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Optibase Ltd. Announces Third Quarter Results

HERZLIYA, Israel, Nov. 27, 2019 /PRNewswire/ -- Optibase Ltd. (NASDAQ: OBAS) today announced financial results for the third quarter ended September 30, 2019.

Revenues from fixed income real estate totaled $4 million for the quarter ended September 30, 2019 compared to revenues of $4.1 million for the third quarter of 2018.

Net loss attributable to Optibase Ltd shareholders for the quarter ended September 30, 2019 was $496,000 or $0.1 per basic and diluted share compared to net loss of $219,000 million or $0.04 per basic and diluted share for the third quarter of 2018.

For the nine months ended September 30, 2019 revenues totaled $12.1 million compared to revenues of $12.5 million for the nine months ended September 30, 2018. Net loss attributable to Optibase Ltd Shareholders for the period was $875,000 or $0.17 per basic and diluted share, compared to a net loss of $2 million or $0.38 per basic and diluted share for the nine months ended September 30, 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 September 30, 2019, we had cash and cash equivalents of $15.8 million, and shareholders' equity of $73.5 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 third quarter results: "This quarter our fixed income real estate rent slightly decreased compared to the third quarter of 2018 and our net loss has increased compared to the third 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 third quarter of 2019, we generated NOI of $3.3 million representing a stability compared to the third quarter of 2018. In addition, for the third quarter of 2019, our Recurring FFO decreased to $1.1 million compared to Recurring FFO of $1.2 million for the third quarter of 2018. The decrease in our Recurring FFO is mainly 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 continue our work to maintain our basic parameters and to increase our financial stability as we progress through 2019."

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:



Nine months ended

Three months ended


September 30

September 30

September 30

September 30


2019

2018

2019

2018


$

$

$

$


Unaudited

Unaudited

Unaudited

Unaudited






GAAP Operating income

4,629

4,422

1,531

1,517






Adjustments:





Real estate depreciation and amortization

3,238

3,233

1,087

1,081






General and administrative

2,010

2,568

671

742






Non-GAAP Net Operating Income NOI

9,877

10,223

3,289

3,340






 

 

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





Nine months ended

Three months ended


September 30

September 30

September 30

September 30


2019

2018

2019

2018


$

$

$

$


Unaudited

Unaudited

Unaudited

Unaudited






GAAP Net income (loss) attributable to Optibase LTD

(875)

(1,977)

(496)

(219)






Adjustments :





Real estate depreciation and amortization

3,238

3,233

1,087

1,081






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

2,234

1,925

777

673






Non-controlling interests share in the above
adjustments

(870)

(845)

(293)

(287)






Non-GAAP Fund From Operation (FFO)

3,727

2,336

1,075

1,248






Non-GAAP Recurring Fund From Operation
(Recurring FFO)    

  

3,727

2,336

1,075

1,248











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.

 

 

Optibase Ltd.

Condensed Consolidated Statement of Operations

For the Period Ended September 30, 2019



Nine months ended

Three months ended


September 30

September 30

September 30

September 30


2019

2018

2019

2018


$

$

$

$


Unaudited

Unaudited

Unaudited

Unaudited






Fixed income real estate rent

12,094

12,507

3,987

4,090

Cost and expenses:





Cost of real estate operation

2,217

2,284

698

750

Real estate depreciation and amortization

3,238

3,233

1,087

1,081

General and administrative

2,010

2,568

671

742

       Total cost and expenses

7,465

8,085

2,456

2,573

Operating income

4,629

4,422

1,531

1,517






Other Income

578

458

130

148

Financial expenses, net

(2,036)

(2,208)

(670)

(705)

Income before taxes on income

3,171

2,672

991

960

Taxes on income

(1,142)

(1,130)

(374)

(390)

Equity share in losses of associates, net

(1,270)

(1,919)

(563)

(257)











Net income (loss)

759

(377)

54

313






Net income attributable to non-controlling interests

1,634

1,600

550

532

Net loss attributable to Optibase LTD

(875)

(1,977)

(496)

(219)






Net loss per share :





Basic and Diluted

$(0.17)

$(0.38)

$(0.10)

$(0.04)











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





September 30,

2019

December 31,

2018


Unaudited

Audited

Assets






Current Assets:



Cash and cash equivalents

15,796

13,836

Restricted cash

110

31

Trade receivables, net

489

427

Other accounts receivables and prepaid expenses

578

320

Total current assets

16,973

14,614




Long term investments:



Other long term deposits and other assets

3,180

2,477

Investments in companies and associates

12,824

14,377

Total Long term investments

16,004

16,854




Property and other assets, net:



Real estate properties, net

207,401

212,349

Other assets, net

150

141

Total property and other assets

207,551

212,490




Total assets

240,528

243,958







Liabilities and shareholders' equity






Current Liabilities:



Current maturities of long term loans and bonds

5,955

5,788

Accounts payable and accrued expenses and other

5,386

4,103

Liabilities attributed to discontinued operations

2,061

2,061

Total current liabilities

13,402

11,952




Long term liabilities:



Deferred tax liabilities

13,553

13,752

Land lease liability, net

6,012

6,134

Other long term liabilities

388

206

Loan from controlling shareholder

2,547

2,476

Long term loans, net of current maturities

126,910

130,806

Long term bonds, net of current maturities

4,245

5,239

Total long term liabilities

153,655

158,613




Shareholders' equity:



Shareholders' equity of Optibase Ltd

52,134

53,559

Non-controlling interests

21,337

19,834

Total shareholders' equity

73,471

73,393




Total liabilities and shareholders' equity

240,528

243,958




Amounts in thousands



 

 

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.