Good morning or good afternoon, and thank you for joining the Azrieli Group's Conference Call to review Second Quarter of 2026. I am very pleased to be with you this afternoon.

We are wrapping up a strong quarter for the Azrieli Group. Our operating results were solid with real growth across all key business segments.

The NOI increased this quarter compared to last year, but the financial statements do not reflect the full impacts as exchange rates negatively affected shekel-denominated revenue from the data center business, which continued to grow in constant currencies by approximately 4%. In our Offices segment, we saw a certain decline, which reflects the onetime termination payment we received last year following Meta's departure from the Azrieli Sarona Tower.

Excluding this onetime payment, our NOI increased by 4% compared with the corresponding quarter last year. In our Malls segment, we recorded growth of 9%.

Importantly, we are seeing growth in the malls even when neutralizing the effects of the war last year. The data centers activity continues to be strong, and we recently signed 2 new agreements that will contribute to continued growth in this segment.

During the quarter, we continued to invest in expanding and enhancing our portfolio in Israel and in the data center segment overseas. Since the beginning of the year, these investments have totaled more than ILS 1.7 billion.

As always, everything we do is carried out while maintaining strict financial discipline. During the quarter, we completed an issuance of a new bond series and maintaining high financial strength together with conservative and responsible financial management continues to be a central pillar of our strategy.

The results are a clear expression of the Azrieli Group's strength and stability. At the same time, many components of our growth engines are not yet fully reflected in the results, including the data centers activity, where the combination of signed and income-generating agreements represent potential annual NOI of more than ILS 1 billion or approximately EUR 315 million.

FFO remained stable compared with the corresponding quarter last year. It was affected by a certain increase in general and admin expenses related to continued investment in our growth engines, especially in data center.

Ariel will expand on the drivers of NOI and FFO in his remarks. I will now go into more detail in our main operating segments.

In our offices. In our Offices segment, NOI for the quarter was strong and stable, increasing by 4% compared with the last year, excluding the onetime lease termination payment of approximately ILS 90 million received in the corresponding quarter from Meta following its departure from the Azrieli Sarona Tower.

As a reminder, the space vacated by Meta has been fully leased at better rates, and this is reflected in the results for the quarter. The Spiral Tower, which is expected to open in about 2 years, is progressing according to plan.

The core of the tower has reached already the 80th floor of the 91 stories that we're expecting to build. The main floor plates have reached already up to the 68th floor of construction and the aluminum is already at the 55th floor.

There is no doubt that the tower will become a unique icon in Israel, and we are seeing interest in the tower, both from large and local companies -- large international and local companies, and we believe it will be a very significant addition to our portfolio. Our new campus in Glilot is in the final stages of construction.

As previously announced, SolarEdge will occupy approximately 60% of the building, and we are in the process of marketing the remaining space. This area is becoming a new center of interest.

And in our view, the campus is very attractive to both high-tech and other industries, in particular, those companies that are looking for a unique and large floor plate where we offer almost 3,000 meters all on one floor. This is a very unique product.

In our mall segment, this was a very good quarter. NOI increased by approximately 9% and tenant sales also showed strong growth of approximately 8%.

The increase was partly offset by the significant works being carried out to connect the Azrieli Tel Aviv Mall with the adjacent Spiral Tower. As I mentioned last quarter, in order to connect the Azrieli Mall with the Spiral Tower, we removed approximately 3,000 square meters from the mall's leasable area due to the construction works and the future connection to the Spiral Tower.

This is a long-term investment that is expected to significantly upgrade the mall and ultimately, we will add approximately 16,000 square meters of retail space. We continue to maintain very high occupancy levels while investing consistently in the quality of our portfolio.

Our malls remain a core pillar of the group's business, and we manage them accordingly, continuously refreshing the tenant mix so that our assets stay relevant, engaging and well managed. The visitor experience remains front and center because that is ultimately what drives foot traffic, tenant demand and rental growth.

In our senior housing sector, we have a very active homes, and we continue to maintain very high occupancy with continued NOI growth supported, among other things, by a very great contribution from the medical facilities. We see the medical department as an important complementary product to our senior housing, providing an important service to our customers.

Our new Palace home, the fifth, is in Rishon LeZion recently opened in June. Approximately 40% of the 274 units have already been sold and occupancy is currently underway.

The home also includes the medical department and approximately 3,000 square meters of retail space, most of which has been leased. The Azrieli Group's FFO has already benefited this quarter from contribution of the first units delivered from Palace Rishon LeZion, and the impact of this new home on the FFO figure will become more significant as we progress with sales and occupancy of the units.

In our data centers, it's become clear that this activity has significant -- is a significant component of the group's NOI mix. Excluding the impact of foreign exchange rates, NOI for the quarter increased by 3% compared with the corresponding quarter last year.

Last week, we announced a new data center services agreement in London at our operating campus in Romford, East London. The agreement covers 13.6 megawatts of contracted capacity over an 8-year term with extension options of up to 2 additional years.

We expect it to contribute an annual NOI of approximately GBP 25 million, equivalent to roughly ILS 101 million at the current exchange rates with NOI recognition beginning in the first quarter of next year 2027. In the earnings report published earlier today, we also announced a data center services agreement at our Enebakk campus in Norway.

The agreement is with a large international technology company for 5 megawatts over a 15-year term with a customer option to extend for an additional 15 years. We expect average annual NOI from the transaction to be approximately ILS 24 million.

Together with these new agreements, our contracted NOI now stands at more than ILS 1 billion or approximately EUR 350 million. We are also advancing construction at our data centers in Mainz, Germany and in Undheim, Norway.

Mainz will begin generating income next year, ramping up towards full contribution as capacity will be delivered. As you can see in the images included in our investor presentation on our website, we have made significant progress at Undheim, where we are developing an 80-megawatt facility.

As a reminder, construction at the site commenced only at the beginning of this year, which makes the pace of this progress particularly notable. We continue to work on additional transactions as well as on expanding our powered land bank, which today stands at approximately 1 gigawatt.

We are moving forward with determination in developing and expanding this activity in Norway and in additional European countries. We see substantial opportunity in the ongoing AI infrastructure ramp-up, and we are confident in our ability to sustain the momentum in this segment.

The same holds for our real estate activities in Israel, where we are looking ahead to 2027 and preparing for the openings of Lot 10 Modi in and the Glilot campus. I will now hand the call over to Ariel for a review of our financial parameters.

Ariel?

Thank you, Danna. We will now review the key financial parameters of the financial statements.

NOI totaled ILS 651 million this quarter, up ILS 3 million versus the same quarter last year. Excluding the impact of foreign exchange rate changes, NOI increased by around ILS 23 million, reflecting an increase of about 4%.

The retail segment recorded an increase of around ILS 22 million in NOI versus the same quarter last year. The increase mainly derived from a real increase in rent, the impact of the CPI as well as from the impact of provision of recorded in the same quarter last year following Operation Roaring Lion, partially offset by the impact of connecting the Spiral Tower to Azrieli Center.

The Offices segment recorded a decrease of around ILS 10 million in NOI versus the same quarter last year. The decrease mainly derived from onetime termination payment of around ILS 90 million received in the same quarter last year for Meta, Facebook in the Sarona project.

Taking into account the spaces that were vacant in Sarona project in the same quarter last year, the net impact between the quarters totaled around ILS 16 million. This impact was partially offset by a real increase in rents and the impact of increase in the CPI.

Data centers decreased by around ILS 12 million, mainly due to the changes in the exchange rate during the period with an impact of around ILS 60 million. This impact was partially offset by the commencement of income generation from a 4.8 megawatt project in the third quarter of last year.

Senior housing increased by around ILS 4 million, mainly as a result of higher revenues and occupancy rate at Palace Tel Aviv, Palace Raanana and Palace Lehavim as well as an increase in the occupancy rate of the medical department, which exceeded the 95% mark. Same-property NOI in quarter 1, in quarter 2 totaled ILS 649 million compared with ILS 648 million in the same quarter last year.

Excluding the impact of changes in foreign exchange rate, same-property NOI increased by 3%. In calculating the same-property NOI, we excluded the income from Z.M.H Hammerman retail properties totaling around ILS 2 million.

The FFO, excluding senior housing, totaled ILS 411 million this quarter, down 1% versus the same quarter last year. The FFO, including senior housing totaled ILS 426 million, up ILS 1 million versus the same quarter last year.

The increase this quarter in FFO, including senior housing, mainly derived from a decrease of around ILS 4 million in financing expenses and an increase of around ILS 7 million in the senior housing deposits. Conversely, the increase was partially offset by an increase of around ILS 6 million in the G&A expenses, mainly due to the expansion of company data centers operations.

Excluding the impact of foreign exchange rate changes, FFO, including senior housing, totaled around ILS 430 million, representing an increase of 1%. Moving on to the balance sheet.

As of the end of the quarter, investment property and investment property under construction totaled around ILS 53 billion, up around ILS [indiscernible] million during the report period. The increase was driven mainly by ongoing investments in properties and fair value adjustments, partially offset by foreign exchange rate impact and the classification of the hotel component in the Spiral Tower as a property, plant and equipment in the amount of around ILS 349 million, following the signing of an MOU with the international hotel chain.

On the investment side, during the period, we invested around ILS 645 million in income-producing properties under construction, mainly in the Spiral Tower, the Glilot Campus, SolarEdge, Modi in Lot 10 and completion of the Palace Rishon LeZion senior housing project. We also continue investing in the group existing income-producing properties.

In the data center segment, we invested around ILS 969 million during the period, mainly in Undheim project in Norway with a capacity of 80 megawatts. During the quarter, we completed the acquisition of a full ownership right in the land of Romford data center project in London with a capacity of 21 megawatts, which had previously been held under lease.

Completion of the acquisition increased the investment property item by around ILS 140 million. Conversely, foreign exchange rate changes led to a decrease of around ILS 844 million in the Palace investment property and investment property under construction.

In the report period, we recorded income from fair value adjustments of investment property totaling around ILS 243 million, mainly deriving from an impact of a lower cap rate on data center projects. Conversely, a negative impact from the fair value adjustment was recorded in the retail properties, mainly in respect of Modi in Lot 10 project, which is under construction, expected investments and the removal of leasable areas from the Azrieli Tel Aviv Mall following its connection to Spiral Tower.

We're also recording a fair value gain of around ILS 43 million in respect of the company data center project in Germany, which is included under the share in the results of companies accounted for using the equity method item. The weighted IRR of each of the income-producing property segments, retail and offices on one hand and income-producing data centers on the other hand is around 6.8%.

The gross financial debt is around ILS 30.4 billion. The company net financial debt is around ILS 24.1 billion, comprising around 37% of the total assets.

Gross financial debt increased by around ILS 1.6 billion compared with the end of 2025. The increase mainly derived from the net increase of around ILS 1 billion in bonds.

During June, we completed an issuance of around ILS 2 billion of Series K bonds with an average duration of 15 years, while during the report period, we repaid around ILS 1.2 billion in Series D and E bonds. In addition, CPI-linked debt was impacted by increase in the known CPI totaling around ILS 0.3 billion.

The issuance of commercial paper in May totaling around ILS 500 million and loans taken by Z.M.H. Hammerman totaling around ILS 138 million to finance projects under construction and the first time inclusion of a loan of around ILS 177 million secured against the land acquired for the Romford project.

Conversely, the increase was partially offset by impact of around ILS 273 million deriving from foreign exchange rate changes. The company average effective interest rate in the report period is 3% with an average duration of 6.5 years, while the average interest rate on debt in Azrieli during the period is around 2.2%.

To conclude, we will briefly review the financial statements results. Net income in the quarter totaled ILS 155 million versus ILS 320 million in the same quarter last year.

The decrease in net income in the report period mainly derives from the impact of fair value adjustments of investment property with a loss of around ILS 35 million recorded in the current quarter compared with a gain of around ILS 193 million in the same quarter last year. In addition, financial expenses increased mainly as a result of a higher average debt balance during the period as well as onetime financing income recorded in the same period last year following restructuring of a loan in the U.S.

Conversely, this impact were partially offset by an increase in the company's share in the result of associated companies accounted for using the equity method, among other things, due to the revaluation of the data center project in Germany, the inclusion of the results of associate companies from Z.M.H. Hammerman operation as well by a decrease in G&A expenses compared with the same quarter last year.

Comprehensive income in the quarter amounted to a loss of ILS 548 million compared with a profit of around ILS 258 million in the same quarter last year. Comprehensive income in the quarter was impacted, among other things, by a loss net of tax of around ILS 65 million from the holding of bank shares, a loss of around ILS 20 million on interest rate hedging instrument in the loans in the data center sector and a loss of around ILS 680 million from translation businesses.

The loss mainly resulted from the change in the shekel by around 7.4% against the Norwegian krone and by around 6.6% against the euro. In the same quarter last year, we're recording a loss of around ILS 402 million from translation businesses, mainly due to strength of shekel by 5% against the Norwegian krone and by around 9.3% against the U.S.

dollar. We will now hold a Q&A session.

Two questions from my side on data centers. The first one is how much better are the TikTok expansion economics versus the original contract?

And going through your report, it sounds like there's upside to the negotiation in terms of pricing. And then the second question is in terms of the 275 megawatts of contracted in data centers across your Green Mountain portfolio.

What is the timing for or the phasing for getting to that stabilized level?

Can you repeat the first question, please?

Was on the TikTok negotiation. I'm mindful it's probably quite confidential, but any insight in terms of the potential upside would be very helpful.

Potential upside.

How much better -- could you just say the whole question again, please, Charles? I didn't hear the whole thing.

Yes. I was just referring to the TikTok negotiation that was mentioned in the report where you -- I think it alluded to some upside versus...

We are negotiating at the moment on 60 megawatts with TikTok, yes, to expand that project, yes. The specification of the project and other items are now under discussion.

We believe that we will be able to, to report something in the next few months, we will see. Anyhow, it's under negotiation.

We believe that the income per kilowatt will be better than the previous one because the negotiation on the previous negotiation was in 2022. Now we are in 2026.

The price will be different. We cannot add anything above this information since everything is under negotiation.

Once we will have something to report, we will report, but the terms will be different.

[indiscernible] megawatts.

Okay. On your second question, I would like just to understand what do you mean by...

Yes, so...

When we will reach the 275, so.

Yes.

Okay. So when we are talking about the projects in -- let's talk about England, yes, the one that we reported just now, 13.6 megawatts.

So in the beginning of 2027, this will be delivered. Undheim project, yes, will be delivered mainly in 2027, yes.

And the last phase will be mainly in 2027 and the rest in the beginning of 2028. So in the next maximum 2 years, everything will be delivered.

KMW, the first phase will be -- partially of the first phase will be completed at the end of this year and the last phase will be completed by 2029. So actually, we are talking about 2, 2.5 years ahead in KMW.

This is a project that we have now in our pipeline, yes. U.K.

will discuss 13.6, which will happen in the beginning of 2027. So 2027, U.K., Undheim till the mid of 2028 and KMW, it will be along 2027.

Again, the last phase beginning of 2029.

Okay. And just is everything secured in terms of permit for delivery on this 275 and that's just essentially Green Mountain doing the construction, but everything is -- everything externally is generally approved and there's no limited risk -- execution risk that's not in your control.

At this moment, as far as we're concerned, we've done everything in our power, and it seems to us that we have mitigated all of the execution risks as far as we can tell. We have everything on track and online with regard to permitting power in every aspects and all of the properties.

And we believe according to the best of our knowledge and the best of our abilities, we have everything on track, absolutely.

Just to mention, Charles, that always in construction and development, you have some risk and you need to take it into consideration. Things can change along the way.

So we with our professional background and the ability of our team and our experience till today, we will know how to deliver the project on time, yes, with the right quality. But of course, nothing is 100% certain, yes.

And things can be changed. And of course, you need to take it into consideration.

Okay. Thank you for your interest in the Azrieli Group.

So we had a very good quarter. Our portfolio is strong.

Our development pipeline continues to advance, and we continue to develop our key growth engines in Israel and in our data centers in Europe. These results reflect the hard work and dedication of our people across Azrieli Group with amazing teams.

And I want to thank everyone for their commitment, professionalism and everything they do for the company. Thank you again.

Enjoy the rest of the summer, and we look forward to speaking with you again next quarter.