The profits of the Mediterranean Towers Company rose sharply in the last quarter: NIS 20 million

The profits of the Mediterranean Towers Company rose sharply in the last quarter, following an increase in occupancy in the company's sheltered housing, an increase in the maintenance fees it charges its tenants, and revaluation profits. The company, which operates six sheltered housing units that include 1,642 housing units, earned NIS 20 million in the first quarter of 2022 - an increase of 66% compared to the corresponding quarter in 2021.
The revenues of the Mediterranean Towers, managed by Doron Arnon, grew by 9% in the past quarter compared to the corresponding quarter in 2021, and amounted to NIS 56 million. The increase in revenue was due to an increase in occupancy in the chain's housing units to 93% in the first quarter of 2022, compared with 89% in the corresponding quarter in 2021. Income has also contributed to a 2.8% increase in the price index in the last 12 months, which affects the amount of deposits that tenants pay upon entering and the current maintenance fees charged to them. At the beginning of 2022, maintenance fees rose even beyond the rate of increase in the price index - due to the increase in current operating costs in the chain's homes.
The gross profit of the Mediterranean towers grew by 22% in the first quarter of 2022 compared to the corresponding period in 2021. It amounted to NIS 22 million, which is 39% of revenues, compared to 35% of parallel revenues in 2021. This is because, among other things, the network's operating expenses - which include labor, energy, water and routine maintenance expenses - have risen at a negligible rate of 1%. This is despite the fact that the chain raised the maintenance fee beyond a 2.8% increase in the price index, and justified this by an increase in operating costs.
Mediterranean Towers enjoyed an increase of NIS 55 million in the fair value of the chain's sheltered housing in the first quarter of 2022, compared with a value increase of NIS 25 million in the fair value in the corresponding quarter in 2021. Here, too, the increase in the deposit prices of the chain's housing units helped, which led to an increase in value of NIS 49 million following transactions signed in the past quarter. The increase was also supported by an update in the forfeiture rate of deposits in one of the housing units, as well as following a 24% increase in the fair value of the housing unit built in Rehovot following continued investments in it.
Net profit increased to NIS 31 million. This, after being offset by a 364% jump in the company's net financing expenses. The increase was due to a 1.17% increase in the known price index in the first quarter of 2022, to which are linked the deposits - which are the company's liabilities to the tenants or their heirs - which amounted to NIS 2.25 billion. This is compared to an increase of 0.1% in the corresponding quarter in 2022. Arnon emphasizes that this is a non-cash expense and that the company enjoys natural hedging, due to the indexation of maintenance fees to the index and the increase in the prices of the housing units sold to the new tenants.
The company is engaged in the construction and development of housing houses in Rehovot, Or Yehuda and Haifa and a boutique housing house in Tel Aviv, which will include 1,050 housing units. He mentions the jump in the volume of activity and the value of the company that occurred with the completion of two housing units in Ganei Tikva and Jerusalem, which include 350 and 116 housing units, respectively. According to him, the construction of the sheltered housing in the streets will be completed in less than two years and will include 250 housing units.