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Africa Israel Group reports results

Net income reached 3.46 billion NIS

* Total assets reached 36 billion NIS, a 41% increase compared to Q1 2007 and 111% increase compared to Q2 2006

* AFI Development portfolio independent valuation increased by 22% representing a 9% increase in the Company's NAV to US$5.6 billion

* Profit from Rental and operation of properties reached 64 million NIS, a 14% increase compared to Q2 2006

* Profit from The Industrial segment reached 34 million NIS compared to 5 million NIS in Q2 2006

Financial Highlights for the second quarter of 2007

Net profit reached 3,460 million NIS, compared to 162 million NIS in Q2 2006.

Net Profit includes a 3.4 billion NIS capital gain from to the IPO of the Russian subsidiary AFI Development.

Profit from development, construction, realization of assets and assets' revaluation reached 87 million NIS, compared to 170 million NIS in Q2 2006. The decrease is mainly due to two reasons: realization of assets policy; a loss (before tax) of 28.4 million NIS reported in the Building and Construction segment due to a major Israeli development company which filed for bankruptcy.

Profit from Rental and operation of properties reached 64 million NIS, compared to 56 million NIS in Q2 2006, an increase of 14%.

Net earnings from affiliated companies, reached 13 million NIS, compared to 35 million NIS in Q2 2006. These earnings do not include Alon's Q1 and Q2 results.

Operating profit after Capital Gains reached 3,618 million NIS compared to 412 million NIS in Q2 2006.

Recent Developments

* On July 1st, the Company announced the acquisition of 26 acres in Las Vegas on which it intends to build a combined project that will include a hotel, casino and a convention center. The land was acquired for $625M. The project will be built by a JV owned by Africa Israel (49%), The Cipriani-Witcoff group (30.6%), Credit Suisse (10.2%) and Silver (10.2%).

* On April 30th, AFI Development announced that it entered into a short term land lease agreement with the Municipality of the Odintsovo District of the Moscow Region for the construction of its Otradnoye project. This land plot will be used for the Company's Otradnoye project, a residential neighborhood development. On completion, the Otradnoye project will comprise approximately 450,100 sq. m. of residential space, 22,000 sq. m. of retail space, 17,960 sq. m. of office space, 106,400 sq. m. of parking facilities, two schools, two kindergartens, a medical centre and a library. The estimated development costs are expected to total US$786.8M.

* On July 11th, AFI Development announced that it entered into an agreement to acquire 24,126 sq. m. of built up facilities on the Yauza River front on Bolshaya Pochtovaya Street in the Central Administrative District of the City of Moscow. The land plot will be used for the construction of the Pochtovaya project that is expected to include 80,000 sq. m. zoned for hotel and residential use, 80,000 sq. m. of office space and 67,000 sq. m. of underground parking space. The acquisition price for the Pochtovaya project is US$104.3 million and the outstanding development costs for the project are expected to total US$465.2 million.

* On July 29th,the Company announced it came to an agreement with Mr. Shaya Boymelgreen regarding the separation of their joint properties in the US. Final closing is expected until September 15th 2007.

* On August 14th, the Company announced it received an AA/Stable rating from Maalot, the Israeli affiliate of S&P and Aa2 from Midroog, the Israeli affiliate of Moody's, both allowing the company to raise up to NIS 2 billion in corporate bonds.

* On August 23rd, the Company announced its first project in Central America where it intends to build a luxurious 100,000 Sq. m. residential project in Panama City. The Company estimates that the construction and development of the project will last approximately 36 months with a total cost of $86M.

* On August 23rd, AFI Development announced its financial results for the second quarter of 2007. In addition, the Company issued an updated valuation conducted by Jones Lang LaSalle showing a 22% increase in the portfolio's value resulting in a 9% increase in the Company's NAV.

Erez Meltzer, CEO of Africa Israel: "We continue to implement our strategy and act consistently to increase the Company's Net Assets Value while focusing our business and aligning it with our core competencies. The activity of the Russian subsidiary, AFI Development, continues as planned. The Company continues to execute all of the projects it committed to as presented during Road Show, on time and on budget.

Alongside this activity, we are continuing to enlarge our Central and Eastern Europe portfolio while becoming a strong and dominant player in the region. We see great potential in our recent transactions in the US which include, among others, the new project in Las Vegas and the large acquisitions we conducted in New York, all totaling to more than US$1.5 billion.

In addition to enhancing our execution ability, we made a few important steps in order to upgrade our financing abilities. As of today, we have a variety of financing options that allow us to continue our efforts in building and strengthening our business."

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