May 23, 2011 / 6:54 AM / in 7 years

UPDATE 1-Gazit-Globe moves to Q1 loss on finance costs

* Net loss 17 mln shekels vs 218 mln shekel profit

* Rental income up 11 pct

* To pay dividend of 0.39 shekel per share

(Adds details, dividend)

TEL AVIV, May 23 (Reuters) - Israeli real estate investment company Gazit-Globe GLOB.TA said on Monday it swung to a loss in the first quarter due to higher financing expenses.

Israel’s largest real estate investment firm posted a net loss of 17 million shekels ($4.9 million) compared with a profit of 218 million a year earlier.

The loss was mainly due to the accounting treatment of financial derivatives instruments, mainly swap transactions, which resulted in high financing costs, the company said.

Property rental income rose 11 percent in the first three months of 2011 to 1.27 billion shekels.

“The signs of stabilisation in the international real estate markets in which we operate have allowed us to take advantage of opportunities to grow our multinational platform,” Chief Executive Roni Soffer said in a statement.

During the quarter the group bought 22 income-producing properties and adjacent land parcels for development for a total of 3.1 billion shekels.

The company said it would pay a dividend of 0.39 shekel a share — up from 0.37 a year earlier — on July 4 as part of its plan for an annual payout of 1.56 shekels.

Gazit-Globe operates in the United States through Equity One EQY.N and in Canada through First Capital Reality Inc (FCR.TO). It is also the largest shareholder in Finland’s Citycon (CTY1S.HE) and together with Citigroup (C.N) controls shopping mall developer Atrium European Real Estate ATRV.VI. ($1 = 3.50 shekels) (Reporting by Tova Cohen. Editing by Jane Merriman)

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