G City : Annual Report 2023

Dear Shareholders,

2023 was a challenging year for the nation, with the events of October 7th and the ensuing war that is still ongoing today, which took us all by surprise and created a complex reality. On the one hand the economy is carrying on in a kind of routine fashion with business being conducted as usual, while on the other hand a fierce war is being waged, which has been and continues to exact a heavy price, and a significant part of the residents of the South and of the North have not yet been able to return to their homes.

On the Group level too, we experienced a challenging year, however packed with action and achievements, the fruit of some of which we can already see and some of which will see in the near future, during 2024 and thereafter. On the macro level, interest and inflation dominated and we too were affected by them. The fact that over 90% of our rental agreements are linked to the CPI contributed to an increase in NOI of 8.8% from income-producing properties, offsetting the effects of the war due to the discounts granted to tenants in Israel, an increase of 9.9%. On the other hand, we saw an increase in interest rates that affected the Cap Rate of our properties and in the last quarter we absorbed a decrease of NIS 400 million in the value of our holdings in the subsidiary, Citycon. The decline in inflation and expected drop in the interest rate in the coming year allowed for cautious optimism regarding the direction that the discount rates will go and as a result, the value of our income-producing properties. About eighteen months ago, Atrium became a private company, which in turn became G City Europe, and we are today beginning to see the fruits of these measures, as during the year we completed its assimilation as a private company, we replaced its management, cut its workforce by 60%, and significantly reduced other costs. We sold properties worth EUR 850 million and in fact, centralized the company in Poland, primarily in Warsaw. These measures are reflected in the double digit growth in our operating parameters in G City Europe. In the coming years we will continue selling off several additional properties to focus almost exclusively on Warsaw and very large properties where there has been and is expected to continue being significant growth.

The commercial real estate sector worldwide, and also here, is in a good place with high occupancy of 96% and rentals that continue to grow, retail stores that increase their sales turnover each year and most important, with visitor traffic that continues to grow and this year increased in our malls by 4% compared to last year.

We can also say that the ecommerce sector, that in the past raised concerns of competition for retailers, has reached a situation where synergy with the physical stores is a winning recipe, and therefore we see more and more online brands opening physical stores in shopping centers and the threat has in fact become an advantage and another tool in our arsenal for promoting sales and traffic in the properties.

The location of the properties remains significant with focus on high-density urban areas with high accessibility to public transport, economic scarcity and of course, the right mix that addresses day-to-day needs and services together with entertainment and food. Mixed uses is also beneficial and we are indeed adding residential apartments and office space to existing properties, that will create a balance between the various parts of the property; the commercial areas benefit from additional visitors and the apartment tenants and offices benefit from the existing infrastructure for services and various consumer providers in the commercial center. The Live Work Play model is a winning model and the option of having everything in one place is time saving and also good for sustainability.

We must remember that historically, commercial centers were built on large plots of land with low floor area ratio (FAR) and in recent years we have witnessed crowding in existing properties with higher construction rate in densely populated areas, such as those where our properties are located, which is quite naturally expected to increase the value of our properties.

At the end of 2022, we announced our strategic plan for business focus and lowering of the Company's leverage by NIS 6 billion, after which we grew to NIS 7 billion. Up until the date of writing of these lines, we have completed disposals worth NIS 4.2 billion, and with the exception of Russia, we sold all the properties at prices similar to their carrying value. We sold our entire Russian portfolio and 30% of our holdings in Brazil, which has significantly improved the Company's risk profile. Because of these measures we are very close to the business focus we aspire to: Israel, the USA and Poland, centralizing a large part of our property portfolio (23%), where there was a change in government this year in democratic elections, strengthening confidence in doing business there.

Alongside the extensive activities in implementing the disposal plan, the Company and its wholly owned subsidiaries raised debt of NIS 2.1 billion this year and at the same time repaid debts in the amount of NIS 3.4 billion. Furthermore, by the date of publication of this report, we extended repayment of revolving lines of credit in an amount of NIS 1.2 billion, which were repayable in 2024, until 2027-2028

We are tirelessly working to continue implementing the disposal plan and we believe that we will complete all the sales we have planned over the next two years. As part of this, we will act to sell properties that are not part of our core properties, at their carrying value, and we will continue to focus on improving our properties in Israel, the USA and Poland, while further reducing our exposure in Brazil.

The positive trend in the Group's properties will continue into 2024 as well. We are working to continue streamlining, with significant actions taken to reduce administrative and general costs, as we successfully did during the year. We are spending much effort to help the management of Citycon implement the plan of action for focusing on its strong properties and to generate value, to reduce administrative and operating expenses, to sell off properties that are not core properties and to reduce leverage.

We want to thank all our stakeholders who expressed their faith in us throughout this challenging year.

The events of October 7 and the war that broke out as a result overshadowed everything that came before and continues to affect us all, probably forever.

On behalf of myself and all my colleagues at G City, in Israel and worldwide, I hereby send condolences to the families of the victims and of the soldiers who have fallen in battle. We wish those injured speedy and full recovery and for the safe return of all the hostages.

We hereby send our support and encouragement to our soldiers and officers in the South and in the North. We wish everyone better days ahead.

Sincerely,

Chaim Katzman

THIS DOCUMENT IS AN ENGLISH TRANSLATION OF THE HEBREW VERSION OF THE COMPANY'S FINANCIAL STATEMENTS AND THE MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR 2023 (THE "REPORTS"). THE HEBREW VERSION OF THE REPORTS IS THE BINDING VERSION AND THE ONLY VERSION HAVING LEGAL EFFECT. THE ENGLISH TRANSLATION HAS BEEN CREATED FOR THE PURPOSE OF CONVENIENCE ONLY. THE APPROVAL OF THE COMPANY'S BOARD OF DIRECTORS WAS GIVEN TO THE HEBREW VERSION ONLY AND NO SUCH APPROVAL HAS BEEN GIVEN TO THE ENGLISH TRANSLATION.

PERIODIC REPORT FOR 2023

G-CITY LTD.

DESCRIPTION OF THE COMPANY'S BUSINESS

1. City Ltd. (the "Company")1

Periodic Report on the Description of the Company's Business

The Company's operations are described on a consolidated basis, unless explicitly stated otherwise.

1. Description of the general development of the Company's business and brief description of the Company's areas of operation

1. Company Operations and Description of the Development of its Business

1.1 G City Group - General

The Company, directly and through its private and public investees (together: "the Group"), engages in management, improvement, development and purchase of income-producingmixed-use real estate properties, including commercial, residential and office properties that supply the needs of the population, in North America, Israel, Brazil, Northern, and Central Europe, with the focus on densely populated urban cities.

The Group's strategy is to focus on properties and areas that have potential for expanding building rights and increasing value and cash flows through proactive management, betterment, addition of uses, development and redevelopment, and the Company explores business opportunities in its operating sectors and in related or other operations in its operating sectors and in additional regions At the same time, the Group acts to sell properties that are non-core assets or assets that the Group believes have limited growth potential and/or are in areas where the Group wishes to cut back its operations, whether by selling an individual property and/or group of properties, and/or by selling part of its holdings in the companies that own properties in these areas.

In accordance with the Company's strategy, in recent years the Company made efforts to increase the rate of its private real estate (i.e., operations not held through public companies), and as part of this in February 2022 the Company completed a transaction to buy out the minority interests in G City Europe Limited (G Europe) (formerly: Atrium European Real Estate Limited), which was a public company controlled by the Company and whose shares have been delisted from trading on the stock exchanges in Vienna and Amsterdam. Since February 2022, the Company holds 100% of G Europe. For further information, see section 7.1 of the Report.

The Group operates in Israel directly through the Company and in other territories through its subsidiaries, in which the Company exclusively plans strategy and oversees their management: G Europe (100%) operating in Central Europe, Gazit Horizons Inc. (100%) in the United States ("Gazit Horizons") and a wholly owned subsidiary operating in Canada ("Gazit Canada"), including through a partnership Gazit Tripllle (60%). In addition, the Company operates in Brazil mainly through Gazit Malls Fll (82%), a real estate investment fund 2 owned and controlled by the Company (indirectly), incorporated in Brazil and that was listed in an IPO for trading in February

2024 on the stock exchange in Brazil ("Gazit Malls") (as set out in section 9C below), and through other subsidiaries in Brazil wholly owned by the Company (jointly - "Gazit Brazil"). Furthermore, the Group operates in Northern Europe through Citycon Oyj ("CTY"), a public company controlled by the Company (49.6%), that has a similar strategy to that of the Company.

The operations of the Company in Israel, of G Europe, Gazit Brazil, Gazit Horizons and CTY are consolidated in the Company's financial statements and constitute as separate operating segments of the Company.

As part of the Group's strategy to focus on urban properties, while strengthening equity and lowering leverage, during the reporting period the Company proactively adopted several significant measures, as follows:

1. Disposal of non-coreassets or assets that the Company has accomplished their improvement. As part of this, in the reporting period until the publication date of this report, the Company and its wholly owned subsidiaries sold properties to the value of NIS 4 billion. For further information regarding the Company's strategic plans to dispose of properties, see section 1.2 below.

1. The Company was incorporated in May 1982, and is listed for trading on the Tel Aviv Stock Exchange Ltd. since 1983 under the symbol "GCT".
2. 'FII' - Fundo De Investimento Imobiliario.

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G-CITY LTD.

DESCRIPTION OF THE COMPANY'S BUSINESS

1. Gazit Malls IPO for an amount of BRL 301 million (NIS 226 million) by way of a tender offer of part of the Company's holdings, that was completed on February 1, 20241.
2. A private equity placement in an amount of NIS 150 million, in which several leading institutional investors as well as the parent company and controlling shareholder of the Company (through a company under its control) took part For further information, see section 2 of the Report.
3. Suspension of the dividend distribution policy - during the reporting period the Company's Board of Directors decided that it will not distribute a dividend to the Company's shareholders for 2023. Similarly, on March 28, 2024, the Company's Board of Directors decided not to distribute a dividend to the Company's shareholders in the first quarter of 2024. The Company's Board of Directors will convene and review the Company's dividend distribution policy for the following quarters of 2024, including based on progress in the execution of the plan for disposal of properties announced by the Company on October 25, 2022 and as updated from time to time, as set out below, and additional considerations, subject to the distribution tests set out in the Companies Law, 1999 (the "Companies Law").

1.2 On October 25, 2022, the company published a property disposition plan for non-core group properties, which is updated from time to time ("the Property Disposition Plan"). According to the Property Disposition Plan, the company intends to sell properties with a total value of NIS 7.0 billion in Europe, Brazil, the United States and Israel.

As of the date of the plan's publication until the publication date of this report, the company and its fully owned subsidiaries have entered into binding agreements for the sale of properties totaling NIS 4.0 billion, at book values (excluding the sale of assets in Russia).

The actual dispositions scope of the properties and the group's progress in their implementation, including the pace of property preparation for sale in different territories where the group operates, are dynamic and executed in accordance with market conditions in these territories and the company's management discretion, while considering macroeconomic factors and specific considerations for the company and balance between the company's needs and the properties' value.

Below is a breakdown of the status of the plan for the disposal of properties (NIS million):

1.3 Furthermore, G Europe completed obtaining secured financing for properties in Europe of EUR 237 million, and the Company intends to act to obtain financing that will be secured by additional debt-free properties (mainly properties in Europe), for some of which it has obtained non-binding letters of intent, for a cumulative amount exceeding EUR 235 million.

1 For further information see immediate reports dated December 31, 2023, January 28, 2024 and February 1, 2024 (Ref. Nos.: 2023-01-118024,2024-01-010548, and 2024-01-012318, respectively) noted herein by way of reference.

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G-CITY LTD.

DESCRIPTION OF THE COMPANY'S BUSINESS

The Company's estimates regarding the sale of properties, as well as the scope of properties that will be sold, the consideration to be received for them and the dates of sale and receipt of financing for them, constitute forward-looking information as defined in the Securities Law, 1968. The foregoing estimates are uncertain, may not materialize and mostly are not within the control of the Company, and are dependent, among other things and as set out above, on the state of the economy and the real estate market in the various countries in which the properties are located and in which the Company operates. If the foregoing market conditions change, it is possible that changes and/or delays will occur regarding the disposal of the foregoing properties.

1. Furthermore, in February 2024 CTY announced its plan for streamlining and disposal of properties for an amount of EUR 950 million (for further information see section 6.1 below).
2. The Group's assets as of December 31, 2023:

1 Including extensions to income-producing properties.

• Additionally, the Company and its subsidiaries own land for future development as well as unutilized construction rights for different uses (including residential) in income-producing existing properties.

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G-CITY LTD.

DESCRIPTION OF THE COMPANY'S BUSINESS

USA - Gazit Horizons, the Group's private real-estate branch in the United States, operates in densely populated urban areas in large cities in the US, mainly in New York, Boston, Florida and Philadelphia and as of reporting date, it owns (including with partners) 11 income-producing properties worth USD 434 million. In the reporting period Gazit Horizons continued the development of an exclusive residential tower in Tampa, Florida (together with a local partner), and it is expected to be handed over in 2024. Simultaneously, as part of its property disposal plan, in January 2024, Gazit Horizons completed the sale of a property in the United States for USD 153 million. For further information, see section 10 of the Report.

Brazil - as of reporting date, the Group holds 5 properties in Brazil worth NIS 2,085 million through Gazit Malls Fll, which is a real estate investment fund1 incorporated in Brazil under the Company's control (indirect), which as aforesaid, in February 2024 was listed for trading in an IPO by way of a tender offer and the Company currently holds (indirectly) 82%. In addition, the Group has two properties in Brazil worth NIS 369 million, held through a wholly owned subsidiary of the Company (indirectly).

During the reporting period and pursuant to the Group's property disposal plan, Gazit Brazil completed transactions for the sale of its share in two commercial centers in Brazil for BRL 562 million and BRL 93 million (totaling NIS 485 million). For further information, see section 9 of the Report.

Canada - As of 2019, the Company operates in Toronto, Canada through Gazit Canada, mainly through a partnership Gazit Tripllle (60%), which owns 7 properties worth a total of CAD 108 million (including through joint transactions), including a 33% holding in a property in which a wholly owned subsidiary of the Company holds a further 33%, and the rest is held by a third party, as set out in section 11.1 below.

Public Holdings:

Northern Europe - in Northern Europe, the Group operates through CTY, a public company whose shares are traded on the Helsinki Stock Exchange (OMX) in Finland. CTY operates in Finland, Norway, Sweden, Estonia and Denmark. As of reporting date, CTY owns 34 properties to a value of NIS 15.5 billion. In the reporting period, CTY enhanced its property portfolio and strengthened its balance sheet. In this context, in November 2022, CTY announced its intention to sell off its non-core properties to a total value of EUR 500 million and in February 2024, CTY decided to increase the target of property sales to a total amount of EUR 950 million, planned to be sold over a period of 24 months, and announced a number of other streamlining measures. Simultaneously, in the first quarter of 2023, CTY completed the development of residential buildings close to the Lippulavia property. For further information, see section 6 of the Report.

1.8 Group structure

For a description of the structure of the principal companies in the Group as of December 31, 2023, see to section 1.7 of the Directors Report.

The Group description will be presented below, divided according to the areas of operation set forth below, except for with regarding to information that is relevant to all areas of operation, which will be presented together, and except for information on specific topics related to a description of the Company itself, which will be presented separately. The information included in the descriptions of each of the areas of operation of real estate for investment, will be presented according to the primary geographic regions where the operations in that area are concentrated.

1 'FII' - Fundo De Investimento Imobiliario.

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G-CITY LTD.

DESCRIPTION OF THE COMPANY'S BUSINESS

2. Investments in the Company's capital and transactions in its shares in the last two years

1. On February 6, 2022, the Company's Board of Directors approved a private placement, to three classified investors, of 12.5 million ordinary shares of NIS 1 par value each, of the Company ("Ordinary Shares") at a price of NIS 32.5 per ordinary share, and of 6.25 million options (non-marketable) that are exercisable for 6.25 million ordinary shares of the Company, for total proceeds of NIS 406 million. The options were exercisable over a period of 24 months from the date of the placement, for an exercise price of NIS 40 per option, subject to adjustments. These options expired on February 15, 2024.
   In addition, at the same time, the Company's Board of Directors approved a private placement to the controlling shareholder of the Company, Norstar Holdings Inc. ("Norstar") (through its wholly owned subsidiary, Norstar Israel Ltd.; "Norstar Israel"), of 2 million ordinary shares of the Company and 1 million options (non-tradable) for total proceeds of NIS 65 million and at the same terms as those for the placement to the classified investors, as stated above1.
2. On January 29, 2023, the Company's Board of Directors approved a private placement of 7.5 million ordinary shares of the Company at a price of NIS 12.615 per ordinary share, to four classified investors and for total proceeds of NIS 93.5 million. Furthermore, at the same time the Company's Board of Directors approved a private placement of 3.62 million ordinary shares to Norstar Israel2 for proceeds of NIS 45.6 million and a private placement of 0.79 million ordinary shares for proceeds of NIS 10 million to Aurora Capital Holdings Ltd., a private company under the control of Mr. Chaim Katzman, the controlling shareholder of the Company, at the same terms as the placement to the classified investors. The total proceeds for these placements is NIS 150 million3.
3. In January 2023, Norstar's board of directors approved an issue of ordinary shares of Norstar together with
   10,188,800 purchase options, each, awarding the right to purchase from Norstar 10,188,800 existing issued and fully paid-up ordinary shares per NIS 1 par value each, held by Norstar Israel, for NIS 14 per share. In and subsequent to the reporting period, Norstar purchased 1,236,358 options and eliminated them. As of the present time, the options have not been exercised.
4. On December 11, 2023, the company's Board of Directors approved a private allocation of approximately 7.6 million ordinary shares, to several classified entities and another entity. The consideration. The Company's return was paid in EUR 45.9 million par value G Europe debentures (the "Transferred Securities"), at an exchange ratio of EUR
   6.037 par value for the transferred securities per share of the Company4.
5. For information about the vesting of the convertible securities allotted to employees and officers of the Company and its subsidiaries, see Note 26 to the financial statements.

1. For further information, see immediate reports dated February 6, 2022, February 13, 2022, February 14, 2022 and March 31, 2022 (Ref. Nos.: 2022-01-015769,2022-01-017671,2022-01-081115, and 2022- 01-039766 respectively) presented here by way of reference.
2. A wholly owned subsidiary of Norstar Holdings Inc., the controlling shareholder of the Company ("Norstar Israel").
3. For further information see immediate reports dated January 29 and 31, 2023 and March 9, 2023 (Ref. Nos.: 2023-01-012396,2023-01-0129032023-01-025437-ו,2023-01-011356-ו, respectively), noted herein by way of reference.
4. For further information see the immediate report and supplementary report dated December 12, 2023 (Ref. Nos.: 2023-01-112522 and 2023-01-112813, respectively), noted herein by way of reference.

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