Good afternoon, and thank you for joining Azrieli Group's conference call to discuss our results for the first quarter of 2026. I'm very happy to be with you today.

We delivered solid first quarter results, despite a more challenging operating environment. Performance was mainly impacted by two external factors: the war with Iran and foreign exchange movements, primarily the strengthening of the shekel.

Together, these created modest pressure on the NOI, resulting in a slight year-over-year decline. In the malls segment, the decline in NOI was driven primarily by the impact of the war, which led to lower ancillary revenues, mostly parking, as well as reduced income from tenant sales participation.

Excluding the war's impact, NOI in the malls segment would have recorded a slight increase. The segment was also affected by a reduction in leasable area at the Azrieli Tel Aviv Mall, reflecting the extensive works underway right now to connect the mall with the adjacent Spiral Tower, one of the group's most significant development projects.

Construction of the Spiral Tower is progressing at an impressive pace, with the core already reaching the 74th floor and the occupied floor structure reaching the 60th floor. While these works naturally create disruption during the construction period, they are a major long-term investment that is expected to transform and slightly upgrade the mall.

Once completed, the project is expected to increase the mall's leasable area by approximately 14,000 square meters and enhance its connectivity and customer experience and further strengthen its position as one of Israel's leading retail destinations for years to come. During the quarter, we invested more than 600 million shekels in expanding and enhancing our portfolio in Israel, alongside the current development of our data center platform in Europe.

This reflects the Azrieli Group's strong developmental momentum and our clear focus on scaling our key growth engines. We continue to maintain a strong financial position, supported by our disciplined and conservative financial management.

In March, we also completed a significant equity offering of approximately 1.4 billion shekels, further strengthening the group's capital base and financial flexibility. We thank our investors for their continued confidence in the Azrieli Group and in our long-term growth strategy.

Overall, I view these results as a clear expression of our stability and resilience, supported by the diversity of the group's business activities. We are investing significantly in the group's future growth, and there is substantial embedded potential that is not yet fully reflected in our current results.

This is especially true in the data center segment, where signed contracts already represent potential annual NOI of €278 million, or approximately 1 billion shekels. FFO, excluding senior housing, decreased by approximately 9%.

This was mainly driven by the decline in NOI in the malls segment, alongside higher financing expenses and continued investment in our growth engines, but in particular in the data centers segment. I will now review our main operating segments.

I'll begin with the offices. NOI in the office segment remained stable.

The quarter was affected, among other things, by the timing of the income recognition from the space previously leased to Meta in our very beautiful Azrieli Sarona building. This space has now been fully released, but did not yet contribute a full quarter of income.

The war also had an impact, mainly through lower parking revenues. Overall, this was a strong and stable quarter for the office segment, supported by our high-quality assets, strong demand, and stable operating fundamentals.

In our malls segment, it's natural that this segment was the one that was most directly affected by the war. At the same time, we continued to maintain very high occupancy levels at 98%, but the decline in NOI during the quarter was mainly due to the impact of the war.

Excluding this impact, the malls segment would have recorded a slight increase in NOI. Tenant sales were affected during the quarter, particularly as a result of the war in March.

However, as soon as conditions allowed, we saw a very strong visitor traffic all across most of our assets, despite the continued tense environment and until the ceasefire. People came to our malls to take a break and return to have a sense of normality, and we see this as a clear indication of the strength of our assets and the trust that our customers place in us and in our malls, the places they know and love.

On our side, we made sure to operate our malls very responsibly during this time, including by adding security personnel wearing special vests who provided orderly guidance, helping people to protected areas, and of course, this also involved some additional costs. We recently launched a broad advertising campaign as the first step in introducing a refreshed brand identity for the Azrieli Malls.

This reflects our ongoing effort to keep our assets contemporary and closely connected to our customers. We continue to strengthen and upgrade our tenant mix across our assets with thoughtfulness and creativity in order to keep our properties relevant, engaging, and welcoming.

As always, the visitor experience remains at the center of everything we do for the success of our businesses and our shopping malls. We are pleased to see that this investment is also being recognized.

In a recent survey by Mako, one of Israel's leading digital media platforms, our Jerusalem Mall was ranked first in Israel, while the Ayalon Mall and Azrieli Tel Aviv Center also maintained their positions among the top five most successful malls. In senior housing, we have four active properties, and our occupancy is close to 100%.

NOI continues to grow and be supported, among other things, by a strong contribution from the medical services that we offer. FFO in this quarter was affected by a lower number of apartments available for sale.

When there is some slowdown in the residential market, particularly during the war and the period of tension that preceded it, this naturally also affected the senior housing market. With the opening of our new project in Rishon LeZion in the coming months, we expect to see a change in this figure as well.

The new property will include 274 residential units, a medical services department, and 3,000 square meters of retail space. Sales are progressing at a good pace, and we look forward to opening later this year.

In our data center segment, it continues to establish itself as a meaningful component of the Azrieli Group's NOI mix. NOI for the quarter recorded a slight decrease of 6 million shekels compared to the corresponding period last year, and an increase of 3 million shekels compared with the previous quarter.

On a shekel-denominated basis, the segment's NOI was mainly affected by foreign exchange movements. On our previous call, we discussed several transactions that we're working on, including one for 60 megawatts in Hamar with TikTok, as well as non-binding negotiations in Romford near London, where the exclusivity period recently ended, and we are now also in discussions with additional parties.

I won't go through all the details today, but I do want to remind you that our contracted NOI, meaning NOI from signed agreements, already represents potential NOI of approximately 1 billion shekels. We continue to work on additional transactions, while also expanding our powered land bank, which currently stands at approximately 1 gigawatt, that's 1,000 megawatts, and we're moving forward with strong momentum in the development and expansion of our platform in Norway, as well as in additional countries across Europe.

We see this as a very significant opportunity ahead of us. The global technology revolution is accelerating, and demand for data center capacity continues to grow, and we believe that we are well positioned to capture that demand in a disciplined and value-accretive manner.

At the same time, we remain fully focused on our core real estate platforms in Israel. This is not a shift away from our base; it is an additional growth engine alongside our strong and resilient portfolio.

With that, I'll hand the call over to Eyal, who will take you through the financials in more detail. Thank you.

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

NOI totaled 638 million shekels this quarter, down 1% versus the same quarter last year. The decrease of some 5 million shekels in the retail segment mainly derives from the impact of the war, which is estimated at around 7 million shekels, and the impact of connecting the Spiral Tower to the Azrieli Center.

As Danna noted, ignoring the impact of the war, the NOI in the retail segment would have presented an increase of about 1%. The NOI in the offices segment was unchanged compared to the same quarter last year.

An increase in the CPI contributed to revenue growth. Conversely, the rent income in Sarona Tower was impacted by the fact that despite completing the lease-up of all the Meta spaces, the occupancy process is progressing gradually.

Therefore, the current quarter doesn't yet reflect full occupancy. Data centers decreased by around 6 million shekels due to the changes in the exchange rate during the period, as well as one-time revenue recorded in the same quarter last year, which were related to the operation of TikTok project, which generated full revenues for the first time in that quarter.

Senior housing is up around 5 million shekels, mainly as a result of an increase in revenues and increased occupancy of Palace Tel Aviv and Palace Lehavim, as well as significant increase in the occupancy of the medical departments, which reached the 90% mark. Same-property NOI in quarter one totaled 635 million shekels, compared with 646 million shekels in the same quarter last year.

In calculating the same-property NOI, we excluded the income from ZMH Hammerman retail properties, which totaled some 3 million shekels. The FFO excluding senior housing totaled 395 million shekels, down 9% versus the same quarter last year.

The FFO including the senior housing totaled 399 million shekels, down around 12%. The decrease this quarter in the FFO including senior housing mainly derives from the decrease of around 13 million shekels in the company's NOI excluding senior housing, from an increase of around 24 million shekels in the financing expenses, mainly due to the increase in debt, from an increase of around 14 million shekels in G&A and other expenses, mainly due to the expansion of the company's data centers operations, and from a decrease of around 13 million shekels in senior housing deposits, mainly deriving from a slowing of sales due to the war.

Conversely, the decrease was partially offset by an increase of around 11 million shekels in the other items. Moving on to the balance sheet.

As of the end of the quarter, investment property and investment property under construction totaled around 52 billion shekels, up some 321 million shekels in the report period. The increase was driven by ongoing investments and fair value adjustments, which were partially offset by foreign exchange rate impact and the clarification of part of the hotel in Spiral Tower as property, plant, and equipment in the sum of around 385 million shekels, following the signing of an MOU with international hotel chain.

On the investment side, this year we invested around 260 million shekels in income-producing property under construction, mostly in the Spiral Tower, SolarEdge campus, Modi'in Lot 10, and continuing construction of the Palace Rishon LeZion senior home in Rishon LeZion, which is expected to open in the coming months. We have also continued improving our existing income-producing properties.

We invested some 122 million shekels in the data centers segment, mostly in the Hunder project in Norway, which has a capacity of 80 megawatts. Recall our investment in the data center project in Frankfurt is structured as a joint venture, in which the investment is recorded under the loans and receivables item in the balance sheet, rather than investment property under construction item.

In the report period, we invested around 81 million shekels in this project. We hold a share of 50% in that project.

We also include ZMH Hammerman investment properties and properties under construction and ZMH Hammerman share in retail spaces within residential development project, currently under development and construction. The exchange rate change led to a decrease of around 55 million shekels in the balance of investment property and investment property under construction.

In the report period, we recorded investment property revaluations of around 278 million shekels, mainly driven from a decrease in the cap rates in the data center properties. Revaluation profits total around 33 million shekels were also recorded for a 54 megawatts data centers project in Germany, which is including under the share in results of companies accounted for using an equity method item.

The weighted IRR of each of the income-producing property segments, retail and offices on one hand, and data centers on the other hand, is around 6.8%. In March, the company raised around 1.4 billion shekels through an equity issuance, marking our first since IPO in 2010.

This equity issue contributes to reducing the net financial debt and strengthens our equity. The gross financial debt is around 28.6 billion shekels.

The company's net financial debt is around 22.75 billion shekels, comprising around 35% of the total assets. The decrease of around 234 million shekels in gross financial debt compared to the end of 2025 was primarily driven by a repayment of loans and bonds total around 320 million shekels, the impact of the drop in the known index this quarter on the CPI-linked debt total around 23 million shekels, as well as the impact of foreign exchange rates on the foreign currency debt of around 11 million shekels.

This decrease was partially offset by ZMH Hammerman taking of additional bank loans, total some 120 million shekels, which were used to finance projects under construction. The company average effective interest rate in the report period is 2.9% with the average duration of six years, similar to the end of 2025, while the average interest rate on debt in Israel in the period is around 2.1%.

To conclude, we will briefly review the financial statements results. Net income in the quarter totaled 514 million shekels versus 457 million shekels in the same quarter last year.

The increase in net income in the report period is mainly due to an increase in fair value adjustments, an increase in the company's share in the results of associate companies accounted for using the equity method, among other things, due to the revaluation of the data center project in Germany and inclusion of the results of associate companies for ZMH Hammerman operations, as well as a decrease in other expenses compared to the same quarter last year. Comprehensive income totaled around 495 million shekels in the quarter versus 1.126 billion shekels in the same quarter last year.

Comprehensive income in the quarter was impacted, among other things, by a loss of net of tax of some 8 million shekels driving from holding of Bank Leumi shares, by gains on interest rate hedging instruments in loans in the data centers sector in view of expectation of raising interest rates in Europe, as well as by a loss of around 70 million shekels from translation differences. This loss was primarily due to a roughly 2.9% changing of the shekel against the euro, which was offset by close 2.3% weakening of the shekel against the Norwegian krone.

In the same quarter last year, we recorded a profit of around 491 million shekels from translation differences, mainly due to a roughly 2.3% weakening of the shekel against Norwegian krone and close to 5.9% against the euro. We will now hold a Q&A session.

hi, good afternoon, Danna and Eyal. Thank you very much for the presentation.

A few questions from my side: two on data center, one on mall, and one on the pipeline. On data center, I just wanted to ask you the following two questions.

First, we see revenue up 7% and NOI down 5%, and I think you mentioned about both FX, but also other items. Just wanted to know if you can quantify how much of the pressure on the NOI is basically temporary with the FX versus more structural in terms of cost base reset, whether it's due to HR or electricity cost.

Still on data center, my other question is on Romford in East London, where you mentioned that you had an exclusivity period that ended. I'm assuming that the option was not exercised by the customer.

Just wanted to know what's the reason for not exercising it given the strong data center dynamics at the moment. Thank you.

I'll take the second question first and then Eyal will take the first question. Nice to hear you, Charles.

No, with regard to Romford, the only thing that we said is that the exclusivity was opened after a period of time. What we're doing is we're simply in further conversations with other clients as well, and we're going to get the best deal for this location.

I can't say that the first conversations are necessarily over by any means, but I can only tell you that we've opened up our purview and we're very aggressively going to be honing in on the best deal for this property.

Okay. For your question in respect to the revenue and NOI of the data centers, on the revenue side, we include as well electricity income from the customer.

Actually, the customer is getting electricity on one hand, and we pay the electricity to the power company. The increase in revenue not necessarily have an impact over the NOI.

Yes, we need to take it into consideration. The NOI was impacted by the topics that I discussed about it as exchange rates different and some impact of TikTok site that last year was fully operated, and we recorded some income that was related to 2024, and we had some less operational cost compared to the operational cost that we have this quarter, and therefore, we had this 6 million shekels difference between quarter one 2026 and the comparable quarter in Q1 2025.

The revenue not necessarily connected to the NOI since we have some income from electricity.

Clear. Two more questions from my side: so on malls and on the pipeline.

On malls, I think you mentioned it's logically the sector that is most affected by the conflict. Just wanted to ask you for your view in terms of do you see Q1 as particularly impacted, or do you see that the longer the conflict last, the more we can start seeing some tenant stress and kind of escalating issues within your retailer base on malls?

On the pipeline, we've observed that your construction costs are generally quite stable, you have not seen significant cost inflation pressure, but how are you seeing the yield on cost developing for the pipeline going forward? Thank you.

I'll take the first question and Eyal will take the second. With regard to the malls, listen, the war definitely had an impact this quarter, in particular in certain segments like in fashion segments, and of course, it's natural.

We're already seeing an upswing in the second half of April, although I don't have the exact figures yet, and I think we're seeing that the malls are filled, the foot traffic is basically back to normal, and for as long as there are indications that we're in stable times, I think all we were seeing is definitely a one-off and certainly not a trend in any way, shape, or form. I believe that this has been a difficult time globally, and definitely locally, and I believe that when things get stable, Israel has incredible resilience, incredible capacity for shopping and living life, and I believe that we're going to be seeing a nice upswing back in the near term.

Why don't you take the cost question, Eyal?

Okay. When we're talking about yield, of course, for sure the impact of the cost index, war, and other things that may influence the cost of construction impact us in Israel, yes.

We see some pressure over the yield on cost. In general, when you are talking about yield on cost, we need to take into consideration the expected yield over the property.

We, as a company that think long term, we need to see the impact over the yield over the project for many years ahead. I'm just giving you an example: when we're talking about the Spiral building, we invest a lot of money into things that not necessarily you see the return immediately.

As a company that owns the project for so many years, you see the impact and the yield over the years. The example is the Azrieli Towers, where our offices is, is a project of 25 years, which looks like a new project, well designed, although it was designed so many years ago, because it was designed with vision.

Most probably at the beginning, the yield on cost was low compared to other projects, but other project already are becoming to be old, and this project is still yielding like a new project. Yield on cost is a matter of point of view.

We are achieving a yield on cost which is I think very good in respect to the market. It's a normal.

We expect, of course, that we will face some pressure over the yield on cost, but we are looking long term and not a short term. Since our projects are very unique and we believe in the market, and we believe in the growth of the rent over yield, we will see a very nice yield on cost along the way.

This is our point of view.

Great. Thank you very much.

Nice to hear you.

With pleasure. To conclude, we delivered a solid quarter in a complex environment, and our portfolio remains strong, our development pipeline is moving forward, and we continue to advance our key growth engines: malls, offices, senior housing, and particularly data centers.

We're focused on execution, financial discipline, and long-term value creation. We look forward to updating you again next quarter.

Thank you for being with us here today.