Bethel Finance: Mishorim enters US real estate market

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Bethel Finance news:
Mishorim Development Ltd. (TASE:MSHR) is expanding its Israeli and Canadian operations into the US, with $14 million (NIS 51 million) in investments. In a notice to the TASE, the company said that it won a tender to buy a commercial complex in Cleveland, Ohio, from its receiver for $8 million (NIS 29 million).

The property includes a 293-room 4-star hotel, managed by Hyatt Regency, and a 6,000-square meter shopping center built in 1890, the first indoor mall in the US. $74 million has been invested in the complex since 2001, and its estimated net operating income (NOI) for 2011 is $700,000.

Mishorim made the deal though its Canadian subsidiary Skyline International Development Inc. (in which it owns 59%), which handles 85% of the company's operations. Skyline plans to convert 100 of the hotel rooms into residences and sell them, as the company has done in other projects.

A few weeks ago, Mishorim announced that Skyline raised C$20 million (NIS 72 million) from two Canadian investors at a company value of C$150 million, before money. Skyline also raised C$6.7 million in an owners' loan from Mishorim and Ofer Nimrodi-controlled Israel Land Development Company (TASE: ILDC).

Mishorim and a partner have also signed an agreement buy a commercial property in Las Vegas for $3.2 million (NIS 12 million). Mishorim's share of the deal is 70%. The property was bought from the US bank which has the $8 million mortgage on the property. The 5,000-square meter shopping center is 54% occupied and has an NOI of $425,000 in 2011. Mishorim expects to close the deal by January 2012.

In a third deal, this month, Mishorim and its partners expect to complete the purchase of a 208-condominium residential complex in St. Petersburg, Florida , for $15 million (NIS 55 million). Mishorim's share of the deal is 25%. The project has an anchorage for yachts.

Mishorim CEO Gil Blutrich first entered the US real estate market in a private capacity in the 1990s. He said, "These deals were made after we monitored the US market for almost five years, in order to find the right moment. I believe that the conditions are right to make a careful and measured entry into this market.

Mishorim's share price rose 3.3% today to NIS 9.80, giving a market cap of NIS 332 million.