From the start of 2022 until the date of release of this report, the Company raised bonds and banking and institutional debt in the sum of approx. ILS 2.3 billion. The Company has financial flexibility in the raising of debt under favorable conditions and with a long duration, supporting its continued construction, improvement and development of additional projects and seizing of new business opportunities, while maintaining financial strength and stability also in more challenging times.
The guiding principles in our financial debt management are:
- Maintaining sufficient liquidity.
- Extending the debt duration.
- Maintaining a strong and stable balance sheet.
- Maintaining a high rating.
The Company’s debt mix includes marketable public bond series, private loans from institutional bodies, loans and credit facilities from banking sources and commercial paper.
With respect to the impact of the “Iron Swords” war, see page 4 of this Board of Directors’ Report.
The Company’s Financial Leverage
Reducing the leverage in recent years has contributed to reducing the Company’s risks alongside maintaining a leverage ratio that allows for business development and improvement of the return on equity.
The Company believes, as of the report date, that the right LTV for the Company is around 50%. The Company’s current LTV (as of 30 September 2023) is approx. 44.2%, up 1.4% compared with 31 December 2022.
In recent years, the Company has succeeded in reducing the financing costs while extending the debt duration. In the current market environment, in view of the rising interest rates, the Company is focusing on extending the duration.
As of the report date, in the upcoming year (until 30 September 2024), the Company must repay debt in the sum of approx. ILS 1.7 billion (principal and interest).
As of 30 September 2023, the Company has a cash balance and a portfolio of financial assets available for immediate liquidation in the sum of approx. ILS 1.4 billion, as well as undrawn binding banking facilities in the sum of ILS 500 million.
The change in the net financial debt (extended consolidated)
As of 30 September 2023, the net debt balance is approx. ILS 10.7 billion.
The financing component is one of the main factors of the Company’s success. Through diversification of the sources of financing and maintenance of high liquidity, the Company can continue its development momentum and succeed in periods of crisis like the one that the world is currently experiencing.
Total Blended Cost of Debt
Presented below is a specification of the weighted effective debt cost (real interest rate carried to P&L) and the nominal debt cost (the cash flow interest rate paid on the debt) as of the date of the reports and for each year and over the period of repayment of Melisron’s financial liabilities for such year.
Breakdown of Mortgaged Property Value (Owners’ Share)
The Company has approx. ILS 9.4 billion in non-mortgaged properties, and approx. ILS 1.3 billion in mortgaged properties, against which credit facilities have been provided which, as of the balance sheet date, are undrawn and are therefore releasable from the mortgage.
The mortgaged properties present potential for expansion of the debt, since the average ratio of collateral value to secured debt is around 61%, but may be increased to up to 70%-80%.