Gav-Yam Posts Record NOI of 215 Million Shekels on Strong Tech Demand
Gav-Yam reported a record quarter with an 11% rise in net operating income to 215 million shekels, driven by major tech campus projects and strong AI-sector demand.
Gav-Yam reported another strong quarter with double-digit growth in operating revenues, as net operating income (NOI) reached 215 million shekels, marking an 11% increase compared to the same period last year. This represents a record quarterly figure for the income-producing real estate company, as well as the third consecutive quarter with an NOI exceeding 200 million shekels and the fifth straight quarter of double-digit growth year-over-year.
The continuous improvement is largely driven by the Hebrew Park project established by the company near the Givat Ram campus of the Hebrew University in Jerusalem, featuring 56,000 square meters of office space. Company estimates indicate full occupancy would yield annual revenues of 47 million shekels. Gav-Yam completed construction and began occupancy at the project in the second quarter of last year, subsequently leasing it in full. In parallel, the company began populating the expansion project of the Apple campus in Herzliya during the third quarter, encompassing 39,000 fully leased square meters.
AI Sector Driving Office Demand
Maintaining the optimistic outlook expressed in the previous quarter, Gav-Yam highlighted the positive impact of artificial intelligence developments on office demand from technology companies, which constitute the primary tenants in the company's high-tech parks. The expansion of tech firms operating in the AI sector generates robust demand for office and laboratory spaces across both immediate and medium-term horizons.
Consequently, Gav-Yam is advancing planning and licensing for seven projects spanning 296,000 square meters adjacent to its existing portfolio. Key initiatives include the ToHa3 project in central Tel Aviv, designed for 80,000 square meters of office space (company share), and an office-residential project at the nearby Tara site, where land was acquired in May, slated for 63,000 square meters of offices.
Projects Under Construction and Financial Projections
Additionally, the company has six ongoing projects under construction, projected to add 291 million shekels in annual revenues upon full occupancy. The centerpiece is ToHa2 in Tel Aviv, offering 155,000 square meters of marketing space. Developed in a 50-50 partnership with Alony-Hetz subsidiary Amot Investments, the project has already leased 62% of its space, securing 96 million shekels in anticipated annual revenues out of a projected 155 million shekels total.
Gav-Yam reaffirmed its full-year guidance, projecting an NOI between 825 and 845 million shekels and funds from operations (FFO) ranging from 450 to 460 million shekels. Furthermore, the company maintained its multi-year outlook, targeting an NOI of 940 to 960 million shekels and an FFO of 640 to 660 million shekels by the end of 2028. CEO Nili Mishan-Zakai emphasized that these forecasts are being achieved despite challenging market conditions, supported by robust assets and high-tier tenants.
