☐ |
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
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☒ |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐ |
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report _______________
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Title of class
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Trading Symbol(s)
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Name of each exchange on which registered
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Ordinary Shares, par value NIS 0.65 per share (2)
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OBAS
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Nasdaq Global Market
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None
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(Title of Class)
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None
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(Title of Class)
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Large Accelerated filer ☐
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Accelerated filer ☐
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Non-accelerated filer ☒
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Emerging growth company ☐
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4
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4
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4 | |
6
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6
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6
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6
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20
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32 | |
32 | |
43 | |
57 | |
64
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64 | |
67
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82 | |
83 | |
84 | |
84 | |
84 | |
84 | |
85
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85
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85
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85
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86
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86
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86
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86
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86
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87
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87
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87
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87 |
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• |
We may incur losses as a result of unforeseen or catastrophic events, such as the global COVID-19 pandemic that has created significant business disruptions and affected our business and is likely to continue to create business
disruptions and adversely affect our business in the future.
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• |
We may be affected by instability in the global economy, including the recent European economic and financial turmoil.
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A large percentage of our ordinary shares are held by one shareholder which could significantly influence the outcome of actions.
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• |
We are currently, and may be in the future, the target of securities class action, derivative claim or other litigation, which could be costly and time consuming to defend.
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• |
Our effective tax rate could be materially affected by several factors including, among others, changes in the amount of income taxed by or allocated to the various jurisdictions in which we operate that have differing statutory tax
rates, changing tax laws, regulations and interpretations of such tax laws in multiple jurisdictions.
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• |
There is a substantial risk that we are a passive foreign investment company, and holders of our ordinary shares who are United States residents face income tax risks.
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• |
We are obligated to develop and maintain proper and effective internal controls over financial reporting. These internal controls may not be determined to be effective, which may adversely affect investor confidence in our company
and, as a result, the value of our ordinary shares.
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• |
The real estate sector continues to be cyclical and affected by changes in general economic, or other business conditions that could materially adversely affect our business or financial results.
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• |
We rely on one large property for a significant portion of our revenue.
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• |
With respect to our commercial properties, we are dependent on the continued tenant demand for our properties. If there is a decrease in tenant demand and an increase in vacancy of our commercial properties, it would adversely affect
our financial condition and results of operations.
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• |
We may have difficulties leasing real-estate properties.
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• |
We are depended on the solvency of our tenants and may lease properties at below expected rental rates.
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• |
We may experience future unanticipated expenses.
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The fair value of our real estate may be harmed by certain factors, which may entail impairment losses not previously recorded which, in turn, will adversely affect our financial results.
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We may not be able to raise additional financing for our future capital needs on favorable terms, or at all, which could limit our growth and increase our costs and could adversely affect the price of our ordinary shares.
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In the event we are unable to continuously comply with the covenants, including with respect to financial covenants, which we undertook with respect to our properties, our results of operations may be adversely affected.
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Rapid and significant changes in interest rates may adversely affect our profitability.
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An adverse change in the Swiss real estate market will adversely affect our results of operations.
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• |
Because of our small size, we rely on a small number of personnel who possess both executive and financial expertise, and the loss of any of these individuals would hurt our ability to implement our strategy and may adversely affect
our financial results.
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• |
We face risks associated with property acquisitions.
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• |
An adverse change in the U.S. real estate market will adversely affect our results of operations.
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• |
With respect to our residential properties in Miami, Florida, the success of our investment will depend on market conditions.
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We depend on partners in our partnerships and collaborative arrangements.
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Cause of physical damages and other nature losses may affect our properties.
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Competition for acquisitions may reduce the number of acquisition opportunities available to us and increase the costs of those acquisitions.
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Environmental discoveries may have a significant impact on the value, viability and marketability of our assets.
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Israeli courts might not enforce judgments rendered outside of Israel, which may make it difficult to collect on judgments rendered against us.
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Additional operating expenses without additional revenues;
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Potential dilutive issuances of equity securities;
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The incurrence of debt and contingent liabilities;
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Amortization of bargain purchase gain and other intangibles;
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Impairment charges; and
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• |
Other acquisition-related expenses.
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The purchase or failure to purchase real-estate assets;
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• |
Changes in rent prices for our properties;
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• |
Changes in presence of tenants and tenants' insolvency;
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• |
Changes in the availability, cost and terms of financing;
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The ongoing need for capital improvements;
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Changes in foreign exchange rates;
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• |
Changes in interest rates; and
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• |
General economic conditions, particularly in those countries or regions in which we operate.
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• |
employment levels;
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• |
availability of financing for homebuyers and for real estate investors/funds;
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• |
interest rates;
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• |
consumer confidence and expenditure;
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• |
levels of new and existing homes for sale;
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• |
demographic trends;
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• |
urban development and changes;
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• |
housing demand;
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• |
local laws and regulations; and
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• |
acts of terror, floods or earthquakes.
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• |
even if we enter into an acquisition agreement for a property, it is usually subject to customary conditions to closing, including due diligence investigations to our satisfaction;
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• |
we may be unable to finance acquisitions on favorable terms or at all;
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acquired properties may fail to perform as we expected;
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• |
we may not be able to obtain adequate insurance coverage for new properties; and
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we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations, and therefore our results of operations and financial condition could be
adversely affected.
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• |
liabilities for clean-up of undisclosed environmental contamination;
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• |
claims by tenants, vendors or other persons arising from dealing with the former owners of the properties;
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liabilities incurred in the ordinary course of business; and
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claims for indemnification by general partners, directors, officers and others indemnified by the former owners of the properties.
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an inability to acquire a desired property because of competition from well-capitalized real estate investors, including publicly traded and privately held REITs, private real estate funds, domestic and foreign financial
institutions, life insurance companies, sovereign wealth funds, pension trusts, partnerships and individual investors; and
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an increase in the purchase price for such acquisition property, in the event we are able to acquire such desired property.
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The judgment was rendered by a court which was, according to the laws of the state of the court, competent to render the judgment;
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The judgment can no longer be appealed;
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• |
The obligation imposed by the judgment is enforceable according to the rules relating to the enforceability of judgments in Israel and the substance of the judgment is not contrary to public policy; and
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The judgment is executory in the state in which it was given.
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• |
The judgment was obtained by fraud;
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There was no due process;
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• |
The judgment was rendered by a court not competent to render it according to the laws of private international law in Israel;
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• |
The judgment is at variance with another judgment that was given in the same matter between the same parties and which is still valid; or
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• |
At the time the action was brought in the foreign court a suit in the same matter and between the same parties was pending before a court or tribunal in Israel.
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Availability of funding resources for the acquisition of new real estate assets;
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General market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors;
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Seizure of a substantial business opportunity by our competitors or us;
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Changes in interest rates;
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Changes in foreign exchange rates;
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The entering into new businesses;
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Quarterly variations in our results of operations or in our competitors’ results of operations; and
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Changes in earnings estimates or recommendations by securities analysts.
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• |
purchase of real estate mainly in Central and Western Europe, North America and Israel;
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• |
developing and improving existing real estate;
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• |
maximize the leasing of existing properties to commercial users;
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• |
increase and develop unused building rights in our existing properties; and
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acquire additional commercial, residential and other real estate assets in light of market conditions, while diversifying our real estate property base.
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Property
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Location
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Acquisition
Date |
Company Stake
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Nature of Rights
|
Property Type
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Net
Rentable Square Meters Excluding Redevelopment Space(1) |
Annualized
Rent ($000)(2) |
Rate of Occupancy (3)
|
Annualized
Rent per Occupied Square Meter ($)(4) |
Centre des Technologies Nouvelles (CTN)
|
Geneva, Switzerland
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March 2, 2011
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51%
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Ownership with land lease
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Commercial
|
34,800
|
12,385
|
92%
|
386
|
Rümlang
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Rümlang, Switzerland
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October 29, 2009
|
100%
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Ownership
|
Commercial
|
12,500
|
2,007
|
88%
|
182
|
Miami, Florida
|
Miami, Florida
|
2010-2013
|
100%
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Ownership
|
Residential - Condominium Units
|
4,260
|
591
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54%
|
429
|
Portfolio Total/ Weighted Average
|
-
|
-
|
-
|
-
|
-
|
51,560
|
15,343
|
88%
|
338
|
Year Ended December 31
|
||||||||||||
Thousands US$
|
||||||||||||
2018
|
2019
|
2020
|
||||||||||
GAAP Operating income
|
5,800
|
5,828
|
14,984
|
|||||||||
Adjustments:
|
||||||||||||
Real estate depreciation, amortization and impairment
|
4,317
|
4,321
|
3,946
|
|||||||||
General and administrative
|
3,500
|
3,047
|
2,523
|
|||||||||
Gain on sale of operating properties
|
-
|
-
|
(9,127
|
)
|
||||||||
Non-GAAP Total Net Operating Income (NOI)
|
13,617
|
13,196
|
12,326
|
Year Ended December 31
|
||||||||||||
Thousands US$
|
||||||||||||
2018
|
2019
|
2020
|
||||||||||
GAAP Net income (loss) attributable to Optibase Ltd.
|
(2,781
|
)
|
(1,993
|
)
|
6,433
|
|||||||
Adjustments:
|
||||||||||||
Real estate depreciation, amortization and impairment
|
4,317
|
4,321
|
3,946
|
|||||||||
Pro rata share of real estate depreciation and amortization from unconsolidated associates
|
2,610
|
3,085
|
3,087
|
|||||||||
Non-controlling interests share in the above adjustments
|
(1,136
|
)
|
(1,162
|
)
|
(1,234
|
)
|
||||||
Non-GAAP Fund From Operation (FFO)
|
3,010
|
4,251
|
12,232
|
|||||||||
Gain on sale of operating properties, net
|
-
|
-
|
(7,570
|
)
|
||||||||
Non- GAAP Recurring Fund From Operation (Recurring FFO)
|
3,010
|
4,251
|
4,662
|
Property
|
Location
|
Acquisition
date |
Company Stake
|
Nature of Rights
|
Property Type
|
Net
Rentable Square Feet Excluding Redevelopment Space(1) |
Annualized
Rent ($000)(2) |
Rate of Occupancy (3)
|
Annualized
Rent per Occupied Square Feet ($)(4) |
2 Penn Center Plaza
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Philadelphia, Pennsylvania
|
October 12, 2012
|
22.16%
|
Beneficial interest in the owner of the property
|
Commercial
|
516,108
|
11,726
|
86%
|
26
|
Texas Shopping Centers Portfolio
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Houston, Dallas, San Antonio, Texas
|
December 31, 2012
|
4%
|
Beneficial interest in the portfolio
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Commercial
|
2,036,290
|
26,755
|
92%
|
14
|
South Riverside Plaza Office Tower
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300 South Riverside Plaza, Chicago
|
December 29, 2015
|
30%
|
Beneficial interest in the owner of the property
|
Commercial
|
1,073,040
|
20,244
|
94%
|
20
|
Portfolio Total/ Weighted Average
|
-
|
-
|
-
|
-
|
-
|
3,325,438
|
58,725
|
92%
|
18
|
Number of tenants whose
leases will expire*
|
Total area covered
by these leases
|
Area covered
by these leases (%)
|
Annual rent
at expiration ($000)
|
Percent of annual rent at expiration (%)
|
||||||||||||||||
2021
|
19
|
12,701
|
36
|
%
|
4,774
|
41
|
%
|
|||||||||||||
2022
|
7
|
3,664
|
11
|
%
|
1,215
|
10
|
%
|
|||||||||||||
2023
|
11
|
8,726
|
25
|
%
|
3,218
|
28
|
%
|
|||||||||||||
2024
|
4
|
431
|
1
|
%
|
187
|
2
|
%
|
|||||||||||||
2025
|
8
|
2,785
|
8
|
%
|
930
|
8
|
%
|
|||||||||||||
Thereafter
|
4
|
3,777
|
11
|
%
|
1,369
|
12
|
%
|
|||||||||||||
Sub-total
|
53
|
32,084
|
92
|
%
|
11,693
|
100
|
%
|
|||||||||||||
Vacant
|
-
|
2,725
|
8
|
%
|
-
|
-
|
||||||||||||||
Total
|
53
|
34,809
|
100
|
%
|
11,693
|
100
|
%
|
Number of tenants whose
leases will expire*
|
Total area covered
by these leases
|
Area covered
by these leases (%)
|
Annual rent
at expiration ($000)
|
Percent of annual rent at expiration (%)
|
||||||||||||||||
2021
|
4
|
3,594
|
29
|
%
|
505
|
30
|
%
|
|||||||||||||
2022
|
2
|
4,617
|
38
|
%
|
702
|
42
|
%
|
|||||||||||||
2023
|
3
|
874
|
7
|
%
|
142
|
8
|
%
|
|||||||||||||
2024
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
2025
|
10
|
1,759
|
14
|
%
|
331
|
20
|
%
|
|||||||||||||
Sub-total
|
19
|
10,844
|
88
|
%
|
1,680
|
100
|
%
|
|||||||||||||
Vacant
|
-
|
1,434
|
12
|
%
|
-
|
-
|
||||||||||||||
Total
|
19
|
12,278
|
100
|
%
|
1,680
|
100
|
%
|
|
1. |
A corporate income tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017 ("Rate Reduction");
|
|
2. |
The transition of U.S international taxation from a worldwide tax system to a territorial system by providing a 100 percent deduction to an eligible U.S. shareholder on foreign sourced dividends received from a foreign subsidiary;
|
|
3. |
A one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017; and
|
|
4. |
Taxation of GILTI earned by foreign subsidiaries beginning after December 31, 2017. The GILTI tax imposes a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations.
|
Year Ended December 31
|
||||||||||||
2018
|
2019
|
2020
|
||||||||||
Fixed income from real estate rent
|
100
|
%
|
100
|
%
|
100
|
%
|
||||||
Costs and expenses:
|
||||||||||||
Cost of real estate operations
|
18
|
18.3
|
17.1
|
|||||||||
Real estate depreciation, amortization, and impairment
|
26
|
26.8
|
26.5
|
|||||||||
General and administrative
|
21.1
|
18.9
|
17
|
|||||||||
Total costs and expenses
|
65.1
|
63.9
|
60.6
|
|||||||||
Operating income
|
34.9
|
36.1
|
100.7
|
|||||||||
Other income, net
|
3.7
|
4.5
|
3.1
|
|||||||||
Financial expenses, net
|
(17.4
|
)
|
(16.3
|
)
|
(12
|
)
|
||||||
Income before taxes on income
|
21.2
|
24.3
|
91.8
|
|||||||||
Taxes on income
|
(8.8
|
)
|
(9.1
|
)
|
(14.5
|
)
|
||||||
Equity share in losses of associates, net
|
(16.6
|
)
|
(14.4
|
)
|
(14
|
)
|
||||||
Net income
|
(4.2
|
)
|
0.7
|
63.3
|
||||||||
Net income attributable to non-controlling interest
|
12.5
|
13.1
|
20
|
|||||||||
Net income (loss) attributable to Optibase Ltd.
|
(16.7
|
)
|
(12.3
|
)
|
43.2
|
❖ |
Long-lived assets including intangible assets
|
❖ |
Investment in companies
|
❖ |
Contingencies; and
|
❖ |
Income Taxes.
|
Type of Facility
|
Borrower
|
Original Date and Maturity Date
|
Original Amount(1)
|
Outstanding Amount (as of December 31, 2020) (2)
|
Annual Interest
|
Payment Terms
|
Principal Securities
|
Principal Covenants
|
Additional Information
|
Framework agreement for mortgage loan of the CTN complex
|
Eldista GmbH (Senior Borrower)
|
Original Date- January 8, 2020;
Maturity Date- 2061
|
CHF 83.5 million
(app. $87.3 million).
The Borrower may choose to utilize the credit facility as follows: (i) mortgage loans in CHF with terms of 1 to max 10 years; (ii) mortgage-backed fixed
advanced in CHF with terms of 3, 6 or 12 months; (iii) mortgage-backed fixed advanced in USD with terms of max 3 months. (5)
During 2020 and to date, the Borrower has been utilizing the credit facility every 3 months in USD or CHF.
|
CHF 81.5 million (app. $92.3 million).
|
Floating interest rate, based on the prevailing conditions in the money and capital markets, the risk assessments of the bank and the margin determined by the
bank + 0.75% for drawings in CHF or 1.05% for drawings in USD, per annum.
|
Interest due quarterly, beginning March 31, 2020.
CHF 2 million to be paid per year on a quarterly basis, beginning March 31, 2020.
|
A senior ranking mortgage over the property + Deed of Assignment in favor of the bank of any rent payments from the CTN complex and all rent payments will be
made directly into an account at the bank.
|
• The framework agreement may be terminated by either party at any time with immediate effect.
• The Borrower undertakes to refrain from providing new or additional collateral exceeding CHF 2 million in favor of a third party.
• The bank is authorized to assign all or any part of the lone relationship to a third party.
• Transfers/sales of property are prohibited. Any sale will result in the loan being repayable and a prepayment fee of 0.1%, plus
difference between interest rate at time of termination and interest rate that bank can achieve for residual interest term.
• Loans to third parties (excluding shareholders) by the borrower are not permitted.
• Distributions of dividends/shareholder loans are only permitted in line with available yearly profit after loan payments.
|
|
Financing agreement of condominium units in Miami
|
Optibase Real Estate Miami, LLC
|
Original Date- July 7, 2015;
Maturity Date- September 30, 2021
|
$8.82 million(3)
|
$6.5 million
|
Libor (30-day rate) + 2.65%, but no less than 4.65%.
|
Interest – payable monthly commencing on October 1, 2021
Principal – the entire principal balance and all accrued interest shall be due and payable on March 31, 2023.
On September 30, 2021 borrower shall make a principal payment in an amount equal to 10% of the outstanding principal balance.
|
(i) A senior mortgage spread over 25 residential condominium units;(4) and (ii) A collateral assignment of contracts; (iii)
pledged collateral agreement; (iv)
Guaranty from Optibase, Inc., under which Optibase, Inc. guarantees the obligations of the Borrower, including the punctual payment of
amounts owed under the loan documents.
|
• Minimum deposit by Borrower of $1.5 million during the term of the loan. Failure to meet this covenant on the testing period requires
Borrower to pay the Lender a fee in an amount of 2% of the amount of the deficiency.
• Interest reserve account of at least $550,000.
• Guarantor and the Borrower must collectively maintain unrestricted and unencumbered Liquid Assets of at least $2 million including
any amounts held as Interest Reserve under the Loan Agreement.
Guarantor not to transfer a material portion of its assets, other than in the ordinary course of business, for fair market terms, and
such transfer will not have material adverse effect on its ability to perform its obligations. Guarantor can make advances to affiliates in ordinary course of business without consent.
|
• Borrower has an option to extend the maturity date by 18 months if no event of default has occurred and subject to certain other
conditions.
• The Mortgage will be partially released so that a sale of a Unit can occur, provided: no Event of Default exists at the time the
Borrower presents a contract for sale to the Lender executed by a buyer; the sale is to a bona-fide third party purchaser upon the terms and conditions set out in Exhibit B of the Loan Agreement.
• Lender may obtain a new or updated Appraisal of the Project at Borrower’s expense once annually, or more often if an Event of Default
exists or if required by a governmental or banking agency or authority.
|
Type of Facility
|
Borrower
|
Original Date and Maturity Date
|
Original Amount(1)
|
Outstanding Amount (as of December 31, 2020) (2)
|
Annual Interest
|
Payment Terms
|
Principal Securities
|
Principal Covenants
|
Additional Information
|
Financing agreement of the property in Rumlang
|
Optibase RE 1 SARL
|
Original Date- October 2009; Maturity Date- 2059
|
CHF 18.8 million ($18.4 million)
|
CHF 14.7 million (app. $16.6 million)
|
Libor (for a period determined by borrower per each interest payment for the next payment) + 0.8%
|
Interest - payable in four quarterly payments annually;
The principal amount is payable in four quarterly amortization payments annually, each in the amount of CHF 94,000 (approximately $92,000
as of the purchase date).
|
A senior mortgage over the property +
Pledge over the holdings in borrower.
|
Undertaking not to grant any encumbrance or mortgage on the Rümlang property without the lender's approval.
|
• The lender may adjust the margin at its sole discretion on account of deterioration in Optibase RE 1's credit standing or the value
of the property.
• The principal payments may be adjusted at the lender's sole discretion if the lease of major tenants is terminated and no replacement
tenant is found within 6 months.
• Borrower may repay the mortgage at any time, subject to a prior notice of three months with no subject penalty.
• The lender holds the right to accelerate future loan payments, upon occurrence of certain default conditions.
|
(1) |
Translation of the amounts into US Dollar was made in accordance with the representative rate of exchange of the relevant currency into US Dollar as of the date the loan was taken.
|
(2) |
Translation of the amounts into US Dollar was made in accordance with the representative rate of exchange of the relevant currency into US Dollar as of December 31, 2020
|
(3) |
The original amount is the amount received following a second amendment to the loan agreement.
|
(4) |
In May 2020, we sold one of the apartment units in consideration for approximately $2.4 million and out of which approximately $2.3 were used for the repayment of the loan.
|
(5) |
Use in foreign currency (USD) may only occur if the resulting foreign exchange risk is hedged through a separate OTC transaction in the same currency and with the same term and nominal.
|
|
Payments Due by Period
(USD in thousands)
|
|||||||||||||||||||
Contractual Obligations
|
Total
|
Less than 1 year
|
1- 3 years
|
3-5 years
|
more than 5 years
|
|||||||||||||||
Long-Term Debt*
|
116,273
|
3,349
|
11,169
|
5,386
|
96,369
|
|||||||||||||||
Capital Lease Obligations
|
15,241
|
277
|
554
|
554
|
13,856
|
|||||||||||||||
Lease Obligations*
|
327
|
170
|
157
|
-
|
-
|
|||||||||||||||
Bonds*
|
3,099
|
3,099
|
-
|
-
|
-
|
|||||||||||||||
Total Contractual Cash Obligations
|
134,940
|
6,895
|
11,880
|
5,940
|
110,225
|
Age
|
Position
|
|
Alex Hilman
|
68
|
Executive Chairman of the board of directors
|
Amir Philips
|
53
|
Chief Executive Officer
|
Shlomo (Tom) Wyler
|
69
|
Chief Executive Officer of Optibase Inc.
|
Yakir Ben-Naim
|
49
|
Chief Financial Officer
|
Tali Yaron-Eldar(1)(2)(3)
|
58
|
Director
|
Danny Lustiger(1)(3)
|
53
|
Director
|
Haim Ben-Simon(1)(2)(3)
|
64
|
Director
|
Reuwen Schwarz
|
44
|
Director
|
(1) |
Member of our audit committee, financial statements review committee and nominating committee.
|
(2) |
External director.
|
(3) |
Member of our compensation committee.
|
|
(1) |
“Salary” means yearly gross base salary with respect to our Executive Officers (Mr. Philips, Mr. Wyler and Ms. Ben-Naim). “Monthly Payment” means the aggregate gross monthly payments with
respect to the members of our board of directors (Mr. Hilman and Mr. Schwarz) for the year 2020.
|
|
(2) |
“Social Benefits” include payments to the National Insurance Institute, advanced education funds, managers’ insurance and pension funds; vacation pay; and recuperation pay as mandated by
Israeli law.
|
|
(3) |
Consists of amounts recognized as share-based compensation (options and restricted shares) expense on our financial statements for the year ended December 31, 2020.
|
|
(4) |
“All Other Compensation” includes, among other things, car-related expenses (including tax gross-up), telephone, basic health insurance, and holiday presents.
|
|
(5) |
Mr. Philips’ employment terms as our Chief Executive Officer provide that Mr. Philips is entitled to a monthly base gross salary of NIS 75,000 (approximately $23,300). Mr. Philips is entitled to 24 vacation days, convalescence pay
of 10 days and sick days in accordance with market practice and applicable law, monthly remuneration for a study fund, contribution by us to an insurance policy and pension fund, and additional benefits, including communication
expenses. In addition, Mr. Philips is entitled to reimbursement of car-related expenses from us (including tax gross-up). Mr. Philips’ employment terms include an advance notice period of 6 months. During such advance notice period,
Mr. Philips will be entitled to all of the compensation elements, and to the continuation of vesting of any options or restricted shares granted to him. Mr. Philips is also entitled to bonus payments in accordance with the
Compensation Policy.
|
|
(6) |
For details on Mr. Wyler’s compensation terms as approved by our shareholders on February 14, 2019, see Item 7.B. “Related Party Transactions”, below. In February 14, 2019, following the approval by our compensation committee,
audit committee and board of directors, our shareholders approved an amendment to Mr. Wyler's compensation terms in a manner that Mr. Wyler's annual gross base salary shall be $220,000 for a full time position, as of January 1, 2019.
|
|
(7) |
Ms. Ben-Naim’s employment terms as our Chief Financial Officer provide that Ms. Ben-Naim is entitled to a monthly base gross salary of NIS 37,800 (approximately $11,800). Ms. Ben-Naim is further entitled to vacation days, sick days
and convalescence pay in accordance with market practice and applicable law, monthly remuneration for a study fund, contribution by us to an insurance policy and pension fund, and additional benefits including communication expenses.
In addition, Ms. Ben-Naim is entitled to reimbursement of car-related expenses from us. Ms. Ben-Naim’s employment terms include an advance notice period of three months. During such advance notice period, Ms. Ben-Naim may be entitled
to all of the compensation elements, and to the continuation of vesting of her options or restricted shares, if granted.
|
|
(8) |
The compensation terms of Mr. Hilman as the Executive Chairman of our board of directors were approved by our shareholders on October 19, 2009. For details on Mr. Hilman’s compensation terms, including options and restricted shares
granted to him, see Item 7.B. “Related Party Transactions”, below.
|
|
(9) |
Mr. Reuwen Schwarz entered into a service agreement with us, for the provision of real estate related consulting services to us, our subsidiaries and affiliates. Such agreement, including the compensation terms of Mr. Schwarz in
consideration for the services under the agreement, were approved by our shareholders on December 19, 2013, on December 29, 2016 and on December 31, 2019. For further details see Item 7.B. “Related Party Transactions”, below.
|
|
❖ |
A breach of the duty of care vis-a-vis us or vis-a-vis another person;
|
|
❖ |
A breach of the fiduciary duty vis-a-vis us, provided that the director or officer acted in good faith and had a reasonable basis to believe that the act would not harm us;
|
|
❖ |
A monetary obligation imposed on him or her in favor of another person;
|
|
❖ |
Financial liability imposed on him or her for payment to persons or entities harmed as a result of violations in Administrative Proceedings, as detailed in section 52(54)(A)(1)(a) of the Israeli Securities Law;
|
|
❖ |
Expenses incurred by him or her in connection with Administrative Proceedings (as defined above) he was involved in, including reasonable litigation fees, and including attorney fees; or
|
|
❖ |
Any other matter in respect of which it is permitted or will be permitted under applicable law to insure the liability of our director or officer.
|
|
❖ |
Any financial liability he or she incurs or imposed on him or her in favor of another person in accordance with a judgment, including a judgment given in a settlement or a judgment of an arbitrator, approved by a court.
|
|
❖ |
Reasonable litigation expenses, including legal fees, incurred by the director or officer or which he or she was ordered to pay by a court, within the framework of proceedings filed against him or her by or on behalf of Optibase, or
by a third party, or in a criminal proceeding in which he or she was acquitted, or in a criminal proceeding in which he or she was convicted of a felony which does not require a finding of criminal intent.
|
|
❖ |
Reasonable litigation expenses, including legal fees he or she incurs due to an investigation or proceeding conducted against him or her by an authority authorized to conduct such an investigation or proceeding, and which was ended
without filing an indictment against him or her and without being subject to a financial obligation as a substitute for a criminal proceeding, or that was ended without filing an indictment against him, but with the imposition of a
financial obligation, as a substitute for a criminal proceeding relating to an offence which does not require criminal intent, within the meaning of the relevant terms in the Companies Law.
|
|
❖ |
Financial liability he or she incurs for payment to persons or entities harmed as a result of violations in Administrative Proceedings, as detailed in section 52(54)(A)(1)(a) of the Securities Law. For this purpose “Administrative
Proceeding” shall mean a proceeding pursuant to Chapters H3 (Imposition of Monetary Sanction by the Israel Securities Authority), H4 (Imposition of Administrative Enforcement Means by the Administrative Enforcement Committee) or I1
(Settlement for the Avoidance of Commencing Proceedings or Cessation of Proceedings, Conditioned upon Conditions) of the Securities Law, as shall be amended from time to time.
|
|
❖ |
Expenses that he or she incurs in connection with Administrative Proceedings (as defined above) he was involved in, including reasonable litigation fees, and including attorney fees.
|
|
❖ |
Any other obligation or expense in respect of which it is permitted or will be permitted under law to indemnify a director or officer of Optibase.
|
|
❖ |
a breach of the fiduciary duty, except for a breach of the fiduciary duty vis-à-vis the company with respect to indemnification and insurance if the director or officer acted in good faith and had a reasonable basis to believe that
the act would not harm the company;
|
|
❖ |
an intentional or reckless breach of the duty of care, except for if such breach was made in negligence;
|
|
❖ |
an act done with the intention of unduly deriving a personal profit; or
|
|
❖ |
Fine, civil penalty, a financial sanction or penalty imposed on the directors or officers.
|
|
❖ |
the maximum coverage amount under each policy shall not exceed the higher of: (i) $25 million; or (ii) 25% of our shareholders equity (based on our most recent financial statements at the time of approval by our compensation
committee) per incident and insurance period (for a one-year period) in addition to reasonable litigation expenses;
|
|
❖ |
the purchase of each policy shall be approved by our compensation committee (and, if required by law, by our board of directors) which shall determine that the policy reflects the current market conditions, and it shall not
materially affect our profitability, assets or liabilities.
|
|
❖ |
The limit of liability of the insurer shall not exceed the greater of $25 million or 25% of our shareholders equity (based on the most recent financial statements at the time of approval by the Compensation Committee) per incident
and insurance period (for a one-year period) in addition to reasonable litigation expenses;
|
|
❖ |
The purchase of such insurance policy shall be approved by the Compensation Committee (and, if required by law, by the board of directors) which shall determine that the insurance policy reflects the current market conditions, and
that it shall not materially affect the Company's profitability, assets or liabilities.
|
|
(i) |
the director holds an academic degree in one of these areas: economics, business administration, accounting, law or public administration;
|
|
(ii) |
the director holds an academic degree or has other higher education, all in the main business sector of the company or in a relevant area for the board position; or
|
|
(iii) |
the director has at least five years’ experience in one or more of the following or an aggregate five years’ experience in at least two or more of these: (a) senior management position in a corporation of significant business scope;
(b) senior public office or senior position in the public sector; or (c) senior position in the main business sector of the company.
|
|
(iv) |
the evaluation of the professional qualification of a candidate shall be made by our board of directors and our nominating committee.
|
|
(i) |
accounting issues and accounting control issues characteristic to the segment in which the company operates and to companies of the size and complexity of the company;
|
|
(ii) |
the functions of the external auditor and the obligations imposed on such auditor;
|
|
(iii) |
preparation of financial reports and their approval in accordance with the Companies Law and the securities law.
|
|
(i) |
the majority of shares voted for the election includes the majority of the shares of non-controlling shareholders or with no personal interest excluding a personal interest not resulting from relation with controlling shareholders,
voted at the meeting (votes abstaining shall not be taken into account in counting the shareholders' votes); or
|
|
(ii) |
the total number of shares to total amount of shareholders listed in subsection (i) above, who voted against the election of the external director does not exceed two percent (2%) of the aggregate voting rights of the company.
|
|
• |
the knowledge, skills, expertise, and accomplishments of the relevant office holder;
|
|
• |
the office holder’s roles and responsibilities and prior compensation agreements with him or her;
|
|
• |
the ratio between the terms offered and the average compensation of the other employees of the company, including those employed through manpower companies, and in particular the ratio between the average wage and the median salary
of such employees;
|
|
• |
the impact of disparities in salary upon work relationships in the company;
|
|
• |
the possibility of reducing variable compensation at the discretion of the board of directors;
|
|
• |
the possibility of setting a limit on the exercise value of non-cash variable equity-based compensation; and
|
|
• |
as to severance compensation, the period of service of the office holder, the terms of his or her compensation during such service period, the company’s performance during that period of service, the person’s contributions towards
the company’s achievement of its goals and the maximization of its profits, and the circumstances under which the person is leaving the company
|
|
• |
the linkage between variable compensation and long-term performance and measurable criteria; however, in certain circumstances, we may grant up to three monthly salaries per year of unmeasurable criteria for an office holder who is
not our chief executive officer;
|
|
• |
the ratio between variable and fixed compensation, and the ceiling for the value of variable compensation at the time of the payment (or with respect to variable equity compensation that is not paid for in cash, a ceiling for their
value on the grant date);
|
|
• |
the conditions under which an office holder would be required to repay compensation paid to him or her if it was later shown that the data upon which such compensation was based was inaccurate and was required to be restated in the
company’s financial statements;
|
|
• |
the minimum holding or vesting period for variable, equity-based compensation with a view to long-term incentives; and
|
|
• |
maximum limits for severance compensation
|
Name of Beneficial Owner
|
No. of Ordinary Shares
Beneficially Owned(1)
|
Percentage of Ordinary
Shares Beneficially Owned
|
The Capri Family Foundation (2)
|
4,097,201
|
78.82%
|
Shareholding of all directors and officers as a group (eight persons)(3)
|
198,665
|
3.82%
|
Beneficial Owner
|
Date of filing
|
No. Of Shares Beneficially Held
|
The Capri Family Foundation
|
May 29, 2019
|
4,097,201*
|
* |
The information is based on Amendment No. 6 to Schedule 13D filed with the SEC on June 19, 2019, by Capri, in connection with the acquisition of an additional 300,917 ordinary shares by Capri on May 29, 2019, in a private transaction
with an unrelated third party at a price of $10.464 per share.
|
|
(a) |
First, to repay partners who loaned sums to other limited partners who defaulted on their capital contributions;
|
|
(b) |
Second, to partners that have made voluntary loans to the Partnership;
|
|
(c) |
Third, to repay the partners their capital contributions; and
|
|
(d) |
Fourth, to the partners in accordance with their percentage interests in the Partnership.
|
|
❖ |
the avoidance of any conflict of interest between the director’s or officer’s position with the company and any other position he or she fulfills or with his or her personal affairs;
|
|
❖ |
the avoidance of any act in competition with the company’s business;
|
|
❖ |
the avoidance of exploiting any of the company’s business opportunities in order to gain a personal advantage for himself or for others; and
|
|
❖ |
the disclosure to the company of any information and documentation relating to the company’s affairs obtained by the director or officer due to his or her position with the company.
|
❖ |
broker-dealers,
|
❖ |
financial institutions,
|
❖ |
certain insurance companies,
|
❖ |
investors liable for alternative minimum tax,
|
❖ |
tax-exempt organizations,
|
❖ |
non-resident aliens of the U.S. or taxpayers whose functional currency is not the U.S. dollar,
|
❖ |
persons who hold the ordinary shares through partnerships or other pass-through entities,
|
❖ |
investors that actually or constructively own 10 percent or more of our voting shares, and
|
❖ |
investors holding ordinary shares as part of a straddle or a hedging or conversion transaction.
|
❖ |
an individual who is a citizen or, a resident of the United States for U.S. federal income tax purposes;
|
❖ |
a partnership, corporation or other entity created or organized in or under the laws of the United States or any political subdivision thereof;
|
❖ |
an estate whose income is subject to U.S. federal income tax regardless of its source;
|
❖ |
a trust if: (a) a court within the United States is able to exercise primary supervision over administration of the trust, and (b) one or more United States persons have the authority to control all substantial decisions of the
trust; or
|
❖ |
a trust, if the trust were in existence and qualified as a “United States person,” within the meaning of the Code, on August 20, 1996 under the law as then in effect and elected to continue to be so treated.
|
|
• |
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and asset dispositions;
|
|
• |
provide reasonable assurance that transactions are recorded as necessary to permit the preparation of our financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are
being made only in accordance with authorizations of our management and directors; and
|
|
• |
provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements.
|
2019
|
2020
|
|
Audit fees (1)
|
112
|
109
|
Audit-related fees (2)
|
5
|
5
|
Tax fees (3)
|
38
|
34
|
Total
|
155
|
148
|
(1) |
Audit fees consist of fees billed for the annual audit services engagement and other audit services, which are those services that only the external auditor can reasonably provide, and include the group audit; statutory audits;
comfort letters and consents; attest services; and assistance with and review of documents filed with the SEC.
|
(2) |
Audit-related fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements or that are traditionally performed by the external
auditor, and include consultations concerning financial accounting and reporting standards; internal control reviews of new systems, programs and projects; review of security controls and operational effectiveness of systems; review of
plans and control for shared service centers, due diligence related to acquisitions; accounting assistance and audits in connection with proposed or completed acquisitions; and employee benefit plan audits.
|
(3) |
Tax fees include fees billed for tax compliance services, including the preparation of original and amended tax returns and claims for refund; tax consultations, such as assistance and representation in connection with tax audits and
appeals, tax advice related to mergers and acquisitions, transfer pricing, and requests for rulings or technical advice from taxing authority; tax planning services; and expatriate tax planning and services.
|
Consolidated Financial Statements
|
Page
|
Report of Independent Registered Public Accounting Firm
|
F-2 F-3
|
Consolidated Balance Sheets
|
F-4 - F-5
|
Consolidated Statements of Operations
|
F-6
|
Consolidated Statements of Comprehensive Income
|
F-7
|
Statements of Changes in Shareholders’ Equity
|
F-8
|
Consolidated Statements of Cash Flows
|
F-9 - F-10
|
Notes to Consolidated Financial Statements
|
F-11 - F-44
|
Consolidated Financial Statements
|
Page
|
Consolidated Financial Statements of 300 RIVER HOLDINGS, LLC
|
F-45 –F-58
|
Page
|
|
F-2 - F-3
|
|
F-4 - F-5
|
|
F-6
|
|
F-7
|
|
F-8
|
|
F-9 - F-10
|
|
F-11 - F-44
|
|
Kost Forer Gabbay & Kasierer
144 Menachem Begin Road, Building A,
Tel-Aviv 6492102, Israel
|
Tel: +972-3-6232525
Fax: +972-3-5622555
ey.com
|
December 31,
|
||||||||
2020
|
2019
|
|||||||
ASSETS
|
||||||||
CURRENT ASSETS:
|
||||||||
Cash and cash equivalents
|
$
|
28,820
|
$
|
12,564
|
||||
Restricted cash
|
835
|
32
|
||||||
Trade receivables (net of allowance for credit losses of $ 178 and $ 285 at December 31, 2020 and 2019, respectively)
|
216
|
536
|
||||||
Other accounts receivable and prepaid expenses
|
569
|
628
|
||||||
Bonds related deposits
|
2,564
|
-
|
||||||
Property held for sale
|
-
|
29,727
|
||||||
Total current assets
|
33,004
|
43,487
|
||||||
LONG-TERM INVESTMENTS:
|
||||||||
Long-term deposits
|
98
|
2,678
|
||||||
Right-of-use assets
|
272
|
376
|
||||||
Investments in companies and associates
|
9,269
|
11,657
|
||||||
Total long-term investments
|
9,639
|
14,711
|
||||||
Real estate property, net
|
192,054
|
181,109
|
||||||
Total assets
|
$
|
234,697
|
$
|
239,307
|
April 27, 2021
|
||||
Date of approval of the
|
Amir Philips
|
Alex Hilman
|
||
financial statements
|
Chief Executive Officer
|
Executive Chairman
of the Board
|
Year ended December 31,
|
||||||||||||
2020
|
2019
|
2018
|
||||||||||
Fixed income from real estate rent
|
$
|
14,874
|
$
|
16,144
|
$
|
16,608
|
||||||
Costs and expenses:
|
||||||||||||
Cost of real estate operations
|
2,548
|
2,948
|
2,991
|
|||||||||
Real estate depreciation, amortization and impairment
|
3,946
|
4,321
|
4,317
|
|||||||||
General and administrative
|
2,523
|
3,047
|
3,500
|
|||||||||
Total costs and expenses
|
9,017
|
10,316
|
10,808
|
|||||||||
Gain on sale of operating properties
|
9,127
|
-
|
-
|
|||||||||
Operating income
|
14,984
|
5,828
|
5,800
|
|||||||||
Other income
|
454
|
722
|
607
|
|||||||||
Financial expenses, net
|
(1,781
|
)
|
(2,630
|
)
|
(2,882
|
)
|
||||||
Income before taxes on income
|
13,657
|
3,920
|
3,525
|
|||||||||
Taxes on income
|
(2,162
|
)
|
(1,472
|
)
|
(1,464
|
)
|
||||||
Equity share in losses of associates, net
|
(2,079
|
)
|
(2,321
|
)
|
(2,765
|
)
|
||||||
Net income (loss)
|
9,416
|
127
|
(704
|
)
|
||||||||
Net income attributable to non-controlling interest
|
2,983
|
2,120
|
2,077
|
|||||||||
Net income (loss) attributable to Optibase Ltd.
|
$
|
6,433
|
$
|
(1,993
|
)
|
$
|
(2,781
|
)
|
||||
Net earnings per share:
|
||||||||||||
Basic and diluted net earnings (loss) per share
|
$
|
1.24
|
$
|
(0.38
|
)
|
$
|
(0.54
|
)
|
||||
Weighted average number of shares used in computing basic net earnings per share:
|
5,186,273
|
5,186,273
|
5,185,352
|
|||||||||
Weighted average number of shares used in computing diluted net earnings per share
|
5,186,273
|
5,186,273
|
5,185,352
|
Year ended December 31,
|
||||||||||||
2020
|
2019
|
2018
|
||||||||||
Net income (loss)
|
$
|
9,416
|
$
|
127
|
$
|
(704
|
)
|
|||||
Foreign currency translation adjustments
|
5,323
|
393
|
(1,052
|
)
|
||||||||
Financial liability related to hedging
|
68
|
137
|
88
|
|||||||||
Total comprehensive income (loss)
|
14,807
|
657
|
(1,668
|
)
|
||||||||
Net income attributable to non-controlling interests
|
(2,983
|
)
|
(2,120
|
)
|
(2,077
|
)
|
||||||
Other comprehensive loss (income) attributable to non-controlling interests
|
(2,204
|
)
|
(283
|
)
|
207
|
|||||||
Comprehensive income (loss) attributable to Optibase Ltd.
|
$
|
9,620
|
$
|
(1,746
|
)
|
$
|
(3,538
|
)
|
Ordinary
shares
|
Additional
paid-in
capital
|
Treasury
shares
|
Other
reserves
|
Accumulated
deficit
|
Total
shareholders'
equity of Optibase Ltd.
|
Non-controlling interests
|
Total
shareholders'
equity
|
|||||||||||||||||||||||||
Balance as of January 1, 2018
|
$
|
993
|
$
|
138,170
|
$
|
(87
|
)
|
$
|
9
|
$
|
(82,048
|
)
|
$
|
57,037
|
$
|
20,031
|
$
|
77,068
|
||||||||||||||
Stock-based compensation
|
-
|
17
|
-
|
-
|
-
|
17
|
-
|
17
|
||||||||||||||||||||||||
Issuance of shares upon exercise of stock options
|
1
|
-
|
-
|
-
|
-
|
1
|
-
|
1
|
||||||||||||||||||||||||
Dividend to non-controlling interests
|
-
|
-
|
-
|
-
|
-
|
-
|
(2,067
|
)
|
(2,067
|
)
|
||||||||||||||||||||||
Other comprehensive loss
|
-
|
-
|
-
|
(757
|
)
|
-
|
(757
|
)
|
(207
|
)
|
(964
|
)
|
||||||||||||||||||||
Equity component of transaction with controlling shareholder
|
-
|
-
|
-
|
42
|
-
|
42
|
-
|
42
|
||||||||||||||||||||||||
Net income (loss)
|
-
|
-
|
-
|
-
|
(2,781
|
)
|
(2,781
|
)
|
2,077
|
(704
|
)
|
|||||||||||||||||||||
Balance as of December 31, 2018
|
994
|
138,187
|
(87
|
)
|
(706
|
)
|
(84,829
|
)
|
53,559
|
19,834
|
73,393
|
|||||||||||||||||||||
Dividend to non-controlling interests
|
-
|
-
|
-
|
-
|
-
|
-
|
(2,227
|
)
|
(2,227
|
)
|
||||||||||||||||||||||
Other comprehensive income
|
-
|
-
|
-
|
247
|
-
|
247
|
283
|
530
|
||||||||||||||||||||||||
Equity component of transaction with controlling shareholder
|
-
|
-
|
-
|
31
|
-
|
31
|
-
|
31
|
||||||||||||||||||||||||
Net income (loss)
|
-
|
-
|
-
|
-
|
(1,993
|
)
|
(1,993
|
)
|
2,120
|
127
|
||||||||||||||||||||||
Balance as of December 31, 2019
|
994
|
138,187
|
(87
|
)
|
(428
|
)
|
(86,822
|
)
|
51,844
|
20,010
|
71,854
|
|||||||||||||||||||||
Other comprehensive income
|
-
|
-
|
-
|
3,187
|
-
|
3,187
|
2,204
|
5,391
|
||||||||||||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
6,433
|
6,433
|
2,983
|
9,416
|
||||||||||||||||||||||||
Balance as of December 31, 2020
|
994
|
138,187
|
(87
|
)
|
2,759
|
(80,389
|
)
|
61,464
|
25,197
|
86,661
|
Year ended December 31,
|
||||||||||||
2020
|
2019
|
2018
|
||||||||||
Cash flows from operating activities:
|
||||||||||||
Net income (loss)
|
$
|
9,416
|
$
|
127
|
$
|
(704
|
)
|
|||||
Adjustments required to reconcile net income (loss) to net cash provided by operating activities:
|
||||||||||||
Depreciation, amortization and impairment
|
3,946
|
4,321
|
4,317
|
|||||||||
Gain on sale of operating properties
|
(9,127
|
)
|
-
|
-
|
||||||||
Stock-based compensation related to options and unvested shares
|
-
|
-
|
17
|
|||||||||
Decrease (increase) in trade receivables
|
353
|
(105
|
)
|
(109
|
)
|
|||||||
Equity share in losses of associates, net
|
2,079
|
2,321
|
2,765
|
|||||||||
Decrease in deferred tax liabilities
|
(22
|
)
|
(140
|
)
|
(173
|
)
|
||||||
Increase (decrease) in land lease liabilities
|
319
|
(106
|
)
|
(108
|
)
|
|||||||
Increase (decrease) in lease liabilities
|
(43
|
)
|
257
|
-
|
||||||||
Decrease (increase) in right-of-use assets
|
104
|
(376
|
)
|
-
|
||||||||
Decrease (increase) in other accounts receivable and prepaid expenses
|
79
|
(665
|
)
|
965
|
||||||||
Increase (decrease) in accrued expenses, other accounts payable and other liabilities
|
(1,986
|
)
|
1,763
|
(103
|
)
|
|||||||
Net cash provided by operating activities
|
5,118
|
7,397
|
6,867
|
|||||||||
Cash flows from investing activities:
|
||||||||||||
Investment in real estate property
|
(989
|
)
|
(1,109
|
)
|
(2,764
|
)
|
||||||
Proceeds from associates, net
|
309
|
398
|
414
|
|||||||||
Decrease (increase) in other long-term deposits
|
(9
|
)
|
116
|
105
|
||||||||
Proceeds from sale of real estate property
|
41,483
|
-
|
-
|
|||||||||
Net cash provided by (used in) investing activities
|
40,794
|
(595
|
)
|
(2,245
|
)
|
Year ended December 31,
|
||||||||||||
2020
|
2019
|
2018
|
||||||||||
Cash flows from financing activities:
|
||||||||||||
Repayment of long-term bank loans and bonds
|
(28,221
|
)
|
(5,958
|
)
|
(6,558
|
)
|
||||||
Dividend paid to non-controlling interests
|
-
|
(2,227
|
)
|
(2,067
|
)
|
|||||||
Repayment of controlling shareholders' loan
|
(2,618
|
)
|
-
|
(2,500
|
)
|
|||||||
Net cash used in financing activities
|
(30,839
|
)
|
(8,185
|
)
|
(11,125
|
)
|
||||||
Exchange differences on balances of cash and cash equivalents
|
1,986
|
112
|
(190
|
)
|
||||||||
Increase (decrease) in cash and cash equivalents and restricted cash
|
17,059
|
(1,271
|
)
|
(6,693
|
)
|
|||||||
Cash and cash equivalents and restricted cash at the beginning of the year
|
12,596
|
13,867
|
20,560
|
|||||||||
Cash and cash equivalents and restricted cash at the end of the year
|
$
|
29,655
|
$
|
12,596
|
$
|
13,867
|
(c) Significant non-cash transactions:
|
|||||||||||||
Net lease liabilities arising from obtaining right of
use assets |
$
|
39
|
$
|
22
|
$
|
-
|
NOTE 1:- |
GENERAL
|
|
a. |
Optibase Ltd. (the "Company") was incorporated and commenced operations in 1990.
|
|
b. |
Investments in associates:
|
|
1. |
Retail portfolio in Bavaria, Germany:
|
NOTE 1:- |
GENERAL (Cont.)
|
Real estate property
|
$
|
31,399
|
||
Other assets, net
|
74
|
|||
Total purchase price
|
$
|
31,473
|
NOTE 1:- |
GENERAL (Cont.)
|
|
c. |
The Company has one major tenant, 20% of the Company revenues for the year ended 2020, and two major tenants: 18% and 16% of the Company revenues in each of the years ended December 31, 2019, 2018. No other tenants accounted for
more than 10% of the Company revenues.
|
|
d. |
Sale of the Video Activity (discontinued operations):
|
Year ended
December 31,
|
||||||||
2020
|
2019
|
|||||||
Liabilities:
|
||||||||
Total liabilities attributed to discontinued operations
|
$
|
2,061
|
$
|
2,061
|
|
e. |
The duration, scope and effects of the ongoing COVID-19 pandemic, government and other third-party responses to it, and the related macroeconomic effects, including to the Company's business and the
business of the Company's suppliers and customers are uncertain, rapidly changing and difficult to predict. The Company considered the impact of COVID-19 on the estimates and assumptions and determined that there were no
material adverse impacts on the consolidated financial statements for the period ended December 31, 2020. As events continue to evolve and additional information becomes available, the Company’s estimates and assumptions may
change in future periods.
|
|
a. |
Basis of presentation of the financial statements:
|
|
b. |
Functional currency, presentation currency and foreign currency:
|
|
c. |
Principles of consolidation:
|
|
d. |
Non-controlling interests:
|
|
e. |
Cash equivalents:
|
|
f. |
Property:
|
Years
|
||||
Building
|
25 - 63
|
|||
Buildings' improvements
|
5 - 20
|
|||
Condominium units
|
30
|
|
g. |
Impairment of long-lived assets, right-of-use assets and intangible assets:
|
|
h. |
Investments in companies:
|
|
i. |
Investments in associates:
|
|
j. |
Intangibles assets:
|
|
l. |
Derivative instruments:
|
|
m. |
Revenue recognition:
|
|
n. |
Contingencies:
|
|
o. |
Income taxes:
|
|
p. |
Concentrations of credit risk:
|
|
q. |
Earnings (loss) per share:
|
|
r. |
Accounting for stock-based compensation:
|
|
Level 1 - |
Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
|
|
Level 2 - |
Include other inputs that are directly or indirectly observable in the marketplace.
|
|
Level 3 - |
Unobservable inputs which are supported by little or no market activity.
|
|
u. |
Comprehensive income:
|
|
v. |
Recently adopted accounting pronouncements:
|
NOTE 3:- |
REAL ESTATE PROPERTY, NET
|
Land
|
Building
|
Condominium units
|
Currency translation adjustment
|
Total
|
||||||||||||||||
Cost:
|
||||||||||||||||||||
At January 1, 2019
|
$
|
33,874
|
$
|
190,830
|
$
|
21,413
|
$
|
(6,618
|
)
|
$
|
239,499
|
|||||||||
Additions
|
-
|
934
|
173
|
1,981
|
3,088
|
|||||||||||||||
Reclassification – property held for sale
|
(7,559
|
)
|
(26,178
|
)
|
-
|
-
|
(33,737
|
)
|
||||||||||||
At December 31, 2019
|
26,315
|
165,586
|
21,586
|
(4,637
|
)
|
208,850
|
||||||||||||||
Additions
|
-
|
615
|
374
|
19,692
|
20,681
|
|||||||||||||||
Disposals
|
-
|
-
|
(2,238
|
)
|
-
|
(2,238
|
)
|
|||||||||||||
At December 31, 2020
|
26,315
|
166,201
|
19,722
|
15,055
|
227,293
|
|||||||||||||||
Accumulated depreciation and impairment:
|
||||||||||||||||||||
At January 1, 2019
|
-
|
25,136
|
2,506
|
(492
|
)
|
27,150
|
||||||||||||||
Depreciation charge for the year
|
-
|
3,948
|
392
|
417
|
4,757
|
|||||||||||||||
Reclassification - property held for sale
|
-
|
(4,166
|
)
|
-
|
-
|
(4,166
|
)
|
|||||||||||||
At December 31, 2019
|
-
|
24,918
|
2,898
|
(75
|
)
|
27,741
|
||||||||||||||
Depreciation and impairment charge for the year
|
-
|
3,221
|
725
|
3,552
|
7,498
|
|||||||||||||||
At December 31, 2020
|
-
|
28,139
|
3,623
|
3,477
|
35,239
|
|||||||||||||||
Real estate property, net:
|
||||||||||||||||||||
At December 31, 2020
|
$
|
26,315
|
$
|
138,062
|
$
|
16,099
|
$
|
11,578
|
$
|
192,054
|
||||||||||
At December 31, 2019
|
$
|
26,315
|
140,668
|
$
|
18,688
|
$
|
(4,562
|
)
|
$
|
181,109
|
Year
|
Estimated depreciation expenses
|
|||
2021
|
3,901
|
|||
2022
|
3,901
|
|||
2023
|
3,901
|
|||
2024
|
3,901
|
|||
2025 and thereafter
|
150,135
|
|||
165,739
|
NOTE 4:- |
OTHER ASSETS, NET
|
Above, below market value of in-place leases
|
Currency translation adjustment
|
Total
|
||||||||||
Cost:
|
||||||||||||
At January 1, 2019
|
$
|
147
|
$
|
(70
|
)
|
$
|
77
|
|||||
Additions
|
-
|
(3
|
)
|
(3
|
)
|
|||||||
Reclassification – property held for sale
|
(74
|
)
|
-
|
(74
|
)
|
|||||||
At December 31, 2019
|
73
|
(73
|
)
|
-
|
||||||||
Additions
|
-
|
-
|
-
|
|||||||||
At December 31, 2020
|
-
|
-
|
-
|
|||||||||
Accumulated amortization:
|
||||||||||||
At January 1, 2019
|
13
|
(77
|
)
|
(64
|
)
|
|||||||
Amortization charge for the year
|
(19
|
)
|
4
|
(15
|
)
|
|||||||
Reclassification – property held for sale
|
79
|
-
|
79
|
|||||||||
At December 31, 2019
|
73
|
(73
|
)
|
-
|
||||||||
Amortization charge for the year
|
-
|
-
|
-
|
|||||||||
At December 31, 2020
|
-
|
-
|
-
|
|||||||||
Other assets, net:
|
||||||||||||
At December 31, 2020
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
At December 31, 2019
|
$
|
-
|
$
|
-
|
$
|
-
|
NOTE 5:- |
OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES
|
December 31,
|
||||||||
2020
|
2019
|
|||||||
Prepaid expenses
|
$
|
38
|
$
|
113
|
||||
Income receivable
|
442
|
257
|
||||||
Others
|
89
|
258
|
||||||
$
|
569
|
$
|
628
|
NOTE 6:- |
DEPOSITS
|
December 31,
|
||||||||
2020
|
2019
|
|||||||
Bonds deposit (1)
|
$
|
2,045
|
$
|
-
|
||||
Restricted account (2)
|
187
|
-
|
||||||
SWAP (3)
|
332
|
-
|
||||||
$
|
2,564
|
$
|
-
|
December 31,
|
||||||||
2020
|
2019
|
|||||||
Bonds deposit (1)
|
$
|
-
|
$
|
1,903
|
||||
Restricted account (2)
|
-
|
232
|
||||||
SWAP (3)
|
-
|
458
|
||||||
Other
|
98
|
85
|
||||||
$
|
98
|
$
|
2,678
|
|
(1) |
Bonds deposit of one payment of principal and interest reserves. See Note 11.
|
|
(2) |
Restricted amount related to the hedging transaction, see details (3) below.
|
|
(3) |
Hedging of cross currency interest rate swap transaction for the total amount of approximately NIS 34,200,000 at fixed interest rate of 6.7% in exchange for approximately $ 8,700 at fixed interest rate of 7.95% with semi-annually
payments commencing on June 2016 through December 2021, the termination date. As of December 31, 2020, the hedging amount is $ 1,455.
|
NOTE 7:- |
LEASES
|
December 31,
|
||||||||
2020
|
2019
|
|||||||
Operating right-of-use assets
|
$
|
272
|
$
|
376
|
||||
Operating lease liabilities, current
|
166
|
142
|
||||||
Operating lease liabilities long-term
|
146
|
257
|
||||||
Total operating lease liabilities
|
$
|
312
|
$
|
399
|
Year ended December 31,
|
||||
2021
|
$
|
170
|
||
2022
|
129
|
|||
2023
|
28
|
|||
Total undiscounted lease payments
|
327
|
|||
Less - interest
|
(15
|
)
|
||
Present value of lease liabilities
|
$
|
312
|
Weighted average remaining lease term (years)
|
1.75
|
|||
Weighted average discount rate
|
3.39
|
%
|
NOTE 7:- |
LEASES (Cont.)
|
Year ended December 31,
|
||||
2021
|
$
|
5,279
|
||
2022
|
1,917
|
|||
2023
|
3,360
|
|||
2024
|
187
|
|||
2025 and thereafter
|
2,630
|
|||
Total future minimum rentals
|
$
|
13,373
|
NOTE 8:- |
INVESTMENTS IN COMPANIES AND ASSOCIATES
|
|
a. |
On October 12, 2012, the Company acquired through its subsidiary beneficial interests in Two Penn Center Plaza in Philadelphia, Pennsylvania. This investment is accounted for using the equity method of accounting as the Company's
indirect beneficial interest in Two Penn Center Plaza is 22.16% and therefore is considered to be more than minor.
|
December 31,
|
||||||||
2020
|
2019
|
|||||||
Invested in equity
|
$
|
4,025
|
$
|
4,025
|
||||
Distributions
|
(1,794
|
)
|
(1,485
|
)
|
||||
Accumulated net income
|
1,110
|
710
|
||||||
Total investment
|
$
|
3,341
|
$
|
3,250
|
|
b. |
On December 31, 2012 the Company acquired through its subsidiary Optibase Inc. approximately 4% indirect beneficial interest in a portfolio of shopping centers located in Texas, USA in consideration for $ 4,000 which accounted
for the cost method of accounting. The Company believes that its beneficial interests in Texas portfolio are considered to be so minor that they create virtually no influence over the operating and financial policies of the Real
Estate Asset and therefore this investment accounted for cost method of accounting.
|
NOTE 8:- |
INVESTMENTS IN COMPANIES AND ASSOCIATES (Cont.)
|
|
c. |
On December 29, 2015, the Company through its subsidiary, Optibase Inc., completed an investment in 300 River Holdings, LLC, (the "Joint Venture Company") which beneficially owns the rights to a 23-story Class A office building
located at 300 South Riverside Plaza in Chicago under a 99 year ground lease expiring in 2114. The Company invested $ 12,900 in exchange for a thirty percent (30%) interest in the Joint Venture Company. In addition to the Purchase
Price, the Company capitalized acquisition costs of approximately $ 242. See Note 1b(2). On June 17, 2016, and in accordance with the Company's initial investment agreement, the Company had invested an additional amount of $ 3,000
which accrued interest of 12% per annum, and was distributed back to the Company on November 21, 2017.
|
December 31,
|
||||||||
2020
|
2019
|
|||||||
Invested in equity
|
$
|
13,142
|
$
|
13,142
|
||||
Accumulated net loss
|
(11,214
|
)
|
(8,735
|
)
|
||||
Total investment
|
$
|
1,928
|
$
|
4,407
|
|
d. |
Investments in associates accounted for using the equity method of accounting:
|
December 31,
|
||||||||
2020
|
2019
|
|||||||
Assets
|
$
|
321,153
|
$
|
336,310
|
||||
Liabilities
|
$
|
459,620
|
$
|
461,448
|
||||
Income
|
$
|
49,708
|
$
|
56,941
|
||||
Net loss
|
$
|
(11,947
|
)
|
$
|
(11,106
|
)
|
|
*) |
The information presented does not include excess cost and goodwill.
|
NOTE 9:- |
OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES
|
December 31,
|
||||||||
2020
|
2019
|
|||||||
Employees and payroll accruals
|
$
|
308
|
$
|
245
|
||||
Accrued expenses
|
2,640
|
2,597
|
||||||
Government (mainly tax provision)
|
264
|
878
|
||||||
Advance tenants payments
|
397
|
504
|
||||||
Tenant security deposits
|
116
|
124
|
||||||
Trade payables
|
397
|
591
|
||||||
Others
|
22
|
89
|
||||||
Total
|
$
|
4,144
|
$
|
5,028
|
|
a. |
On October 29, 2009, Optibase SARL received a mortgage loan (the "Loan") from a financial institution in Switzerland, in the amount of CHF 18,800,000 for the purpose of purchasing the real estate property located in Rümlang,
Switzerland (the "Property"). The loan bears a variable interest rate based on current money and capital markets in Switzerland plus the bank's customary margins 0.8%. The financial institution may increase the margin at any time if
creditworthiness of the borrower or quality of the property is impaired. Principal and interest of the loan are payable quarterly. The loans are repaid at a rate of CHF 376,000 per year. The mortgage loan may be repaid at any time
with a three months prior written notice by the Company. The mortgage loan is governed by the laws of Switzerland and bears other terms and conditions customary for that type of mortgage loans. The
Company pledged to the bank the property and all accounts and assets of the Company's subsidiary which are deposited with the bank against the loan received. The Company is required to meet certain covenants under this mortgage
loan. As of December 31, 2020, the Company met the required covenants.
|
Year ended December 31,
|
||||
2021 (current maturity)
|
427
|
|||
Long-term portion:
|
||||
2022
|
427
|
|||
2023
|
427
|
|||
2024
|
427
|
|||
2025
|
427
|
|||
Thereafter
|
14,483
|
|||
Total
|
16,191
|
|
b. |
On October 2011, OPCTN and Eldista entered into a CHF 100,000,000 bank loan refinancing with Credit Suisse for the above mentioned loan. Under the new financing agreement,
Credit Suisse provided a new loan to OPCTN and Eldista which replaced the mortgage loan that Credit Suisse provided to Eldista. The loan bears a variable interest rate based on current money and capital markets in Switzerland
plus the bank's customary margins, the combined interest margins rate was 0.83%. The loans are repaid at a rate of CHF 2,000,000 per year and are secured by a first mortgage over the property and by a pledge of Eldista's
shares. On January 8, 2020 Eldista has signed a new framework agreement for a mortgage loan at an amount of credit facility of CHF 83,500,000, the amount of the credit facility was reduced by the sum amortization and other
loan repayment made. According to the new framework agreement, the credit facility may be utilized as follows: (i) mortgage loans in CHF with terms of 1 to max 10 years; (ii) mortgage-backed fixed advanced in CHF with terms
of 3, 6 or 12 months; (iii) mortgage-backed fixed advanced in USD with terms of max 3 months. When use in USD may only occur if the resulting foreign exchange risk is hedged through a separate OTC transaction in the same
currency and with the same term and amount. The loan bears a variable interest rate based on current money and capital markets in Switzerland plus the bank's customary margins. The annual interest margin rate is 0.75% for
drawings in CHF or 1.05% for drawings in USD. The loan is repaid at a rate of CHF 2,000,000 per year on a quarterly basis and secured by a pledge of Eldista's shares. The Company is required to meet certain covenants under
this mortgage loan. As of December 31, 2020, the Company met these covenants.
|
Year ended December 31,
|
||||
2021 (current maturity)
|
2,266
|
|||
Long-term portion:
|
||||
2022
|
2,266
|
|||
2023
|
2,266
|
|||
2024
|
2,266
|
|||
2025
|
2,266
|
|||
Thereafter
|
81,886
|
|||
Total
|
90,950
|
|
c. |
Optibase Bavaria negotiated a loan agreement with a Deutsche Genossenschafts-Hypothekenbank Aktiengesellschaft ("DG HYP"), for the provision of a senior mortgage loan in the amount of up to EUR 21,000,000 of which the Company
utilized EUR 20,474,000. The effective interest rate was closed at 2.15%. The loan is repaid in quarterly installments of EUR 105,000 each, up until April 30, 2020. The terms of the loan includes certain covenants, a debt service
cover ratio requirement of between 130% and 110%, and a loan to value requirement of 70% in the first three years and 65% in the fourth and fifth years. As of December 31, 2019, the Company met these covenants. During May and June
2020, as part of the Company portfolio sale transaction, the Company repaid the loan.
|
|
d. |
On July 8, 2015, the Company subsidiary, Optibase Inc., entered into a loan agreement with City National Bank of Florida (“CNB”) for a gross amount of $ 15,000 for the financing of 25 condominium units the Company owns in Miami
and Miami Beach, Florida. The loan is secured by a senior mortgage over the condominium units. The loan was taken for a term of three (3) years, with an interest rate of Libor 30-day-rate plus 2.65%. Interest is paid monthly
commencing August 1, 2015, and the principal is reduced in six-month intervals beginning July 2016. On November 24, 2017 Optibase Inc., refinanced the loan. Under the refinancing, the existing principle loan balance of $ 9,390 bears
an interest rate of Libor 30- day rate plus 2.65% which may be increased to 30-day Libor plus 3.25% if Optibase Inc. or its subsidiary, fail to maintain depository accounts with totaling $ 1,500. On November 21, 2019 Optibase Inc.,
prolonged the amortization of the outstanding principal balance of the loan in amount of $ 8,903, all terms remain unchanged. The principal of the Loan is amortized on a monthly basis with principal payments of approximately $ 19
per month plus accrued interest until the loan matures on January 4, 2021 when all remaining principal and interest become due and payable.
|
Year ended December 31,
|
||||
2021 (current maturity)
|
655
|
|||
Long-term portion:
|
||||
2022
|
-
|
|||
2023
|
5,782
|
|||
Total
|
5,782
|
|
e. |
For information regarding a loan received from the controlling shareholder, see Note 18b(5).
|
NOTE 11:- |
BONDS
|
NOTE 12:- |
COMMITMENTS AND CONTINGENT LIABILITIES
|
|
a. |
Assets pledged as collateral:
|
|
b. |
Israel Innovation Authority commitments:
|
NOTE 12:- |
COMMITMENTS AND CONTINGENT LIABILITIES (Cont.)
|
|
c. |
In June 2017, Aberdeen Associates LLC, a Delaware limited liability company, extended a $ 7,000, 5-year fixed-rate loan facility (the “Loan Facility”) to the Company’s subsidiary, Optibase Inc. secured by a pledge of 100% of its
membership interest in Optibase Chicago 300, LLC. The Loan Facility will bear interest at an annual rate of 5% of the amount drawn, and is compounded and paid quarterly until the maturity on June 1, 2022. As of December 31, 2020,
the Company has not drawn down any funds under the Loan Facility.
|
|
d. |
Legal claims and contingent liabilities:
|
|
1. |
On October 26, 2014, the Company received a letter on behalf of two purported shareholders (the "Shareholders") demanding the Company to file a derivative claim against its controlling shareholder and directors and officers,
according to procedures of the Companies Law and requesting discovery of internal documents. The demand alleges, among other things, breach of fiduciary duties by directors and officers with respect to the approval of the
transaction to acquire condominium units in Miami Beach, Florida, (the "Transaction"), in accordance with the Companies Law. The Company presented the Shareholders, at their request, with certain materials in connection with the
Transaction for their review.
|
NOTE 12:- |
COMMITMENTS AND CONTINGENT LIABILITIES (Cont.)
|
|
2. |
On March 6, 2019, the Company has notified that Swiss Pro Capital Limited, a company organized under the laws of Switzerland, has filed a legal claim against the Company's subsidiaries, Optibase RE 1 s.a.r.l and Optibase Real
Estate Europe SARL.
|
NOTE 12:- |
COMMITMENTS AND CONTINGENT LIABILITIES (Cont.)
|
The plaintiff claims that the correct option exercise price, and as it was actually exercised on May 25, 2016, is zero Swiss Francs, and it seeks for the court to issue a declaratory order under which it is entitled to receive 20% of the shares of Optibase RE1 at a price of zero Swiss Francs, and to issue orders to remove the discrimination, including that the Company must pay the plaintiff a sum of CHF 400,000 .
|
3. |
On April 16, 2015, the Company's subsidiary Eldista GmbH, filed a claim to the court in Switzerland in an amount of CHF 961,000 due to damages and unpaid amounts from a specific tenant. Shortly thereafter, the tenant filed a
counterclaim against Eldista GmbH in an amount of CHF 157,000 for damages allegedly caused to it. The court suggested the parties to transfer to mediation proceedings which failed. The court handed down a partial judgment on 31,
October 2016, dismissing Eldista GmbH's claim (though it had not yet examined the issue of the damages). Eldista GmbH filed an appeal against the judgment, but it was dismissed on June 12, 2017. On May 2, 2018, the court ruled that
the damages owned to the tenant shall amount to approximately CHF 53,000 plus interest 5% as of June 4, 2014. An appeal has been filed and is currently pending before the supreme court. Should the supreme court confirm the first
judgment, Eldista GmbH will most likely have a counterclaim against the former real estate agency that was managing the CTN Complex, although there is also a possibility that a judge would consider that the latter committed no
breach or that only a portion of the damage can be recovered by the agency.
|
NOTE 12:- |
COMMITMENTS AND CONTINGENT LIABILITIES (Cont.)
|
|
4. |
On March 1 2017, the Company's subsidiary Eldista Gmbh, received a notice from its largest tenant in Switzerland, LEM Switzerland SA, or LEM, regarding the deposit of the monthly rent for March 2017
amounting to approximately CHF 279,000 with Banque cantonale de Genève, as a preliminary process for filing a claim. LEM claims that there are serious defects affecting the rented premises, which merit LEM with a reimbursement of
approximately CHF 2,400,000 (excluding VAT) as well as approximately CHF 69,000 as indemnification for consequential damages.
|
|
a. |
Recurring fair value measurements:
|
|
b. |
Valuation methods:
|
|
a. |
On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the "TCJA"). The TCJA makes broad and complex changes to the Code. The changes include, but
are not limited to:
|
|
1. |
A corporate income federal tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017 ("Rate Reduction");
|
|
2. |
The transition of U.S. international taxation from a worldwide tax system to a territorial system by providing a 100 percent deduction to an eligible U.S. shareholder on foreign sourced dividends received from a foreign
subsidiary;
|
|
3. |
A one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017; and
|
|
4. |
Taxation of GILTI earned by foreign subsidiaries beginning after December 31, 2017. The Global Intangible Low-Taxed Icome GILTI tax imposes a tax on foreign income in excess of a deemed return on tangible assets of foreign
corporations.
|
|
b. |
Corporate tax rates:
|
Year ended December 31,
|
||||||||||||
2020
|
2019
|
2018
|
||||||||||
Luxemburg
|
29
|
%
|
29
|
%
|
29
|
%
|
||||||
Zurich, Switzerland
|
21
|
%
|
21
|
%
|
21
|
%
|
||||||
Geneva, Switzerland
|
14
|
%
|
24
|
%
|
24
|
%
|
||||||
United States
|
21
|
%
|
21
|
%
|
21
|
%
|
||||||
Germany
|
16
|
%
|
16
|
%
|
16
|
%
|
|
c. |
Tax assessments:
|
|
d. |
Deferred tax assets and liabilities:
|
NOTE 14:- |
TAXES ON INCOME (Cont.)
|
December 31,
|
||||||||
2020
|
2019
|
|||||||
Deferred tax assets:
|
||||||||
Net operating losses and other temporary differences
|
$
|
31,271
|
$
|
28,941
|
||||
Lease provision
|
1,622
|
1,466
|
||||||
Other
|
199
|
190
|
||||||
Deferred tax assets
|
33,092
|
30,597
|
||||||
Deferred tax liabilities:
|
||||||||
Land
|
(5,734
|
)
|
(5,437
|
)
|
||||
Building
|
(10,373
|
)
|
(10,020
|
)
|
||||
Other
|
(3,553
|
)
|
(3,331
|
)
|
||||
Distributable proceeds
|
(809
|
)
|
-
|
|||||
Deferred tax liabilities
|
(20,469
|
)
|
(18,788
|
)
|
||||
Valuation allowance
|
(27,718
|
)
|
(25,610
|
)
|
||||
Deferred tax liabilities, net
|
$
|
(15,095
|
)
|
$
|
(13,801
|
)
|
|
e. |
Net operating losses carry-forward:
|
NOTE 14:- |
TAXES ON INCOME (Cont.)
|
|
f. |
Reconciliation of the theoretical tax expenses to the actual tax expenses:
|
Year ended December 31,
|
||||||||||||
2020
|
2019
|
2018
|
||||||||||
Income before taxes as reported
|
$
|
13,657
|
$
|
3,920
|
$
|
3,525
|
||||||
Theoretical tax benefit computed at the statutory rate 23%
|
3,141
|
902
|
811
|
|||||||||
Income tax at rate other than the Ltd. statutory tax rate
|
(1,150
|
)
|
101
|
52
|
||||||||
Tax adjustments in respect of currency translation
|
-
|
7
|
2
|
|||||||||
Adjustment of deferred tax balances following a decrease in statutory tax rates
|
(572
|
)
|
-
|
-
|
||||||||
Deferred taxes on losses and other temporary differences for which valuation allowance was provided
|
842
|
465
|
446
|
|||||||||
Taxes for previous years
|
(23
|
)
|
(40
|
)
|
47
|
|||||||
Other non-deductible expenses
|
(76
|
)
|
37
|
106
|
||||||||
Income tax expense
|
$
|
2,162
|
$
|
1,472
|
$
|
1,464
|
|
g. |
Income before taxes on income consists of the following:
|
Year ended December 31,
|
||||||||||||
2020
|
2019
|
2018
|
||||||||||
Domestic
|
$
|
594
|
$
|
(179
|
)
|
$
|
(2,515
|
)
|
||||
Foreign
|
13,063
|
4,099
|
6,040
|
|||||||||
$
|
13,657
|
$
|
3,920
|
$
|
3,525
|
NOTE 14:- |
TAXES ON INCOME (Cont.)
|
|
h. |
Income tax expenses are comprised as follows:
|
Year ended December 31,
|
||||||||||||
2020
|
2019
|
2018
|
||||||||||
Current
|
$
|
2,184
|
$
|
1,612
|
$
|
1,637
|
||||||
Deferred
|
(22
|
)
|
(140
|
)
|
(173
|
)
|
||||||
$
|
2,162
|
$
|
1,472
|
$
|
1,464
|
|||||||
Domestic
|
$
|
809
|
$
|
-
|
$
|
-
|
||||||
Foreign
|
1,353
|
1,472
|
1,464
|
|||||||||
$
|
2,162
|
$
|
1,472
|
$
|
1,464
|
NOTE 15:- |
SHAREHOLDERS' EQUITY
|
|
a. |
General:
|
|
1. |
The Ordinary shares of the Company are traded on the NASDAQ Global Market since April 1999 and on the Tel Aviv Stock Exchange Ltd. since April 2015.
|
|
2. |
On December 31, 2013 following the approval of the Company board of directors and the approval of the Company shareholders, the Company issued a net sum of 1,300,580 ordinary shares in consideration for the purchase of twelve
luxury condominium units in Miami Beach, Florida from private companies indirectly controlled by Capri, the Company's controlling shareholder.
|
|
b. |
Stock options:
|
NOTE 15:- |
SHAREHOLDERS' EQUITY (Cont.)
|
|
c. |
Non-vested shares:
|
|
d. |
The total equity-based compensation expense related to all of the Company's equity-based awards, recognized for the years ended December 31, 2020, 2019 and 2018. During 2020 2019 and 2018 there were no new grants.
|
NOTE 16:- |
FINANCIAL EXPENSES, NET
|
Year ended December 31,
|
||||||||||||
2020
|
2019
|
2018
|
||||||||||
Interest
|
$
|
(2,472
|
)
|
$
|
(2,546
|
)
|
$
|
(2,827
|
)
|
|||
Re-measurement of derivatives
|
(73
|
)
|
188
|
(562
|
)
|
|||||||
Foreign currency translation adjustments
|
764
|
(272
|
)
|
507
|
||||||||
$
|
(1,781
|
)
|
$
|
(2,630
|
)
|
$
|
(2,882
|
)
|
NOTE 17:- |
GEOGRAPHIC INFORMATION
|
2020
|
2019
|
2018
|
||||||||||||||||||||||
Total
revenues
|
Real estate property, net
|
Total
revenues
|
Real estate property, net
|
Total
revenues
|
Real estate property, net
|
|||||||||||||||||||
Switzerland
|
$
|
12,499
|
$
|
175,956
|
$
|
11,975
|
$
|
162,422
|
$
|
12,322
|
$
|
162,706
|
||||||||||||
Germany (*)
|
1,380
|
-
|
3,180
|
-
|
3,261
|
30,736
|
||||||||||||||||||
United States
|
995
|
16,098
|
989
|
18,687
|
1,025
|
18,907
|
||||||||||||||||||
$
|
14,874
|
$
|
192,054
|
$
|
16,144
|
$
|
181,109
|
$
|
16,608
|
$
|
212,349
|
|
*) |
For details regarding the portfolio sale agreement , see Note 1b(1).
|
NOTE 18:- |
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
|
|
a. |
Controlling shareholders:
|
|
b. |
Related party transactions:
|
|
1. |
On December 19, 2013, and following the approval of the Company's audit committee, compensation committee and board of directors, and the Company's shareholders approved the compensation terms of Mr. Shlomo (Tom) Wyler, for his
service as Chief Executive Officer of the Company's subsidiary Optibase Inc. The yearly gross base salary will be $ 170 as well as reimbursement of health insurance expenses of up to $ 24 per year, and including reimbursement of
reasonable work-related expenses incurred up to $ 50 per year. On May 16, 2016, following the approval by the Company's compensation committee, audit committee and board of directors, the Company's shareholders approved an amendment
to Mr. Wyler's compensation terms in a manner that Mr. Wyler's annual gross base salary shall be $ 200 for a full time position, as of January 1, 2016, as well as reimbursement of health insurance expenses of up to $ 24 per year,
and including reimbursement of reasonable work-related expenses incurred as part of his activities as Chief Executive Officer of Optibase Inc., of up to $ 50 per year. On February 14, 2019, following the approval by the Company's
compensation committee, audit committee and board of directors, the Company's shareholders approved an extension for a 3 year term, of the engagement with Mr. Wyler's, including an adjustment to his compensation terms, in a manner
that Mr. Wyler's annual gross base salary was set at $ 220 for a full time position, as of January 1, 2019.
|
|
2. |
On December 19, 2013, and following the approval of the Company's audit committee and board of directors, and the Company's shareholders approved the a service agreement between the Company and Mr.
Reuwen Schwarz, currently serves also as a member of the Company's board of directors, who is a relative of the beneficiaries of Capri, the Company's controlling shareholder, for the provision of real estate related consulting
services in consideration for a monthly fee of EUR 4,000 plus applicable value added tax (if applicable) and reimbursement for expenses incurred up to EUR 12,000 per year. On December 29, 2016, and following the approval by the
Company's audit committee and board of directors, the Company's shareholders approved the extension of Mr. Schwarz' service agreement, which will be in effect retroactively from November 1, 2016 for a period of three years. On
December 31, 2019, following the approval by the Company's audit committee and board of directors, the Company's shareholders approved the extension of Mr. Schwarz' service agreement, which will be in effect retroactively from
November 1, 2019 for a period of three years. Each of Mr. Schwarz and the Company may terminate the service agreement by giving a prior written notice of 30 days.
|
NOTE 18:- |
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS (Cont.)
|
|
3. |
On October 22, 2014, following the approval by the Company's audit committee and board of directors the Company's shareholders approved entering into a registration rights agreement with Mr. Shlomo (Tom) Wyler and Capri, for the
filing of a registration statement in order to register for resale all of the Company's Ordinary shares held by them. As of December 31, 2020 registration has not been implemented yet.
|
|
4. |
On December 29, 2016, the Company's shareholders approved, following the approval by the Company's audit committee and board of directors, a new lease agreement to be entered into
with an affiliate of Capri, or the Tenant. The new lease will be in effect for a one-year term commencing on January 2, 2017, which will be automatically extended by a one-year term and up to a total of three years. On December
31, 2019, the Company's shareholders approved, following the approval by the Company's audit committee and board of directors, the extantion of the lease agreement. The new lease will be in effect for a one-year term commencing
on January 2, 2020, which will be automatically extended by a one-year term and up to a total of three years. The Tenant may decide not to extend the New Lease provided that it has given notice to that effect to the Company at
least 45 days before the end of each year. The monthly rent to be paid by the Tenant to the Company is $ 27.3, including sales tax. The Rent will be increased by 3% every year.
|
|
5. |
In March 2017, the Company's audit committee and board of directors approved, in accordance with the Israeli Companies Regulations (Relieves for Transactions with Interested Parties) of 2000, the receipt of a $ 5,118 loan, (the
"Loan"), from the Company's controlling shareholder. The Loan was granted to the Company on March 28, 2017 for the purpose of strengthening the Company's liquidity. The Loan does not bear any interest or linkage differentials and is
unsecured. In May 2018, the parties entered into an amendment to the Loan's agreement, under which the Company reapid the Company's controlling shareholder $ 2,500 on account of the Loan's account. The repayment by the Company of
the remaining Loan's amount of approximately $ 2,618 has been postponed from April 1, 2019 to April 1, 2020, however, the Company may prepay the Loan prior to such date at its sole discretion without any penalty. On September 30,
2019 the parties entered into an amendment no.2 to the Loan's agreement, under which the remaining loan amount of approximately $ 2,618 shall be postponed to October 1, 2020. The remaining terms of the original agreement shall
remain unchanged. The loan was recognized at fair value to reflect its interest beneficiary terms at the date of the transaction. The difference between the fair value and the loan principal, in the amount of $ 372 is reported as a
reserve from transaction with controlling shareholder in the balance sheet. On July 1, 2020, the Company repaid the loan. As of December 31, 2020 and 2019 an amount of $ 76 and $ 205, respectively, was recorded as finance expense.
|
|
6. |
In December 2017, following the approval of the Company’s board of directors and compensation committee, the Company's shareholders approved an amendment to the Company’s undertaking to indemnify Mr. Shlomo (Tom) Wyler, the Chief
Executive Officer of the Company’s subsidiary Optibase Inc. who is affiliated with the controlling shareholder of the Company; and Mr. Reuwen Schwarz, a member of the Company’s Board of Directors, who is affiliated with the
controlling shareholder of the Company, to the fullest extent permitted by the Companies Law and our articles of association. The aggregate indemnification amount shall not exceed the higher of: (i) 25% of the Company shareholders’
equity, as set forth in the Company’s financial statements prior to such payment; or (ii) $ 20,000.
|
300 RIVER HOLDINGS, LLC
|
|
(a Delaware limited liability company)
|
|
Contents
|
Page
|
|
Consolidated Financial Statements
|
|
F - 47
|
|
F - 48
|
|
F - 49
|
|
F - 50
|
|
F - 51
|
|
F - 52
|
300 River Holdings, LLC
|
|||
(a Delaware limited liability company)
|
|||
December 31, 2020
|
December 31, 2019
|
|||||||
ASSETS
|
||||||||
Real estate, net of accumulated depreciation
|
$
|
216,166,292
|
$
|
224,159,928
|
||||
Cash
|
1,917,162
|
3,006,645
|
||||||
Segregated cash and other escrows
|
10,644,343
|
13,036,134
|
||||||
In-place and other lease values, net of accumulated amortization of
|
|
|
||||||
$39,462,415 and $39,238,904, respectively
|
-
|
223,511
|
||||||
Tenant account receivable
|
||||||||
Current
|
447,818
|
507,467
|
||||||
Unbilled straight-line rent
|
19,618,007
|
16,625,604
|
||||||
Prepaid expenses and other assets
|
996,760
|
456,149
|
||||||
Deferred leasing costs, net of accumulated amortization of $11,279,299
|
||||||||
and $8,747,598, respectively
|
17,035,105
|
19,566,806
|
||||||
$
|
266,825,487
|
$
|
277,582,244
|
|||||
LIABILITIES AND MEMBERS' DEFICIT
|
||||||||
Lease financing obligation, including accrued interest of $4,519,883
|
|
|
|
|
||||
and $3,676,289, less unamortized value of deferred lease
|
||||||||
financing costs of $8,688,137 and $8,781,489, respectively
|
$ |
215,831,746
|
$ |
214,894,800
|
||||
Notes payable
|
17,000,000
|
10,698,891
|
||||||
Mortgage payable, net of unamortized deferred financing costs of
|
|
|
||||||
$1,171,575 and $1,782,839, respectively
|
173,828,425
|
173,217,161
|
||||||
Accounts payable, accrued expenses and other liabilities
|
7,356,089
|
10,204,136
|
||||||
Below market lease values, net of accumulated amortization of
|
||||||||
$48,377,197 and $47,539,090, respectively
|
-
|
838,107
|
||||||
414,016,260
|
409,853,095
|
|||||||
Members' deficit
|
(147,190,773
|
)
|
(132,270,851
|
)
|
||||
$
|
266,825,487
|
$
|
277,582,244
|
300 River Holdings, LLC
|
|||||
(a Delaware limited liability company)
|
|||||
For The Years Ended December 31,
|
2020
|
2019
|
2018
|
||||||||||
Revenue:
|
||||||||||||
Base rent
|
$
|
25,362,370
|
$
|
25,091,596
|
$
|
19,912,661
|
||||||
Escalation and other income
|
20,534,157
|
17,333,020
|
12,429,451
|
|||||||||
Amortization of acquired below market leases
|
838,107
|
495,931
|
516,929
|
|||||||||
46,734,634
|
42,920,547
|
32,859,041
|
||||||||||
Expenses:
|
||||||||||||
Depreciation and amortization
|
14,989,215
|
14,174,470
|
12,375,251
|
|||||||||
Operating expenses
|
14,354,171
|
13,158,869
|
12,844,531
|
|||||||||
Real estate taxes
|
6,769,280
|
7,901,058
|
4,188,424
|
|||||||||
Management fees
|
1,481,895
|
1,221,311
|
1,068,504
|
|||||||||
37,594,561
|
36,455,708
|
30,476,710
|
||||||||||
Operating income
|
9,140,073
|
6,464,839
|
2,382,331
|
|||||||||
Interest including amortization of deferred financing costs of $704,616, $704,616, and $755,554, respectively and related
party interest of $1,870,373, $776,151, and $14,729 respectively |
(24,059,995
|
)
|
(22,660,043
|
)
|
(21,682,362
|
)
|
||||||
Net loss
|
$
|
(14,919,922
|
)
|
$
|
(16,195,204
|
)
|
$
|
(19,300,031
|
)
|
300 River Holdings, LLC
|
|||
(a Delaware limited liability company)
|
|||
Balance - December 31, 2017
|
$
|
(96,764,308
|
)
|
|
Net loss
|
(19,300,031
|
)
|
||
Distributions
|
(11,308
|
)
|
||
Balance - December 31, 2018
|
$
|
(116,075,647
|
)
|
|
Net loss
|
(16,195,204
|
)
|
||
Balance - December 31, 2019
|
$
|
(132,270,851
|
)
|
|
Net loss
|
(14,919,922
|
)
|
||
Balance - December 31, 2020
|
$
|
(147,190,773
|
)
|
300 River Holdings, LLC
|
||||||
(a Delaware limited liability company)
|
||||||
Year Ended December 31,
|
Amounts included in segregated cash and other escrows as of December 31, 2020, 2019, and 2018 represent tenant security deposits, cash received through the Company's lockbox account and monies
required to be set aside by the Mortgage in connection with the Mortgage note payable.
|
|
• |
South Riverside Building LLC (the "Building LLC")
|
|
• |
South Riverside Mezz LLC (the “Mezz LLC”)
|
|
• |
300 Riverside Master Lease LLC (the “Master Lease LLC”)
|
[1] |
Basis of presentation
|
[2] |
Use of estimates:
|
[3] |
Concentration of credit risk:
|
[4] |
Deferred costs:
|
300 RIVER HOLDINGS, LLC
(a Delaware limited liability company)
|
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
|
Year Ending | Deferred | |||
December 31,
|
Leasing Costs | |||
2021
|
$
|
2,114,000
|
||
2022
|
2,113,000
|
|||
2023
|
2,107,000
|
|||
2024
|
2,079,000
|
|||
2025
|
2,022,000
|
[5] |
Real estate:
|
[6] |
Purchase accounting for acquisition of real estate:
|
300 RIVER HOLDINGS, LLC
(a Delaware limited liability company)
|
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
|
[7] |
Revenue recognition:
|
[8] |
Income taxes:
|
[9] |
Debt issuance costs:
|
[10] |
Subsequent events:
|
300 RIVER HOLDINGS, LLC
(a Delaware limited liability company)
|
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
|
December 31,
|
||||||||
2020
|
2019
|
|||||||
Leasehold interest
|
$
|
25,310,232
|
$
|
25,310,232
|
||||
Building and improvements
|
177,320,972
|
177,320,972
|
||||||
Tenant improvements
|
102,171,510
|
97,931,143
|
||||||
Equipment
|
1,729,420
|
1,729,420
|
||||||
306,532,134
|
302,291,767
|
|||||||
Less: accumulated depreciation
|
(90,365,842
|
)
|
(78,131,839
|
)
|
||||
$
|
216,166,292
|
$
|
224,159,928
|
December 31,
|
||||||||
2020
|
2019
|
|||||||
In-place and other lease values
|
$
|
39,462,415
|
$
|
39,462,415
|
||||
Less: accumulated amortization
|
(39,462,415
|
)
|
(39,238,904
|
)
|
||||
$
|
-
|
$
|
223,511
|
|||||
December 31,
|
||||||||
2020
|
2019
|
|||||||
Below market lease values
|
$
|
(48,377,197
|
)
|
$
|
(48,377,197
|
)
|
||
Less: accumulated amortization
|
48,377,197
|
47,539,090
|
||||||
$
|
-
|
$
|
(838,107
|
)
|
300 RIVER HOLDINGS, LLC
(a Delaware limited liability company)
|
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
|
December 31,
|
||||||||||||
Rate
|
2020
|
2019
|
||||||||||
A-Note
|
4.61
|
%*
|
$
|
100,000,000
|
$
|
100,000,000
|
||||||
B-Note
|
5.80
|
%*
|
50,000,000
|
50,000,000
|
||||||||
Mezz Note
|
8.46
|
%*
|
25,000,000
|
25,000,000
|
||||||||
175,000,000
|
175,000,000
|
|||||||||||
Less: unamortized debt issuance costs
|
(1,171,575
|
)
|
(1,782,839
|
)
|
||||||||
$
|
173,828,425
|
$
|
173,217,161
|
[1]
|
Senior notes:
|
300 RIVER HOLDINGS, LLC
(a Delaware limited liability company)
|
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
|
[2]
|
Mezz-Note:
|
[1] |
Space in the Property is leased to various tenants under operating leases which generally provide for renewal options and additional rentals based on increases in real estate taxes and certain operating expenses.
|
[2] |
Base rent from the two largest tenants in the Property (who collectively occupy approximately 25% of the building's rentable square footage during 2020) accounted for approximately 30% of the building's base rental income for
the year ended December 31, 2020. The leases with such tenants expire from April of 2026 through June of 2031. For the year ended December 31, 2019, base rent from the two largest tenants in the Property (who collectively occupy
approximately 30% of the building's rentable square footage during 2019) accounted for approximately 36% of the building's base rental income For the year ended December 31, 2018, base rent from the largest tenants in the
Property (who collectively occupied approximately 25% of the building's rentable square footage during 2018) accounted for approximately 36% of the building's base rental income.
|
300 RIVER HOLDINGS, LLC
(a Delaware limited liability company)
|
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
|
[3] |
As of December 31, 2020, future minimum rentals under the Company's operating leases with its tenants, for the next five years and thereafter are approximately as follows:
|
Total
|
||||
2021
|
$
|
24,381,000
|
||
2022
|
24,730,000
|
|||
2023
|
23,795,000
|
|||
2024
|
22,580,000
|
|||
2025
|
22,486,000
|
|||
Thereafter
|
91,684,000
|
|||
$
|
209,656,000
|
Date: April 27, 2021
|
OPTIBASE LTD.
|
|
By: /s/ [Amir Philips]
|
||
Name: Amir Philips
|
||
Title: Chief Executive Officer
|
Exhibit
Number
|
Description of Document
|
4.2
|
1999 Israel Share Option Plan, as amended (incorporated by reference to exhibits filed with the Registrant’s Annual Report on Form 20-F for
the fiscal year ended December 31, 1999).
|
4.3
|
102 Plan (incorporated by reference to exhibits filed with the Registrant’s Annual Report on Form 20-F for the fiscal year ended December
31, 1999).
|
4.16 | |
|
❖ |
the avoidance of any conflict of interest between the director’s or officer’s position with the company and any other position he or she fulfills or with his or her
personal affairs;
|
|
❖ |
the avoidance of any act in competition with the company’s business;
|
|
❖ |
the avoidance of exploiting any of the company’s business opportunities in order to gain a personal advantage for himself or for others; and
|
|
❖ |
the disclosure to the company of any information and documentation relating to the company’s affairs obtained by the director or officer due to his or her position with
the company.
|
Exhibit 4.7
FRAMEWORK AGREEMENT FOR MORTGAGE LOAN
between
Eldista GmbH, rue des Pierres-du-Niton 17, c/o INTEREXPERTS SA, 1207 Genève
(hereinafter referred to as the “Borrower”)
and
CREDIT SUISSE (Switzerland) Ltd.
Mailing address: | SGLB 8, 8070 Zurich |
Contact address: | Uetlibergstrasse 231, 8045 Zurich |
(the lender, hereinafter referred to as the “Bank”)
Amount of Credit Facility | CHF 83’500’000.00 |
The amount of the credit facility is reduced by the sum of the amortizations and other loan repayments made. |
Utilization | This credit facility may be utilized as follows: |
− | in the form of mortgage loans in CHF with terms of 1 to maximum 10 years |
− | in the form of mortgage-backed fixed advances in CHF with terms of 3, 6, or 12 months |
− | in the form of mortgage-backed fixed advances in USD with terms of maximum 3 months |
Use in foreign currency may only occur if the resulting foreign exchange risk is hedged through a separate OTC transaction in the same currency and with the same term and nominal (see also “Conditions for utilization of mortgage-backed fixed advances in foreign currency”). The form of these mandatory OTC hedging transactions will be agreed together with the Bank. |
The type and term of the loan are mutually agreed by the Borrower and the Bank within the scope of the available credit facility. |
Such agreement is made without complying with any requirements as to form; an oral agreement, in particular, is sufficient to be binding. The agreement will be confirmed by the Bank in writing, but without a signature. |
The use of the individual credit products is in each case limited by the credit amount available at that time. The Bank reserves the right to reject individual transactions in connection with the above credit products. In particular, the Bank does not commit to the conclusion of fixed advances in foreign currency and/or the conclusion of OTC transactions. |
|
Page 1/11 |
Conditions for utilization of mortgage-backed fixed advances in foreign currency | The use of mortgage-backed fixed advances in foreign currency can only take place if: | |
− | at the same time as the use in foreign currency, a corresponding OTC transaction for currency hedging is concluded with the Bank in the same currency and with the same nominal and term as the corresponding fixed advance in foreign currency; |
If a fixed advance in foreign currency agreed with the Bank has a shorter term than the corresponding OTC transaction, the Borrower undertakes, when such a fixed advance falls due for payment, to extend this until the term of the corresponding OTC transaction has ended. |
OTC transactions |
Prior to concluding an OTC transaction, the Bank may request that the Swiss Master Agreement for OTC derivative transactions (“OTC CH Master Agreement”) or another OTC Master Agreement confirmed by the Bank (each an “OTC Master Agreement”) is formally agreed between the Borrower and the Bank. However, there is no obligation on the Bank to conclude “OTC transactions” (see “OTC CH Master Agreement”). The “OTC CH Master Agreement” also applies to any other “OTC transactions” concluded between the Bank and the Borrower outside and independently of this Master Agreement. |
Repayment / Prolongation | Fixed-term loans must be repaid at the end of the term or the aggregate term unless the Borrower has entered into a new agreement with the Bank at least two bank working days before this date. If no such agreement has been made and the framework agreement has not been terminated, the Bank is entitled, but not obliged, to convert the loan into an adjustable-rate mortgage; this is made known to the Borrower in writing, however without a signature. |
For a credit product with an aggregate term, if the Borrower did not agree with the Bank a new partial term for the continued use of the product or the use of another mortgage product by three bank working days before the expiry of a partial term at the latest, the product is automatically prolonged with an adjusted interest rate (see “Interest Rate” below) and the same partial term, which may not, however, exceed the final date of the aggregate term. |
Amortization | The mortgage amortization shall be CHF 2’000’000.00 per year, payable quarterly, for the first time on 31.03.2020. |
Installments and method of payment as well as modifications to the amortization amount are mutually agreed. Such agreement is made without complying with any requirements as to form; an oral agreement, in particular, is sufficient to be binding. The agreement will be confirmed by the Bank in writing, but without a signature. |
|
Page 2/11 |
Interest rate | The interest rate of loans that do not have a fixed term is determined by the Bank. The interest rate is based on the prevailing conditions in the money and capital markets, the risk assessment of the Bank and the margin determined by the Bank. The Bank may at any time and with immediate effect adjust the interest rate to reflect changes in these elements. |
The interest rate of fixed-term loans is mutually agreed by the Borrower and the Bank. This agreement is made without complying with any requirements as to form; an oral agreement, in particular, is sufficient to be binding. |
For credit products with an aggregate term, the calculation of the interest rate is based on the base rate to be agreed for the currency in question and the applicable partial term. The base rate is increased by an agreed surcharge of 0.75% p.a. for drawings in CHF and 1.05% p.a. for drawings in USD, which takes account of the Bank’s margin as well as the risk assessment. In the event of automatic prolongation, the base rate valid for the currency and new partial term in question and the surcharge for this base rate apply. Upon any extension, the Bank is entitled to adjust this surcharge on the basis of a new risk assessment. |
If the agreed base rate for an entire term is unavailable or no longer available for the requested currency and partial term prior to expiration of this overall term, is no longer published, or no longer the market standard, or if the bank declares in good faith and on commercially reasonable grounds that the base rate will be replaced, in particular if the bank no longer uses the base rate as its standard base rate for similar credit products, or if it is no longer offered by the bank at all, or if a corresponding public announcement is made (i.e. the publication of information stating that the base rate will be discontinued by the authority that manages the base rate, or by a successor authority, or that the base rate is no longer representative or can no longer be used), a replacement for the agreed base rate will be specified by the bank and any risk premium and other adjustments made. If the borrower does not agree with this proposal, the borrower has the option of switching the current utilized credit product, on expiration of the partial term, to a different credit product in accordance with the provisions of the applicable product agreement. |
If the borrower does not accept the bank’s proposal, or convert the current utilized credit product, the bank is entitled to convert the current utilized credit product into a loan with a fixed term up to the end of the overall term. The deadline for the acceptance of the proposal made by the bank for a successor product or the notice regarding conversion of the current utilized credit product is 30 days following submission of the proposal for a replacement product. |
In the event of a negative base rate, a base rate of 0.00% will be used to calculate the interest rate. |
|
Page 3/11 |
If the currently valid equity capital requirements are increased through measures by authorities or provisions of law, the Bank is entitled to increase the applicable interest rate by the amount of the resulting additional borrowing costs. |
Interest due dates | March 31, June 30, September 30, and December 31, or in accordance with the separate agreements (see “Utilization” above) |
Interest on arrears | If the Borrower does not pay the interest by the interest due date, an interest penalty of 2% above the agreed interest rate shall be paid on the amount in arrears as from the due date. |
Interest payments and amortization payments | On the due date, interest payments and amortization payments shall be debited to an account with the Bank. |
The Borrower undertakes to make the applicable amount available in this account on the due date. |
The Bank’s rights under the collateral agreement extend to cover any debit balance on such an account arising from the amounts debited for the interest payments or amortization payments. |
Fees | A one-time arrangement fee of CHF 10’000.00 will be payable upon signing of this framework agreement. The Bank is entitled to debit the Borrower’s account. |
The Bank may charge fees for reviewing, changing, monitoring and managing the credit facility and the individual loans as well as for extraordinary expenses. In such cases the combined amount shall not exceed CHF 10’000.00 per calendar year. |
Mortgage collateral | - | CHF 81’666’000.00 first ranking bearer mortgage note, no prior ranking, |
- | CHF 41’959’000.00 third ranking bearer mortgage note, prior ranking CHF 82’523’922.00, |
on business premises “CTN”, Ch. des Aulx 8 - 18, 1228 Plans-les- Ouates, land register Plans-les-Ouates, land register folio 11095 (hereinafter referred to as “CTN”). |
Transfer of ownership by way of collateral in accordance with the “Collateral Agreement” (to be signed) |
If collateral is provided for more than one claim, the Bank may decide at its discretion, which claim(s) will be set off against sales proceeds or any other income derived from the collateral. |
Scope of security | The claims for capital payment from the mortgage notes provide the Bank with security for all claims against the Borrower arising from any agreements or contracts already concluded or to be entered into in the future within the context of business relationships, as well as for all costs connected with such claims and their interest, as well as the commissions, charges, fees, costs, other debits and early repayment penalties, etc. These claims for capital payment under the mortgage note also provide collateral for any right of the Bank to be indemnified and held harmless, especially when claims are asserted against it by third parties (including issuers, liquidators, legal administrators, bankruptcy administrators, institutions, and government authorities) in connection with transactions conducted or assets held on behalf of the Client (hereinafter referred to as secured claims). In contrast, the interest on the mortgage note claims provides the Bank with security for all interest on the secured claims. |
|
Page 4/11 |
Multiple claims | In the event of multiple secured claims against the Borrower, the Bank shall determine to which of these claims the mortgage notes or their realization proceeds are to be allocated. |
Acknowledgement of debt | The Provider of Collateral hereby explicitly acknowledge his financial liability arising from the mortgage notes assigned to the Bank amounting to the sum of the claims for capital payment, in addition to the current and three-year accrued interest. This acknowledgement of debt is valid irrespective of any stipulations in the mortgage deeds (if any). If the Provider of Collateral is not the mortgage note debtor, he hereby declare joint and several liability for the debt to the extent detailed above. The interest rate of the mortgage note claims is stipulated to be 5%; should a higher interest or maximum interest rate have been determined for a mortgage note, this shall be regarded as the interest rate of the mortgage note claim. |
Deed claims and credit claims | The Bank may enforce the mortgage note claims instead of the secured claims. The Bank is also entitled to enforce the secured claims prior to and independently of the mortgage note claims. |
Calling in mortgage note claims | Should the Borrower default on at least one of the secured claims, the Bank is entitled to call in the mortgage notes with a period of notice of three months to the end of a month. Insofar as the Borrower(s) default(s) on the payment of interest or amortization, the Bank is entitled to call in the payment with immediate effect. This shall apply irrespective of any stipulations in the mortgage deeds (if any). |
Increase and conversion of mortgage notes | In the event that a mortgage note is increased or converted into another type of mortgage note, this Agreement shall also apply. |
Reassignment of mortgage notes | As soon as the Bank is no longer in possession of any secured claim(s) against the Borrower, the Bank is obliged to transfer the mortgage notes back to the assignor(s) or to have them transferred by the trustee. Should a third party who has provided personal or tangible security (e.g. surety bond, third-party pledge) satisfy the Bank’s claims, the Bank shall be entitled to transfer the mortgage notes to this third party. |
|
Page 5/11 |
Further collateral | Deed of Assignment in favour of the Bank of any rent payments from the real estate property CTN, Ch. des Aulx 8 – 18, 1228 Plans-les-Ouates, covering the amount of interest and capital repayment dated 05.10.2011. |
If collateral is provided for more than one claim, the Bank may decide at its discretion, which claim(s) will be set off against sales proceeds or any other income derived from the collateral. |
Risks | The Bank expressly informs the Borrower that taking up loans by using securities and/or cash account balances as collateral and/or the utilization of the loan proceeds (leveraging) for investments in financial instruments of any kind (securities, derivatives, OTC / TOFF, FX etc.) also involves an interest rate, price and currency risk. |
The Borrower is made aware of the following risks in particular: In case of adverse market developments, the assets pledged as collateral may be insufficient to cover the outstanding credit in full, so that at a time that is unfavorable for the Borrower the collateral may have to be realized and the open positions may have to be closed out respectively liquidated. To the extent, the realization of the available collateral is insufficient to cover the Bank’s claim from the loan; the Borrower remains based on the credit relationship personally liable vis-à-vis the Bank for the full discharge of the remaining debt. |
Release from banking customer secrecy | If the Bank provides fiduciary declarations upon the instructions of the Borrower, the Bank shall be released from banking customer secrecy vis- à-vis the recipients of these declarations with respect to the construction loan relationship. This release shall continue to apply after the end of the loan relationship between the Borrower and the Bank. |
Termination of the framework agreement | This framework agreement may be terminated by either party at any time with immediate effect. Upon termination of the framework agreement, maturing loans are not renewed and no new loans will be granted. However, loans that were previously agreed will remain unaffected by the termination of this framework agreement. |
The termination of a loan granted under this framework agreement does not automatically result in the termination of the framework agreement. |
Termination of individual loans
Ordinary termination |
Fixed-term loans granted under this framework agreement can not be terminated before the end of the term or the aggregate term, unless otherwise agreed in writing. Loans with unspecified terms can be terminated by either party at any time with 3 months’ notice. |
Extraordinary
termination |
The Bank reserves the right to terminate all loans granted under this agreement with immediate effect at any time if: |
- | the Borrower goes bankrupt or is granted a bankruptcy moratorium; |
- | the Borrower has breached any other obligation under this framework agreement and/or under any agreements based hereon and has failed or was unable to restore the proper contractual situation within 60 calendar days after written notice from the Bank; |
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- | the Borrower is in arrears on interest payments or mortgage amortizations for more than 60 calendar days after they are due; |
- | the mortgaged property is insufficiently insured against fire and damage caused by natural hazards; |
- | the value of the mortgaged property is significantly impaired, especially due to a casualty or insufficient maintenance; |
- | the use of the mortgaged property is materially altered without the Bank’s consent; |
- | there has been a change in direct or indirect ownership/control in respect of the Borrower / holding company resulting in Optibase Ltd. owning less than 51% of the Borrower’s / holding company’s shares and/or resulting in an ownership structure which at the Bank’s sole discretion is not acceptable for the Bank; |
- | owing to default and/or maturity clauses, another loan or similar obligation, exceeding the total amount of CHF 1’000’000.00, entered into by the Borrower has been terminated early; |
- | in the Bank’s view, asset and/or revenue situation of the Borrower has deteriorated significantly; |
- | obligations of the borrower vis-à-vis the bank in connection with OTC transactions entered into by the borrower with the bank have not been fulfilled at the point of maturity; |
- | another loan or similar obligation (e.g. OTC transaction) entered into by the Borrower with the Bank has been prematurely terminated on the basis of default and/or maturity clauses; |
- | OTC transactions for currency hedging that were simultaneously concluded with a corresponding use in the same foreign currency as the fixed advance (see “Conditions for utilization of mortgage-backed fixed advances in foreign currency”) have been prematurely cancelled/closed out and the resulting obligations of the Borrower vis- à-vis the Bank have not been fulfilled at maturity and the associated fixed advance in foreign currency is not repaid at the same time. |
Transfer of ownership or forced sale | In the event of transfer of ownership or forced sale of the mortgaged property, all claims in connection with this framework agreement shall fall due for repayment on the date of transfer of ownership or on the date of the public auction, as applicable. |
Statement of costs in the event of early termination of fixed-term loans | If any fixed-term loans granted under this framework agreement are terminated early, the Bank will credit or debit the Borrower with the interest gain or interest shortfall accrued thereon. This is calculated based on the difference between the contractual interest rate which applies at the time of termination and the interest rate that, in the Bank’s view, can be earned on an investment with the same residual term (i.e. date of termination to expiry of interest period of such loan/advance) on the money or capital markets at the time of termination, multiplied by the outstanding loan amount and the residual term. Any surplus in favor of the Borrower is set off against the fee for the Bank’s expenses described below. |
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Page 7/11 |
In addition a flat fee of 0.1% of the loan amount, but not less than CHF 1’000.00, is owed for the Bank’s expenses. |
By way of example: |
Example 1 |
Early repayment of a mortgage loan of CHF 10mn (original term 2 years) with a reference rate of 3.0% (reference rate = internal funding rate) by the Borrower after 1 year and loan is reinvested by the Bank for residual term (1 year with a reinvestment rate of 2.5%). Interest is calculated in accordance with international conventions (actual number of days / 360). |
(i) | Refinancing portion of early repayment result: 0.5% loss on CHF 10mn reinvestment (reference rate ./. reinvestment rate) for residual term of 1 year (CHF 10mn x 365/360 x 0.5%) equals CHF 50’694.44. |
(ii) | Early repayment processing flat fee of 0.1% of the loan amount: CHF 10mn x 0.1% equals CHF 10’000.00. |
(iii) | Total early repayment penalty: CHF 60’694.44. |
Example 2 |
Early repayment of a fixed advance of CHF 10mn with an interest period of 3 months with a base rate of 1.0% by the Borrower after 1 month and loan is reinvested by the Bank for residual term (2 months a reinvestment rate of 0.5%). Interest is calculated in accordance with international conventions (actual number of days / 360). |
(i) | Refinancing portion of early repayment result: 0.5% loss on CHF 10mn reinvestment (base rate ./. reinvestment rate) for residual term of 2 months (CHF 10mn x 60/360 x 0.5%) equals CHF 8’333.33. |
(ii) | Early repayment processing flat fee of 0.1% of the loan amount: CHF 10mn x 0.1% equals CHF 10’000.00. |
(iii) | Total early repayment penalty: CHF 18’333.33. |
As the exact early repayment penalty is calculated as the present value, so the individual payment flows are discounted, the above calculation is merely an approximation. |
Insurance | The mortgaged property shall be adequately insured against fire and natural hazards. The Bank is entitled to ask the Borrower at any time for a copy of the current certificate of buildings insurance and/or the terms applicable to the insurance. |
Transferability | The Bank is authorized to transfer or assign all or any part of this loan relationship, with all collateral and ancillary rights, to a third party in Switzerland or abroad, for example, for the purposes of securitization or outsourcing. The right to further transfer the relationship or to transfer it back remains reserved. |
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The Bank may at any time make data and information associated with the loan relationship available to such a third party and other involved parties, such as rating agencies and trust companies; these parties shall be obliged to keep such information confidential. The Borrower expressly declares his/her agreement with the procedure described above. |
Important Note regarding Transferability: |
The significance of the provisions relating to transferability, and the impact on bank client confidentiality and data protection are explained in the Information Brochure. The Information Brochure can also be found online at (credit-suisse.com/legalnotes). |
The signatory or signatories of this Framework Agreement for Loans confirm(s) that the Bank’s Information Brochure has been received, read, understood, and accepted. |
Borrower’s affirmative obligations | − |
Obligation to provide information
The Borrower is obliged to inform the Bank without delay of current business developments and significant changes in its management and in its direct and/or indirect
ownership/control as well as other significant changes that could influence the Borrower’s financial situation.
|
In particular, the Borrower will submit the following documents to the Bank: |
- Annually: |
- | Balance sheet, profit and loss statement and the notes thereto, as well as the auditor’s report within four months of the financial year-end |
- | Current tenant schedule including respective rent of the real estate property “CTN” within four months of the financial year- end. |
Borrower’s Positive and Negative Obligations | − | The Borrower undertakes, to the extent permitted by law, to refrain from providing new or additional collateral exceeding the total amount of CHF 2’000’000.00 in favour of a third party to secure existing or future liabilities of the Borrower or a third party. |
− | The Borrower undertakes, to the extent permitted by law, to refrain from establishing additional mortgage notes on the real estate property “CTN”. |
− | Distributions in form of dividends and/or shareholder loans are only permitted in line with the available yearly profit after amortisation of the loan and interest payments and less yearly investments that are necessary for a sustainable value retention for the real estate property “CTN”. |
− | The Borrower will undertake the necessary maintenance/investments to avoid any value reduction caused by insufficient investments into the property “CTN”. |
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− | Loans to third parties (excluding shareholders) by the Borrower are not permitted. |
− | The Borrower undertakes not to enter into any further credit or lease financing transactions without the written approval of the Bank. Notwithstanding the foregoing are credit or lease financing transactions up to the total amount of CHF 2’000’000.00 over the lifetime of this Framework Agreement. |
Additional agreements and special contractual terms | The Borrower will have all rent payments of the real estate property “CTN” made directly into an account at the Bank. In general, the Borrower undertakes to use the Bank for his account movements. |
The additional agreements that will be concluded or have already been concluded in accordance with the terms of this framework agreement and the agreed loan products (including the special contractual terms applicable to the individual loans) form an integral part of this framework agreement. |
General conditions | The Bank’s “General Conditions including the Safe Custody Regulations” supplement this framework agreement. |
Place of performance | The place of performance is the location of the Swiss branch of the Bank with which the Borrower has a contractual relationship. For borrowers whose present or future domicile is outside Switzerland, the place of performance is also the place of debt enforcement (“special domicile” as defined in Art. 50 par. 2 of the Federal Law on Debt Collection and Bankruptcy). |
Applicable law and place of jurisdiction | This framework agreement and the agreements based on this framework agreement are subject to and shall be construed in accordance with Swiss law. The Borrower recognizes the exclusive jurisdiction of the courts of Zurich or of the location of the branch of the Bank with which the contractual relationship exists. The Bank also has the right to bring legal action against the Borrower before any other competent court. |
Relationship to existing agreements | This framework agreement replaces the loan agreement dated 05.10.2011, but shall not effect any novation of the Borrower’s existing credit obligations pursuant to Art. 116 of the Swiss Code of Obligations. |
Issuance/Signing of Agreement | This framework agreement has been drawn up and signed in duplicate. The Borrower and the Bank each receive one copy. |
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CREDIT SUISSE (Switzerland) Ltd. | Eldista GmbH |
Ralf Schütz | Stefan Willi | Borrower’s signature |
Zurich, January 8, 2020 | Place and Date |
Agreement “Collateral Agreement”
(still to be signed by the Borrower)
“Information Brochure on Mortgage-Backed Credits (Mortgages)”
General Conditions incl. Safe Custody Regulations
Page 11/11
Exhibit 4.8
CREDIT SUISSE (Switzerland) Ltd.
Paradeplatz 8
|
Agreement (Collateral Agreement)
between
Eldista GmbH |
rue des Pierres-du-Niton 17, c/o INTEREXPERTS SA |
1207 Genève |
(hereinafter referred to as the Provider(s) of Collateral)
and Credit Suisse (Switzerland) Ltd. (hereinafter referred to as the Bank).
1. The Bank holds or acquires creditors’ rights to the bearer, registered, and paperless mortgage notes or bearer bonds with mortgage assignment (hereinafter referred to as mortgage notes) directly or through a trustee. The Bank is authorized to transfer existing mortgage notes either individually or collectively to a trustee, or to request, if mortgage notes are to be newly established, that they be established directly in favor of the trustee. The trustee holds the mortgage notes in its own name but on behalf of the Bank. The Bank may exercise all rights granted to it on the basis of the present agreement either on its own or by way of the trustee.
- CHF 81’666’000.00 first ranking bearer mortgage note, dated 18.05.2007 |
no prior ranking, |
- CHF 41’959’000.00 third ranking bearer mortgage note, dated 18.05.2007 |
prior ranking CHF 82’523’922.00 |
on business premises “CTN”, Ch. des Aulx 8 - 18, 1228 Plan-les-Ouates, |
land register Plan-les-Ouates, land register folio 11095 |
Important Note regarding the Appointment of a Trustee:
The significance of the appointment of a trustee is explained in the “Information Brochure on Mortgage-Backed Credits (Mortgages)” (hereinafter referred to as the Information Brochure). The Information Brochure can also be found online at (credit-suisse.com/legalnotes).
The signatory or signatories of this agreement (Collateral Agreement) confirm(s) that the Bank’s Information Brochure has been received, read, understood, and accepted.
2. The claims for capital payment from the mortgage notes provide the Bank with security for all claims against as individual debtor(s) and/or joint debtor(s) (hereinafter referred to as the Borrower) arising from any agreements or contracts already concluded or to be entered into in the future within the context of business relationships, as well as for all costs connected with such claims and their interest, as well as the commissions, charges, fees, costs, other debits, and early repayment penalties, etc. These claims for capital payment under the mortgage note also provide collateral for any right of the Bank to be indemnified and held harmless, especially when claims are asserted against it by third parties (including issuers, liquidators, legal administrators, bankruptcy administrators, institutions, and government authorities) in connection with transactions conducted or assets held on behalf of the Client (herein-after referred to as secured claims). In contrast, the interest on the mortgage note claims provides the Bank with security for all interest on the secured claims.
Eldista GmbH, rue des Pierres-du-Niton 17, c/o INTEREXPERTS SA, 1207 Genève |
To be completed by the Bank
|
Signature checked: Date, signature and stamp |
|||
161849 | ||||
Client No. (CIF) _0251-1732456-0 | ||||
|
Page 1/3 |
3. In the event of multiple secured claims against one or several Borrowers, the Bank shall determine to which of these claims the mortgage notes or their realization proceeds are to be allocated.
4. The Provider(s) of Collateral hereby explicitly acknowledge(s) his/her/their personal (joint, in the event of several Providers of Collateral) financial liability arising from the mortgage notes assigned to the Bank amounting to the sum of the claims for capital payment, in addition to the current and three-year accrued interest. This acknowledgement of debt is valid irrespective of any stipulations the mortgage deeds (if any). If the Provider(s) of Collateral is/are not the mortgage note debtor(s), he/she/they hereby declare joint and several liability for the debt to the extent detailed above.
The Bank may enforce the mortgage note claims instead of the secured claims. The Bank is also entitled to enforce the secured claims prior to and independently of the mortgage note claims.
5. Should the Borrower default on at least one of the secured claims, the Bank is entitled to call in the mortgage notes with a period of notice of three months to the end of a month. Insofar as the Borrower(s) default(s) on the payment of interest or amortization, the Bank is entitled to call in the payment with immediate effect. This shall apply irrespective of any stipulations in the mortgage deeds (if any).
6. In the event that a mortgage note is increased or converted into another type of mortgage note, this Agreement shall also apply.
7. The interest rate of the mortgage note claims is stipulated to be 5%; should a higher interest or maximum interest rate have been determined for a mortgage note, this shall be regarded as the interest rate of the mortgage note claim.
8. If, on transfer of the pledged property, the new owner acquires both the mortgage note debt(s) and the secured debt(s), the Bank is entitled to transfer this agreement with all associated rights and obligations to the new owner.
9. As soon as the Bank is no longer in possession of any secured claim(s) against the Borrower, the Bank is obliged to transfer the mortgage notes back to the assignor(s) or to have them transferred by the trustee. Should a third party who has provided personal or tangible security (e.g. surety bond, third-party pledge) satisfy the Bank’s claims, the Bank shall be entitled to transfer the mortgage notes to this third party.
10. The Bank is authorised to transfer or assign all or part of the rights and obligations arising from this security agreement to a third party in Switzerland or abroad for the purposes of securitisation or outsourcing the claims for which security has been provided, for example. The right to further transfer the relationship or to transfer it back to the Bank is reserved.
The Bank may make information associated with the security agreement available to such a third party and other involved parties, such as rating agencies or trust companies, at any time; these parties shall be obliged to keep such information confidential. The Provider(s) of Collateral expressly declare(s) his/her/their agreement with the procedure described above.
Important Note regarding Transferability:
The significance of the provisions relating to transferability, and the impact on bank client confidentiality and data protection are explained in the Information Brochure. The Information Brochure can also be found online at (credit-suisse.com/legalnotes).
The signatory or signatories of this agreement (Collateral Agreement) confirm(s) that the Bank’s Information Brochure has been received, read, understood, and accepted.
To be completed by the Bank | ||
161849 Client No. (CIF) 0251-1732456-0 |
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11. The place of performance is the location specified in the Bank’s address. For Providers of Collateral whose current or future domicile is outside Switzerland, the place of performance is also the place of enforcement (special domicile pursuant to Art. 50 para. 2 of the Federal Law on Debt Enforcement and Bankruptcy).
This agreement is governed by Swiss law, to the exclusion of the conflict of laws provisions of Swiss private inter-national law.
The exclusive place of jurisdiction for all legal proceedings is Zurich or the place of business of the Swiss branch of the Bank with which the contractual relationship exists, or the respondent’s registered office or place of domicile, or the location of the concerned property(ies). Mandatory places of jurisdiction prescribed by law remain reserved.
Place, date | The Provider(s) of Collateral | |
For CREDIT SUISSE (Switzerland) Ltd. | ||
Place, date | ||
Zürich, January 8, 2020 | ||
To be completed by the Bank | ||
161849 Client No. (CIF) 0251-1732456-0 |
Page 3/3
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(a) |
Collateral Assignment of Contracts, Etc.: That certain Amended and Restated Collateral Assignment of Contracts, Etc. dated as of November 17, 2017, from Borrower in favor of Lender, as modified by that certain Second Amendment and
Ratification of Loan Agreement and Other Loan Documents dated as of March 31, 2020, as the same may be further amended, restated, modified or replaced from time to time.
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|
(b) |
Environmental Indemnity Agreement: That certain Amended and Restated Environmental Compliance and Indemnity Agreement dated as of November 17, 2017, from Borrower and Guarantor in favor of Lender, as modified by that certain Second
Amendment and Ratification of Loan Agreement and Other Loan Documents dated as of March 31, 2020, as the same may be further amended, restated, modified or replaced from time to time.
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|
(c) |
Pledged Collateral Agreement: That certain Pledged Collateral Agreement dated as of November 17, 2017, from Borrower in favor of Lender, as modified by that certain Second Amendment and Ratification of Loan Agreement and Other Loan
Documents dated as of March 31, 2020, as the same may be further amended or modified from time to time.
|
(a) |
Loan: That certain term loan in the amount of EIGHT MILLION EIGHT HUNDRED TWENTY-SEVEN THOUSAND EIGHT HUNDRED FIFTY-FIVE AND 91/100 DOLLARS ($8,827,855.91), as evidenced by the Note
and secured by the Mortgage and other Loan Documents as provided herein.
|
(b) |
Loan Documents: Any and all documents evidencing, securing, or executed by Borrower and/or Guarantor in connection with the Loan, including, without limitation, the Note, the
Mortgage, the Guaranty, the Collateral Assignment of Contracts, Etc., the Pledged Collateral Agreement, the Environmental Indemnity Agreement and this Agreement.
|
(c) |
Maturity Date: Shall mean September 30, 2021.
|
|
BORROWER:
OPTIBASE REAL ESTATE MIAMI, LLC, a Delaware limited liability
company, acting by and through its Sole Member, to wit:
By: OPTIBASE, INC., a California corporation
By:___________________________________
Robert A. Feingold, Executive Vice President
LENDER:
CITY NATIONAL BANK OF FLORIDA
By: _______________________________________
Suhail Farooq, Vice President
|
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OPTIBASE, INC., a California corporation
By: ______________________________________
Robert A. Feingold, Executive Vice President
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A - 5
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A - 7
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A - 7
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A - 9
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A - 9
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A - 10
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1. |
Introduction
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2. |
Objectives
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2.1. |
To closely align the interests of the Executive Officers with those of Optibase's shareholders in order to enhance shareholder value;
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2.2. |
To provide the Executive Officers with a structured compensation package, putting the emphasis on a proper balance between the fixed components, i.e., the base salaries and benefits, and on the
variable compensation, such as bonuses and equity-based compensation in order to minimize potential conflicts between the interests of Executive Officers and those of Optibase;
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2.3. |
To strengthen the retention and the motivation of Executive Officers in the long term.
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3. |
Compensation structure and instruments
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• |
Base salary;
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• |
Benefits;
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• |
Cash bonuses;
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|
• |
Equity based compensation; and
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|
• |
Retirement and termination of service arrangements.
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4. |
Overall Compensation - Ratio Between Fixed and Variable Compensation
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5. |
Intra-Company Compensation Ratio
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6. |
Base Salary
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6.1. |
The base salary varies between Executive Officers (among themselves) and the Executive Chairman of the Board, and is individually determined by the Compensation Committee and the Board (unless other approvals are required under any
applicable law) according to the educational background, prior vocational experience, qualifications, role, business responsibilities, past performance and previous compensation arrangements of such
Executive Officer and Executive Chairman of the Board.
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6.2. |
The maximum monthly base salary for each of the following roles shall be as follows:
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(i) |
Chief Executive Officer ("CEO") – up to NIS 100,000 for a full time position
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(ii) |
CEO of the Company's subsidiary ("Subsidiary CEO") – up to NIS 90,000 for a full time position;
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(iii) |
Executive Officer who is not a director, CEO or Subsidiary CEO – up to NIS 50,000 for a full time position
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6.3. |
The Executive Chairman may be paid management fee in amount that shall not exceed NIS 50,000 per month.
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7. |
Benefits
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7.1. |
In addition to the base salary, the following benefits may be granted to the Executive Officers in order, among other things, to comply with legal requirements:
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|
• |
Vacation days in accordance with market practice and applicable law;
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• |
Sick days in accordance with market practice and applicable law;
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• |
Convalescence pay according to applicable law;
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• |
Monthly remuneration for a study fund, as allowed by applicable tax law and with reference to Optibase’s practice and common market practice;
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• |
Contribution by Optibase on behalf of the Executive Officer to an insurance policy or a pension fund, as allowed by applicable tax law and with reference to Optibase’s policies and procedures and common market practice; and
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• |
Contribution by Optibase on behalf of the Executive Officer towards work disability insurance, as allowed by applicable tax law and with reference to Optibase’s policies and procedures and common market practice.
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7.2. |
Optibase may offer additional benefits to its Executive Officers, including but not limited to: communication, company car and travel benefits, insurances, other benefits (such as newspaper
subscriptions, academic and professional studies), etc., including their gross up.
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7.3. |
Optibase may reimburse its Executive Officers and its Executive Chairman for reasonable work-related expenses incurred as part of their activities, including without limitations, meeting participation expenses, reimbursement of business
travel including a daily stipend when traveling and accommodation expenses. Optibase may provide advance payments to its Executive Officers in connection with work-related expenses.
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7.4. |
Non-Israeli Executive Officers may receive other similar, comparable or customary benefits as applicable in the relevant jurisdiction in which they are employed.
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8. |
Signing Bonus
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9. |
Annual Bonuses
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9.1. |
The payment of annual bonuses to the Executive Chairman and any Executive Officer for any particular fiscal year shall be subject to the fulfillment (in addition to the fulfillment of the applicable objectives set forth below as the case
may be) of any one of the two following criteria: (a) that Optibase's EBITDA was at least USD $10 million (on a consolidated basis) during such fiscal year; or (b) that Optibase's net profit for such fiscal year was at least USD $500,000,
net of equity gains or losses, and net of non-recurring expenses related to the purchase or disposal of real estate investments.
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9.2. |
The Compensation Committee and Board may decide, at their sole discretion, to grant annual bonuses to the Executive Chairman and the Executive Officers, subject to the fulfillment of the pre-conditions for payment of bonuses as detailed
in section 9.1 above.
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9.3. |
The annual bonus to the Executive Chairman and the CEO will be based on measurable criteria. The measurable criteria and their relative weight shall be determined by the Compensation Committee and the Board in respect of each calendar
year. These measurable criteria may include, inter alia, objectives relating to the annual income, annual profit (net profit, pre tax profit), budget, annual EBITDA, acquisition and/or disposal of
assets, financing, re-financing and fundraising.
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|
9.4. |
In addition, the Company may grant the CEO a bonus of up to three (3) monthly base salaries, at the sole discretion of the Compensation Committee and Board, based on the CEO's contribution to the Company.
|
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9.5. |
The Company may also grant, subject to the approval of the Compensation Committee and the Board, an annual bonus to its Executive Officers (other than the CEO) for their contribution to the Company. Such grants may be based in whole or
in part on discretion, provided that they do not exceed the ceiling specified in section 9.6 below.
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|
9.6. |
The annual bonus that may be paid to the Executive Officers for any fiscal year shall not exceed six (6) monthly base salaries to the CEO, and three (3) monthly base salaries to any other Executive Officer (excluding the CEO). The annual
bonus that may be paid to the Executive Chairman for any fiscal year shall not exceed two (2) monthly payments of management fee.
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9.7. |
The Board, following the recommendation of the Compensation Committee, shall be entitled to decrease the annual bonus to be paid to the Executive Chairman and/or Executive Officers based on measurable criteria (if such criteria were
determined) or cancel such grant of bonuses altogether in its sole discretion, even in the event measurable criteria were determined and met..
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10. |
Special Bonuses
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11. |
Pro Rata Payment
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12. |
Compensation Recovery ("Clawback")
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12.1. |
In the event of an accounting restatement, Optibase shall be entitled to recover from its Executive Chairman or Executive Officers the bonus compensation in the amount in which such bonus exceeded what would have been paid under the
financial statements, as restated, provided that a claim is made by Optibase prior to the third anniversary of fiscal year end of the restated financial statements.
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12.2. |
Notwithstanding the aforesaid, the compensation recovery will not be triggered in the following events:
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|
• |
The financial restatement is required due to changes in the applicable financial reporting standards; or
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|
• |
The Compensation Committee has determined that clawback proceedings in the specific case would be impossible, impractical or not commercially or legally efficient; or
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|
• |
The amount to be paid under the clawback proceedings is less than 10% of the relevant bonus received by the Executive Chairman or Executive Officer.
|
|
12.3. |
Nothing in this Section 12 derogates from any other "clawback" or similar provisions regarding disgorging of profits imposed on the Executive Chairman and Executive Officers by virtue of applicable securities laws.
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|
13. |
General and Objectives
|
|
13.1. |
The Compensation Committee and Board may grant from time to time equity-based compensation which will be individually determined and awarded according to the performance, educational background, prior business experience, qualifications,
role and the personal responsibilities of the Executive Officer. Equity-based compensation may also be awarded to the Directors, subject to the provisions of the Companies Law and the regulations thereunder and the receipt of all additional
approvals that may be required under the Companies Law.
|
|
13.2. |
The main objectives of the equity-based compensation is to enhance the alignment between the Executive Officers' and Directors' interests with the long term interests of Optibase and its shareholders, and to strengthen the retention and
the motivation of Executive Officers in the long term. In addition, since equity-based awards are structured to vest over several years, their incentive value to recipients is aligned with longer-term strategic plans.
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|
13.3. |
The equity based compensation offered by Optibase is intended to be in a form of share options, restricted shares and/or other equity based awards, such as RSUs, in accordance with the Company's incentive plan in place as may be updated
from time to time.
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|
14. |
Fair Market Value
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15. |
Additional Terms
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|
15.1. |
Subject to any applicable law, Optibase may determine, at the Compensation Committee and the Board’s discretion, the tax regime under which equity-based compensation may be granted, including a tax regime which will maximize the benefit
to the Executive Officers and Directors.
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|
15.2. |
All equity-based incentives granted to Executive Officers and Directors shall be subject to vesting periods in order to promote long-term retention of such recipients. Unless otherwise determined in a specific award agreement approved by
the Compensation Committee and the Board, grants to Executive Officers shall vest gradually over a period of at least two years.
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|
15.3. |
All other terms of the equity awards shall be in accordance with Optibase's incentive plans and other related practices and policies. Accordingly, the Board may, following approval by the Compensation Committee, extend the period of time
for which an award is to remain exercisable and make provisions with respect to the acceleration of the vesting period of any Executive Officer's or Director's awards, including, without limitation, in connection with a corporate
transaction involving a change of control, subject to any additional approval as may be required by the Companies Law.
|
|
16. |
Advanced Notice Period
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|
16.1. |
Optibase may provide each Executive Officer, according to his or her seniority in the Company, his or her contribution to the Company’s goals and achievements and the circumstances of retirement, a prior notice of termination of up to
three (3) months, except for the CEO whose prior notice may be of up to six (6) months. During such advance notice period, the Executive Officer may be entitled to all of the compensation elements, and to the continuation of vesting of his
or her options, restricted shares or RSUs.
|
|
16.2. |
Optibase may waive the Executive Officer’s services to the Company during the advance notice period and pay the amount payable in lieu of notice, plus the value of benefits.
|
|
17. |
Adjustment Period/Retirement Bonus
|
|
17.1. |
CEO – for seniority of up to 5 years – the CEO will not be entitled to any Adjustment Period; seniority between 5 to 10 years – up to 4 monthly base salaries; and seniority of 10 years or more – up to 8 monthly base salaries.
|
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17.2. |
Executive Officer (except the CEO) – for seniority of up to 5 years – such Executive Officer will not be entitled to any Adjustment Period; seniority between 5 to 10 years – up to 2 monthly base salary; and seniority of 10 years or more
– up to 4 monthly base salaries.
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18. |
Additional Retirement and Termination Benefits
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19. |
Non-Compete Grant
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20. |
Exemption
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21. |
Indemnification
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22. |
Insurance
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22.1. |
Optibase will provide "Directors’ and Officers’ Liability Insurance" (the "Insurance Policy") for its directors and Executive Officers as follows:
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• |
The limit of liability of the insurer shall not exceed the greater of $25 million or 25% of the Company’s shareholders equity (based on the most recent financial statements of the Company at the time of approval by the Compensation
Committee) per incident and insurance period (for a one-year period) in addition to reasonable litigation expenses;
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• |
The purchase of each Insurance Policy shall be approved by the Compensation Committee (and, if required by law, by the Board) which shall determine that the Insurance Policy reflects the current market conditions, and it shall not
materially affect the Company's profitability, assets or liabilities.
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22.2. |
Upon circumstances to be approved by the Compensation Committee (and, if required by law, by the Board), Optibase shall be entitled to enter into a "run off" Insurance Policy of up to seven (7) years, with the same insurer or any other
insurer, as follows:
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• |
The limit of liability of the insurer shall not exceed the greater of $25 million or 25% of the Company’s shareholders equity (based on the most recent financial statements of the Company at the time of approval by the Compensation
Committee) per incident and insurance period (for a one-year period) in addition to reasonable litigation expenses;
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• |
The purchase of such Insurance Policy shall be approved by the Compensation Committee (and, if required by law, by the Board) which shall determine that the Insurance Policy reflects the current market conditions, and that it shall not
materially affect the Company's profitability, assets or liabilities.
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22.3. |
Optibase may extend the Insurance Policy in place to include cover for liability pursuant to a future public offering of securities as follows:
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• |
The purchase of such Insurance Policy shall be approved by the Compensation Committee (and if required by law, by the Board) which shall determine that the Insurance Policy reflects the current market conditions, and it does not
materially affect the Company's profitability, assets or liabilities.
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23. |
The following benefits may be granted to the Directors and/or Executive Officers in addition to the benefits applicable in the case of any retirement or termination of service upon a "Change of Control" following of which the employment
of the Executive Officer is terminated or adversely adjusted in a material way:
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23.1. |
Vesting acceleration of outstanding options or restricted shares.
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23.2. |
Extension of the exercising period of options or restricted shares for Optibase’s Executive Officers for a period of up to one (1) year and two (2) years, respectively, following the date of termination of employment.
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23.3. |
For Executive Officers only - up to an additional six (6) months of continued base salary and benefits following the date of employment termination (the "Additional Adjustment Period"). For
avoidance of doubt, such additional Adjustment Period shall be in addition to the advance notice and adjustment periods pursuant to Sections 14 and 15 of this Compensation Policy.
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23.4. |
For Executive Officers only - a cash bonus not to exceed together with the annual cash bonus, up to eighteen (18) monthly base salaries, in the case of the CEO, and nine (9) monthly base salaries, in the case of other Executive Officers
(excluding the CEO).
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24. |
All the Directors, excluding the Executive Chairman, shall be entitled to an equal annual and per-meeting compensation.
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25. |
The compensation of the Directors (including external directors and independent directors, but excluding the Executive Chairman) shall not exceed the maximum amounts provided in the Companies Regulations (Rules Regarding the Compensation
and Expenses of an External Director) of 2000, as amended by the Companies Regulations (Relief for Public Companies Traded in Stock Exchange Outside of Israel) of 2000, as such regulations may be amended from time to time ("Compensation of Directors Regulations").
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26. |
Directors may be granted equity-based compensation in accordance with the principles detailed in this Policy, and subject to the provisions of the Companies Law and the regulations thereunder.
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27. |
Optibase's external and independent Directors may be entitled to reimbursement of expenses in accordance with the Compensation of Directors Regulations. Optibase’s Directors, excluding external and independent Directors, may be entitled
to reimbursement of work-related expenses, including meeting participation expenses, reimbursement of business travel including a daily stipend when traveling and accommodation expenses. Optibase may provide advance payments to its
Directors in connection with work-related expenses.
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28. |
This Policy is designed solely for the benefit of Optibase. Nothing in this Compensation Policy shall be deemed to grant any of Optibase’s Executive Officers, Directors or employees or any third party any right or privilege in connection
with their employment by the Company. Such rights and privileges shall be governed by the respective personal employment agreements.
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29. |
This Policy is subject to applicable law and is not intended, and should not be interpreted as limiting or derogating from, provisions of applicable law to the extent not permitted, nor should it be interpreted as limiting or derogating
from the Company’s articles of association.
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30. |
This Policy is not intended to affect current agreements nor affect obligating customs (if applicable) between the Company and its Executive Officers or Directors as such may exist prior to the approval of this Compensation Policy.
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31. |
In the event of amendments made to the Companies Law or any regulations promulgated thereunder providing relief in connection with Optibase’s compensation to its Executive Officers and Directors, Optibase may elect to act pursuant to
such relief without regard to any contradiction with this Policy.
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32. |
The Compensation Committee and Board may determine that none or only part of the payments, benefits and perquisites shall be granted, and is authorized to cancel or suspend a compensation package or part of it.
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1. |
I have reviewed this annual report on Form 20-F of Optibase Ltd.
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2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
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4. |
The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
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(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material
information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c) |
Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d) |
Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has
materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and
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5. |
The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors
and the audit committee of the company’s board of directors (or persons performing the equivalent functions):
|
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely
affect the company’s ability to record, process, summarize and report financial information; and
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(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.
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1. |
I have reviewed this annual report on Form 20-F of Optibase Ltd.
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2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
|
4. |
The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
|
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material
information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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|
(c) |
Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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|
(d) |
Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has
materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and
|
5. |
The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors
and the audit committee of the company’s board of directors (or persons performing the equivalent functions):
|
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely
affect the company’s ability to record, process, summarize and report financial information; and
|
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.
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|
/s/ Amir Philips
Name: Amir Philips
Title: Chief Executive Officer
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/s/ Yakir Ben-Naim
Name: Yakir Ben-Naim
Title: Chief Financial Officer
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/s/ Kost
Forer Gabbay & Kasierer
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Tel-Aviv, Israel
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KOST FORER GABBAY & KASIERER |
April 27, 2021
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A Member of Ernst & Young Global
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