our fixed income real estate rent stayed stable compared to the fourth quarter of 2018 and our net loss has increased compared to the fourth quarter of 2018. The increase in our net loss is mostly attributed to an increase in our Equity share in losses of associates, net, related to our investment in 300 River Holdings, LLC. For the fourth quarter of 2019, we generated NOI of $3.3 million representing a slight decrease compared to the fourth quarter of 2018 duo to a slight increase in our general and administrative expenses. For the year ended December 31, 2019, we generated NOI of $13.2 million representing a slight decrease compared to the year ended December 31, 2018. In addition, for the year ended December 31, 2019, our Recurring FFO increased to $4.2 million compared to Recurring FFO of $3 million for the year ended December 31, 2018. The increase in our Recurring FFO is due to a decrease in our general and administrative expenses, decrease in our financial expenses and a decrease in our Equity share in losses of associates, net, related to our investment in 300 River Holdings, LLC. Mr. Philips concluded: "We continue our work to maintain our basic parameters and to increase our financial stability as we progress through 2020."

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:



Year ended

Three months ended


December 31

December 31

December 31

December 31


2019

2018

2019

2018


$

$

$

$


Audited

Audited

Unaudited

Unaudited






GAAP Operating income

5,828

5,800

1,199

1,378






Adjustments:





Real estate depreciation and amortization

4,321

4,317

1,083

1,084






General and administrative

3,047

3,500

1,037

932






Non-GAAP Net Operating Income NOI

13,196

13,617

3,319

3,394






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


Nine months ended

Three months ended


December 31

December 31

December 31

December 31


2019

2018

2019

2018


$

$

$

$


Audited

Audited

Unaudited

Unaudited






GAAP Net income (loss) attributable to Optibase LTD

(1,993)

(2,781)

(1,118)

(804)






Adjustments :





Real estate depreciation and amortization

4,321

4,317

1,083

1,084






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

3,085

2,609

851

684






Non-controlling interests share in the above adjustments

(1,162)

(1,137)

(292)

(292)






Non-GAAP Fund From Operation (FFO)

4,251

3,008

524

672






Non-GAAP Recurring Fund From Operation
(Recurring FFO)

4,251

3,008

524

672











Amounts in thousands





Optibase Ltd.

Condensed Consolidated Statement of Operations

For the Year Ended December 31, 2019



Year ended

Three months ended


December 31

December 31

December 31

December 31


2019

2018

2019

2018


$

$

$

$


Audited

Audited

Unaudited

Unaudited






Fixed income real estate rent

16,144

16,608

4,050

4,101

Cost and expenses:





Cost of real estate operation

2,948

2,991

731

707

Real estate depreciation and amortization

4,321

4,317

1,083

1,084

General and administrative

3,047

3,500

1,037

932

Total cost and expenses

10,316

10,808

2,851

2,723

Operating income

5,828

5,800

1,199

1,378






Other Income

722

607

144

149

Financial expenses, net

(2,630)

(2,882)

(594)

(674)

Income before taxes on income

3,920

3,525

749

853

Taxes on income

(1,472)

(1,464)

(330)

(334)

Equity share in losses of associates, net

(2,321)

(2,765)

(1,051)

(846)











Net income (loss)

127

(704)

(632)

(327)






Net income attributable to non-controlling interests

2,120

2,077

486

477

Net loss attributable to Optibase LTD

(1,993)

(2,781)

(1,118)

(804)






Net loss per share :





Basic and Diluted

$(0.38)

$(0.54)

$(0.21)

$(0.16)











Number of shares used in computing earnings losses
per share





Basic

5,186

5,185

5,186

5,186

Diluted

5,186

5,185

5,186

5,186











Amounts in thousands





Condensed Consolidated Balance Sheets



December 31,

2019

December 31,

2018


Audited

Audited

Assets






Current Assets:



Cash and cash equivalents

12,564

13,836

Restricted cash

32

31

Trade receivables, net

536

427

Other accounts receivables and prepaid expenses

628

320

Property held for sale

29,727

-

Total current assets

43,487

14,614




Long term investments:



Other long term deposits and other assets

2,678

2,477

Right-of-use assets

376

-

Investments in companies and associates

11,657

14,377

Total Long term investments

14,711

16,854




Property and other assets, net:



Real estate properties, net

181,109

212,349

Other assets, net

-

141

Total property and other assets

181,109

212,490




Total assets

239,307

243,958




Liabilities and shareholders' equity






Current Liabilities:



Current maturities of long term loans and bonds

28,803

5,788

Accounts payable and accrued expenses and other

5,170

4,103

Liabilities attributed to discontinued operations

2,061

2,061

Total current liabilities

36,034

11,952




Long term liabilities:



Deferred tax liabilities

13,801

13,752

Land lease liability, net

6,110

6,134

Lease liabilities

257

-

Other long term liabilities

-

206

Loan from controlling shareholder

-

2,476

Long term loans, net of current maturities

108,406

130,806

Long term bonds, net of current maturities

2,845

5,239

Total long term liabilities

131,419

158,613




Shareholders' equity:



Shareholders' equity of Optibase Ltd

51,844

53,559

Non-controlling interests

20,010

19,834

Total shareholders' equity

71,854

73,393




Total liabilities and shareholders' equity

239,307

243,958




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, Germany, 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

Cision
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SOURCE Optibase Ltd.