Ladies and gentlemen, thank you for standing by. Welcome to the Azrieli Group conference call. All participants are present in a listen only mode. Following the presentation, instructions will be given for the Q&A session. For operator assistance during the conference, please press star zero. This conference call will be accompanied by a slide presentation. It can be found on the Azrieli site www.azrieligroup.com on the Investor Relations page under presentations, and the financial reports can be found on the website as well. I would like to remind everyone that forward-looking statements for the respective company's business, financial position and results of its operations are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated. With us on the line today are Mr. Eyal Henkin, CEO, and Moran Goder, Head of Capital Markets. Mr. Henkin, would you like to begin, please?
Yes, thank you. With us, Irit Sekler-Pilosof, which is, Deputy CEO and CFO as well. Good afternoon to everyone. Thank you for joining the Azrieli Group earnings call summarizing the quarter. This was a very good quarter in the operating parameters, whether it's NOI, FFO, occupancy, traffic, tenants' turnover and so forth, with a good business environment. Some major highlights of the quarter. One, annually NOI rate is the last quarter times four, plus transactions we closed, whether it's Mall Hayam, labs and others, is close to ILS 2 billion annually. I emphasize that this is, does not yet include the NOI from significant contracts signed in the Data Centers segment, which will be expressed in the coming year or two. Regarding the acquisition of Mall Hayam, which is one of the strongest malls in Israel, if not the strongest.
This was closed on July 1st, or in other words, in the third quarter, and the ownership of the property has been transferred to us. I truly believe in its fit and contribution to the Azrieli portfolio. In terms of the mix of contributions of the different segments of the group, it is well balanced and reflects the investments in the development of the new growth engines, whether it started a couple of years with additional Offices and Senior Housing and of course today, the Data Centers. FFO annual rate higher than ILS 1.3 billion. If you look at it closely, it blurs the future horizon on the short-term but bringing very high income which will be in place in the middle long-term. Irit will go over the financial parameters in the coming minutes.
Interest rates increased to 1.25% after several years at 0.1%. Obviously, this increase in interest increases the input for all companies, but I think in situations like this, we can appreciate and understand that our lower leverage will enable us to be less affected by this process because of some of these following parameters. One, both rentals and debt are all indexed to inflation rate. Another thing, the leverage is very low. It's 31% today, net LTV. The average duration of the debt is long. As you can see in slide 49, in recent years, we extended the average duration to 6.3 years from 2.3 years, as well as lowered the average interest to 1.7% from almost 5% a decade ago.
In view of all of this, we are ready for the current inflation trend and interest rate hikes. The fifth subject matter I want to indicate is the acquisition of labs in Azrieli Sarona. These were actually the sixth highest floors of stories of this building. They were leased up until 2042, and we bought them back. We bought the contract back, which in terms of annual NOI, the additional contribution of these floors is almost ILS 17 billion a year. We signed additional data center contracts, both in North America and with Green Mountain in Europe. Some words about the macro Israeli economy. Israeli economy is functioning well and is still solid.
Though recent inflation indicators are up to 5.2% annual rate, relative to other economies in the OECD, the major parameters are strong. In this quarter, Israel's GDP increased by 6.8% compared with the previous quarter of Q1 2022, strongly by the private consumption and export components, but also investments in infrastructure. The private consumption expenditure increased by 10.4% in the quarter compared to Q1. The private consumption per person increased by approximately 8%. Fashion and footwear up almost 5%, 4.1%. The business sector, related also to the Office segment, grew by 8.5% compared to Q1 2022 and up 8.8% compared with the equivalent quarter in 2021.
The GDP growth forecast for the Israeli economy is growth of 5% in 2022, and 3.5% growth in 2023. In this call, we will review all of our operating segments, but I'll start with the Data Centers segment. In the past three years, Data Centers have been considered one of the fastest-growing industries in the world. Just to express this, expectations up until 2027, specifically from cloud and hyperscalers, is 34% growth each year. Development and supply to the market, just to exemplify in the major markets we operate in North America, which are Northern Virginia, Dallas-Fort Worth, and Phoenix. The supply last year was more than 320 MW. On the demand side, in this market, it was almost 550 MW, just to exemplify the difference between supply and demand.
Also, last year, there were a number of M&A transactions, such as the acquisition of CyrusOne and CoreSite, and earlier that year, QTS, which were $10 billion-$15 billion companies, all priced with multiples of between 25x-30x on the EBITDA, reinforcing our view and our acquisition of both Compass and specifically Green Mountain, which are smaller companies with very high rates of growth and reflecting very good prices that we bought these platforms. The Data Centers segment is a significant growth engine for the group, and currently comprises some 14% of the group's operations. As we mentioned, our strategy is to acquire platforms in secondary markets with potential for aggressive expansion and to enter the main markets from there.
If the U.S. activity or the North American activity, we started mainly from Canada and then expanded to NoVA, DFW, and Phoenix, incorporating some of the largest hyperscalers in the world. As of today, the EBITDA of Compass is almost $190 million contracted EBITDA. We continued with the acquisition of Green Mountain last year. Green Mountain is a fully green energy platform, all green energy. It is a hyperscaler platform, fully fitted with these customers and operating with these customers. In the current circumstances in the EU continent, some of which are quite tragic, I would say, bad and not convenient, were secured electricity in volumes, redundancy, green energy, low prices, and cold weather are abundant.
The Green Mountain value proposition is superb, with hyperscalers requiring 3x-10x larger capacity compared with the previous years. On top of that, with the outstanding management and very high quality of engineering and development flexibilities of Green Mountain, this acquisition provides a very strong horizon for a future growth in the space. This quarter, we signed a contract to acquire a DC platform at the London market to serve as a long arm for Green Mountain in this market. What we're aiming to do is having a very low latency product close to the customer, with the back office of storage and high-performance computing back in the Scandinavian area, specifically in Norway.
Thus having both low latency platform and very green and redundant and high-capacity platform at the back office. As we indicated in the past, we will develop and extend our platforms, consolidate them under one umbrella. If we decide and if applicable, merge them with our operations in the various continents and continue expanding from there. As we speak, we explore additional M&A opportunities which will make this area even more significant to Azrieli Group in the future. Some words about the hyperscalers, the customers.
If you look at the three major players, which are Amazon through AWS, Microsoft through Azure, and Google Cloud Platform, what you can see is that Amazon, with around 50% market share, is having 16.3% of its revenues from cloud, while all of its income line is from cloud services. All of it. Amazon additionally grew 35%, 39%, 40%, and 36%, and then last quarter, 63%, quarter-over-quarter in the recent year. Regarding Azure. Azure today is 27.8% of the revenues of Microsoft, with more than 40% of the operating profits of this great company.
Azure was growing in the recent quarters 48%-50% quarter-on-quarter and is becoming maybe the major growth engine of Microsoft. With these great companies and this great expansion of cloud, I think this is a very relevant and good growth engine for a group like Azrieli, and we will continue to invest in this market. Regarding other segments, Offices, t he market is good and demand is strong, despite the changes taking place in the high-tech industry, their impact on the deployment market in such field, and the repricing of stock and risk in the field.
Contract renewals continued to be on a positive trend, with new contracts signed in the last quarter reflecting 15%-20% increase in the rate per square meter. Some customer updates and some things from the field. Just to exemplify, in the Azrieli Center, which is full today, there are 16 tenants which are asking to expand and rent more space, which is very difficult for us to find space for most of these customers because all of the space in the center has been occupied. Regarding new developments, SolarEdge, which is today on a market cap of around $17 billion.
At the beginning of the year, we laid the cornerstone for the construction of the project, which is going to be launched on March 2025, and the leasing is going to be for 25 years with this great customer. Regarding the Mall segment, NOI was up ILS 17 million year-on-year, quarter-on-quarter, all same property. Just to reflect, occupancy a year ago was around 98%. Today, it's 99.1% occupancy, and still the NOI is up almost 11%. On top of this, the acquisition of Mall Hayam will contribute more than ILS 90 million to the NOI, so from the malls starting from Q3 2022. Store revenues increased by 10.4% year-over-year, April through June.
If we look only at May to June, where we leave the Passover holidays aside, only May and June 2022 compared with May and June 2021 was an increase of 5.5%, which we present adjusted for the effect of the timing of the Passover holiday. Some interesting developments. We opened the DNA food truck venue a few months ago at the ground floor of Azrieli. It's a great change of atmosphere and a very good refreshment of this great area and it was very positive and we got a very positive response from the tenants. We will open the anchor Nike store in Sarona Mall on September 21st. It is a Nike elevated rise store, a huge and one-of-a-kind three-story store, of which six are planned to be built in the world, and only one, this one, in Israel.
In Jerusalem and Modi'in stores, we opened the huge Zara flagship stores. They contribute a lot for the visitor traffic and for the turnover, and I believe they are also impacting the store revenues of many other stores at those malls. Regarding Senior Housing, we're on track with very strong demand. Dozens of contracts have been signed in each of the homes, mainly in Lehavim and Modi'in. Actually we're out of inventory as we finish this quarter. Back in 2021, we raised our prices by 13% in the aggregate.
In Lehavim, we have completed Stage A with 215 out of 251 apartments, which is 90% occupancy. We're opening in September Stage B with additional 109 apartments, of which already 45 contracts are already signed. Modi'in is already fully occupied. Regarding the development, we are currently finishing building and beginning to occupy the following two projects. As I said before, Stage B of Palace Lehavim, we finished on time, on budget, 109 apartments, of which, as I said, 31% have been marketed already and having already contracts. In Azrieli Town, we finished on time and below budget, the multifamily, the first multifamily in Israel, 210 residential rental apartments, where we easily begin to lease and are being occupied.
We finished it and launched it on August 1st, and the response is very good. Next year, 2023, we expect to complete Lot 21, which is a mixed-use of both hotel, offices, commercial, residential in Modi'in next to the mall, and we will complete the Checkpost project in Haifa. Other projects, such as Lot 10, SolarEdge Campus, the Senior Housing, Jerusalem Mall expansion, Spiral, and other projects are on track and on budget. From here, I'm going to hand over to Irit, who will review the financial parameters of this quarter.
Good afternoon, to you all. The second quarter reflects excellent results, as expressed in all of the operating parameters for the quarter, and they can be viewed as an indication of stability further to the company's growth. NOI in the second quarter was ILS 473 million, compared with ILS 407 million year-over-year. The increase of ILS 66 million constitutes a 60% increase in the NOI. The Resource segment contribution to the increase was ILS 17 million. The entire increase derived from organic growth of same properties. ILS 23 million derived from an increase in the Office segment, which was also due to organic growth in higher rent at same properties. ILS 4 million derived from an increase in the Senior Housing segment, mainly due to increased occupancy in the Lehavim Stage A and Modi'in homes, and they're reaching full occupancy.
ILS 24 million derived from an increase in the Data Centers segment, mainly in view of the acquisition of the Norwegian company, Green Mountain. The same property NOI in the quarter presents a similar trend to the NOI, and the gap between them, between the same property NOI and the NOI, is actually mainly stems from discounting the operating results of Green Mountain, which was acquired in August 2021. The company's FFO totaled ILS 331 million in the quarter, compared with ILS 371 million year-over-year. The decrease mainly derived from volatility in the volume of deposits received from residents after we completed the occupancy of the income-producing senior homes.
Therefore, in fact, we will see another boost from the flow of deposits after the opening of Lehavim Stage B in the coming months. The FFO net of contribution of Senior Housing presents similar results year-over-year. As the company builds its future growth engine and invest in Data Centers, the yield will be expressed in the NOI in the coming months, while the growth in financing expenses and G&A is already expressed at this time. At the end of the quarter, the total value of the group's real estate property was around ILS 35 billion. In the report period, we invested ILS 868 million in the acquisition and further development of income-producing properties and properties under development, including closing the purchase of land in Herzliya for the construction of SolarEdge Campus, which is expected to be delivered to the tenant in 2025.
In the report period, the company recorded depreciation in respect of fair value adjustment of investment property of around ILS 853 million. About 60% of the revaluation derived from an increase in the CPI, and the rest of the increase was mainly thanks to an increase in rent prices. In addition to the revaluation that appears in the statement in the fair value adjustment section, the valuation was also conducted through the real estate properties owned by Compass, which is a U.S. company held by us engaged in data center industry. With our share of the revaluations totaling approximately ILS 376 million, and which is included in a different part of the P&L, which is called share of results of companies accounted for on the equity method. The company's net debt is ILS 13.6 billion, which is 31% of the total assets.
After the acquisition of Mall Hayam in Eilat, which closed last month, the leverage was increased to 34%. The company has around ILS 51 billion in unencumbered assets, which are 75% of the company's total assets. In addition to the cash balance and deposits, which totaled to ILS 2 billion at the end of the quarter. After the end of the quarter, the company performed an approximately ILS 3 billion extension of three of its bond series with an average duration of 8.1 years and an average interest rate of 2%. The net income for the quarter totaled to ILS 803 million, compared with ILS 383 million year-over-year. The increase mainly derived from the increase in NOI and increase in profits from fair value adjustments, net of an increase in financing expenses, which mainly derived from the rise in CPI. Now we will move on to the Q&A portion.
Thank you. Ladies and gentlemen, at this time, we will be giving the Q&A session. If you have a question, please press star one. If you wish to cancel your request, please press star two. If you are using speaker equipment, kindly lift the handset before pressing the numbers. Your questions will be pulled in the order they are received. Please stand by while we pull for your questions. I repeat, if you have a question, please press the star one. Our first question is from Christopher Tong of UBS. Please go ahead.
Hi. Chris from UBS. Thank you for your presentation. Maybe just one question on offices. I was just wondering what the office utilization is for your portfolio, meaning how much of employees are returning to office on average, and if that has been stabilizing or is it still falling?
Could you repeat, please, the question again?
Yeah. It was on Offices. I was just wondering what the office utilization is in your portfolio to have employees in returning to office, and, you know, has this been stabilizing, or if it's, like, still evolving.
First of all, in whatever segments which are not pure high tech, I would say that people are between four to five days a week come to the office in Israel today. Talking about high tech, mostly in local firms, people work at least three days from the office. In global firms, they work between two to four days from the office. If you're asking about the demand. At this stage, at least, we don't see any reflection of this in terms of demand and in terms of hiring employees.
Even though some of the unicorns released employees, on the overall picture, these high-tech companies are keen for programmers, for a good human capital, and they're still recruiting.
Perfect. That makes sense. Thank you.
Thank you.
There are no further questions at this time. Before I ask Mr. Henkin to go ahead with his closing statement, I would like to remind participants that a replay of this call will be available later today on the company's website at www.azrieligroup.com in the Investor Relations section. Mr. Henkin, would you like to make your concluding statement?
Yeah. I think that this quarter reflects the very strong core businesses of the Azrieli Group. We are making a very strong progress in all of the operating parameters, both in Offices through Malls, continuing with Senior Housing, which we have full occupancy rates, very high growth of NOI, good traffic, and very strong store revenues in the Malls. We accelerated development momentum with over 1 million square meters under construction within the coming five years to six years. We strongly believe in pushing the data center segment, developing the existing companies, and entering into new markets like London.
We think it's the right time in the markets of developing with high margins, massive growth, and the strongest customers in the world, with very long and sticky contracts in a world driven by data, supported by technology which only accelerates the need to increase processing and storage space, all leading to data centers and actually to real estate. We will continue to grow after the Green Mountain acquisition with large-scale developments and possibly additional acquisitions. Thank you very much for listening, and we'll see you in the next quarter. Thank you.
Thank you. This concludes the Azrieli Group conference call. Thank you for your participation. You may go ahead and disconnect.