Media Contacts:

Amir Philips, CEO, Optibase Ltd.

011-972-73-7073-700

info@optibase-holdings.com

Investor Relations Contact:

Marybeth Csaby, for Optibase

+1- 917-664-3055

Marybeth.Csaby@gmail.com

OPTIBASE LTD. ANNOUNCES FIRST QUARTER RESULTS

HERZLIYA, Israel, May 25, 2017 – Optibase Ltd. (NASDAQ: OBAS) today announced financial results for the first quarter ended March 31, 2017.

Revenues from fixed income real estate totaled $4 million for the quarter ended March 31, 2017, compared to revenues of $4 million for the first quarter of 2016.

Net loss attributable to Optibase Ltd shareholders for the quarter ended March 31, 2017 was $515,000 or $0.10 per basic and diluted share compared to net income of $718,000 or $0.14 per basic and diluted share for the first quarter of 2016.

Weighted average shares outstanding used in the calculation for the periods were approximately 5.1 million basic and diluted shares for each period.

As of March 31, 2017, we had cash and cash equivalents of $22.3 million, and shareholders' equity of $76.3 million, compared with $16 million, and $74.1 million, respectively, as of December 31, 2016.

Amir Philips, Chief Executive Officer of Optibase commented on the first quarter results: "This quarter results are stable compared to the previous quarter and the first quarter of 2016 in our fixed income real estate rent and operating income, while our net income has decreased somewhat due mostley to increased financial expenses and Equity share in losses of associates, net. For the first quarter of 2017 we generated NOI of $3.3 million representing a 3% increase over the same period in 2016. In addition, for the first quarter of 2017, our Recurring FFO decreased to 304,000 compared to the first quarter of 2016. The decrease in our Recurring FFO is primarily due to an increase in our equity share in losses of associates related to our investment in 300 River Holdings, LLC and increase in our financial expenses due to currency rate differences." Mr. Philips concluded: "We are working maintain our basic parameters and increase our financial stability as we progress through 2017."

OPTIBASE REPORTS/2

ACCOUNTING AND OTHER DISCLOSURES

Non-GAAP Net Operating Income, or NOI, is a non-GAAP financial measure. The most directly comparable GAAP financial measure is operating income, which, to calculate NOI, is adjusted to add back real estate depreciation, and amortization, general and administrative expenses and other operation expenses less gain on sale of operating properties. We use NOI internally as a performance measure and believe that NOI (when combined with the primary GAAP presentations) provides useful information to investors regarding our financial condition and results of operations because it reflects only those income and expense item that are incurred at the property level.

We consider the NOI to be an appropriate supplemental non-GAAP measure to operating income because it assists management, and thereby investors, to understand the core property operations prior to depreciation and amortization expenses and general and administrative costs. In addition, because prospective buyers of real estate have different overhead structures, with varying marginal impact to overhead by acquiring real estate, we consider the NOI to be a useful measure for determining the value of a real estate asset or groups of assets.

The metric NOI should only be considered as supplemental to the metric operating income as a measure of our performance. NOI should not be used as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends or make distributions. NOI should also not be used as a supplement to, or substitute for, cash flow from operating activities (computed in accordance with generally accepted accounting principles in the United States).

Non-GAAP Funds from operation, or FFO, is a non-GAAP financial measure. The most directly comparable GAAP financial measure is net income, which, to calculate FFO, is adjusted to add back depreciation and amortization and after adjustments for unconsolidated associates. We make certain adjustments to FFO, which it refers to as Non-GAAP recurring FFO or recurring FFO, to account for items we do not believe are representative of ongoing operating results, including transaction costs associated with acquisitions. We use FFO internally as a performance measure and we believe FFO (when combined with the primary GAAP presentations) is a useful, supplemental measure of our operating performance as it's a recognized metric used extensively by the real estate industry. We also believe that Recurring FFO is a useful, supplemental measure of our core operating performance. The company believes that financial analysts, investors and shareholders are better served by the presentation of operating results generated from its FFO and Recurring FFO measures.

We consider the FFO and Recurring FFO to be an appropriate supplemental non-GAAP measure to operating income because it assists management, and thereby investors, in analyzing our operating performance.

The metric's FFO and Recurring FFO should only be considered as supplemental to the metric net income as a measure of our performance. FFO (i) does not represent cash flow from operations as defined by GAAP, (ii) is not indicative of cash available to fund all cash flow needs, including the ability to make distributions, (iii) is not an alternative to cash flow as a measure of liquidity, and (iv) should not be considered as an alternative to net income (which is determined in accordance with GAAP) for purposes of evaluating our operating performance.

OPTIBASE REPORTS/3

Reconciliation of GAAP to Non-GAAP (Unaudited) Supplemental Financial Data

A reconciliation of operating income to NOI is as follows:

	Three months ended
	March 31		March 31
	2017		2016
	$		$
	Unaudited		Unaudited

GAAP Operating income		1,643		1,571

Adjustments:
Real estate depreciation and amortization		1,038		1,051

General and administrative		626		597

Non-GAAP Net Operating Income NOI		3,307		3,219

A reconciliation of net income to FFO and Recurring FFO is as follows:

	Three months ended
	March 31			March 31
	2017			2016
	$			$
	Unaudited			Unaudited

GAAP Net income (loss) attributable to Optibase LTD		(515	)		718

Adjustments :
Real estate depreciation and amortization		1,038			1,051

Prorata share of real estate depreciation and amortization from unconsolidated associates		60			447

Non controlling interests share in the above adjustments		(279	)		(283	)

Non-GAAP Fund From Operation (FFO))		304			1,933

Non-GAAP Recurring Fund From Operation (Recurring FFO)		304			1,933

Amounts in thousands

OPTIBASE REPORTS/4

About Optibase

Optibase invests in the fixed-income real estate field and currently holds properties and beneficial interest in real-estate assets and projects in Switzerland, Germany and in Texas, Philadelphia, PA and Miami, FL, Chicago, IL, USA and is currently looking for additional real estate investment opportunities. Optibase was previously engaged in the field of digital video technologies until the sale of its video solutions business to Optibase Technologies Ltd., a wholly owned subsidiary of VITEC Multimedia in July 2010. For further information, please visit www.optibase-holdings.com.

This press release contains forward-looking statements concerning our marketing and operations plans. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. All forward-looking statements in this press release are made based on management's current expectations which involve risks, uncertainties and other factors that could cause results to differ materially from those expressed in forward-looking statements. These statements involve a number of risks and uncertainties including, but not limited to, difficulties in finding suitable real-estate properties for investment, availability of financing for the acquisition of real-estate, difficulties in leasing of real-estate properties, insolvency of tenants, difficulties in the disposition of real-estate projects, risk relating to collaborative arrangements with our partners relating to our real-estate properties, risks relating to the full consummation of the transaction for the sale of our video solutions business, general economic conditions and other risk factors. For a more detailed discussion of these and other risks that may cause actual results to differ from the forward looking statements in this press release, please refer to Optibase's most recent annual report on Form 20-F. The Company does not undertake any obligation to update forward-looking statements made herein.

OPTIBASE REPORTS/5

Optibase Ltd.

Condensed Consolidated Statement of Operations

For the Period Ended March 31, 2017

	Three months ended
	March 31			March 31
	2017			2016
	$			$
	Unaudited			Unaudited

Fixed income real estate rent		4,027			4,043
Cost and expenses:
Cost of real estate operation		720			824
Real estate depreciation and amortization		1,038			1,051
General and administrative		626			597
Total cost and expenses		2,384			2,472
Operating income		1,643			1,571

Other Income		161			229
Financial expenses, net		(890	)		(641	)
Income before taxes on income		914			1,159
Taxes on income		(415	)		(392	)
Equity share in income (losses) of associates, net		(492	)		460

Net income		7			1,227

Net income attributable to non-controlling interests		522			509
Net income (loss) attributable to Optibase LTD		(515	)		718

Net income (loss) per share :
Basic and Diluted	$	(0.10	)	$	0.14

Number of shares used in computing earnings losses per share
Basic		5,180			5,141
Diluted		5,180			5,141

Amounts in thousands

OPTIBASE REPORTS/6

Condensed Consolidated Balance Sheets

	March 31, 2017		December 31, 2016
	Unaudited		Audited
Assets

Current Assets:
Cash and cash equivalents		22,253		16,024
Trade receivables		628		220
Other accounts receivables and prepaid expenses		510		528
Total current assets		23,391		16,772

Long term investments:
Other long term deposits and receivables		4,172		2,785
Investments in companies and associates		22,243		22,892
Total Long term investments		26,415		25,677

Property and other assets, net:
Real estate properties, net		211,380		207,690
Other assets, net		199		245
Total property and other assets		211,579		207,935

Total assets		261,385		250,384

Liabilities and shareholders' equity

Current Liabilities:
Current maturities of long term loans and bonds		10,572		10,360
Accounts payable and accrued expenses		4,931		4,254

Total liabilities attributed to discontinued operations		2,061		2,061
Total current liabilities		17,564		16,675

Long term liabilities:
Deferred tax liabilities		13,873		13,620
Land lease liability, net		6,240		6,133
Other long-term liabilities		337		407
Long term loans, net of current maturities		136,312		129,261
Long term bonds, net of current maturities		10,779		10,160
Total long term liabilities		167,541		159,581

Shareholders' equity:
Shareholders' equity of Optibase Ltd		56,347		55,134
Non-controlling interests		19,933		18,994
Total shareholders' equity		76,280		74,128

Total liabilities and shareholders' equity		261,385		250,384

Amounts in thousands