“Hi-tech companies don’t give up on a physical presence in the office. The need for real estate and recruiting employees has not declined – even during the Corona crisis. We see 60-70% of the employees arriving to the office buildings at the Herzeliya industrial park. International companies with development centers in Israel, operate around the clock. They will set the trend for the office market”, says Avi Jacobovitz, CEO of Gav Yam.

According to him, “the Corona crisis is a continuing event that will continue through the next two years, thus we are facing many challenges. The current office attendance rate is 30-50%. The tenants – mainly hi-tech companies – wish to expand their space. Even if 10-20% of the employees stay home after the crisis is over, yielding real estate will not be harmed. “The bleak prophecies do not correspond with our reality.

Gav Yam, which published its financial statements today (Wednesday) is involved with the initiation, construction and management of hi-tech parks, industrial, commercial, office and residential structures. The company holds investment real estate valued at 8.1B NIS. The company reported an FFO of 59M NIS in Q3, reflecting a decline of 3.2% compared to Q3/2019. With a broader perspective, the FFO for January-September 2020 totaled ~181M NIS, demonstrating an increase of ~8.4% compared to the respective period last year.

Gav Yam’ revenues for Q3 increased by 3% to 134M NIS, compared to the respective quarter in 2019. Despite the crisis, Gav Yam reported a real increase of 4.8% in rental fees, with the renewal of 47 contracts. The company reports a high occupancy rate of 96% of its properties. ~74% of its income is related to hi-tech and office properties; ~19% to logistics and industry and the remainder to commercial yielding assets.

Gav Yam earned 47M NIS in Q3, reflecting a decline of ~57% compared to the respective period in 2019. The decline was caused mainly by the fact that Gav Yam did not record revenues from its investment real estate valuation, compared to revenues of 95M NIS in the respective quarter last year. The company has a substantial project backlog of ~265,000m² and its share in the investment is ~1.6B NIS. The company capitalizes its assets at conservative rates of 7.3-81%.

“Israel hi-tech is demonstrating continued growth and it acts as a growth engine for offices, accelerating the trends in the yielding real estate market. The leading hi-tech parks and metropolitan operations remain at the core of large technology companies’ operation and they provide the necessary quantity and quality of human capital. Collections are continuing at a regular rate, identical to the respective period last year – all contracts are upheld. The occupancy rates are still high and we do not see a trend shift. There is no waiver of rental fees, excluding specific alleviations for commerce”, said Jacobovitz. The occupancy rate in all company assets is 96%.

A major Gav Yam tenant – Microsoft – has recently left the building in Herzeliya. According to Jacobovitz, “The building will not remain empty. The supply in Herzeliya is lower than the demand. There are already two customers who signed and another customer in negotiations. The Herzeliya market is on fire and every bit of space is taken. We are promoting a UPC at the Apple campus for adding another 30,000m². In all of our properties, we are conducting advanced negotiations with large international and Israeli companies toward renting tens of thousands of new square meters”, he concluded.