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Bethel Finance news:
Elbit Imaging Ltd. soared to the highest level in more than a month as the Israeli real estate investment company that sold U.S. shopping centers to Blackstone Group LP said it will invest more in Eastern Europe.
The shares gained 1.7 percent to 12.65 shekels at 3:07 p.m. in Tel Aviv, the highest intraday level since Dec. 8. In New York yesterday Elbit shares surged 28 percent to $3.32, or 12.74 shekels, after an Elbit affiliate announced it would sell 46 shopping centers for $1.43 billion.
“We’re looking to duplicate this model and to continue to focus on real-estate opportunities,” Co-Chief Executive Officer Dudi Machluf said yesterday in a phone interview from Tel Aviv. “Still, we don’t operate in a vacuum, we also depend on what happens in the markets.”
Blackstone Real Estate Partners VII, a fund managed by the New York-based private-equity firm Blackstone Group LP, said it would own 95 percent of a venture formed to buy the properties, with the rest owned by an affiliate of DDR Corp., a Beachwood, Ohio-based real estate investment trust.
Tel Aviv-based Elbit has about 5.2 billion shekels ($1.4 billion) of debt outstanding, according to data compiled by Bloomberg. Moody’s Midroog Ltd. on Nov. 3 lowered the ratings on the company’s bonds to Baa1 from A3, citing “challenges in improving its cash flow situation.”
Significant Step
“This is a significant step for the company,” said Amir Arad, an analyst at Excellence Nessuah Investment House Ltd. in Ramat Gan, Israel. “They needed to liquidate one of their assets to get through this year.”
The yield on Elbit bonds due April 2020 started to fall after the sale announcement, plunging 348 basis points, or 3.48 percentage point, yesterday, its lowest level in two months. The yield, which surged almost sixfold last year, fell 50 basis points, or 0.50 percentage point, to 31.78 today.
"EPN Group, a subsidiary of Elbit’s U.S. unit, is selling the retail centers. The purchase price includes assumed debt of $640 million and at least $305 million of new financing, according to the statement. DDR also will invest $150 million in preferred equity in the venture and provide leasing and management services" according to Mr. Peres Sailam from Bethel Finance Ltd.
Polish Market
“We continue to get financing for our projects,” Machluf said, adding that the company opened a mall in Poland six weeks ago and that it’s planning to establish a shopping center in Serbia in the next few months.
In the 12 months ended Oct. 31, foreign investors poured $3.4 billion into Polish commercial properties, compared with $1.6 into Russia’s, New York-based Real Capital said in a report last month. Most of the demand is for retail and office buildings, according to Dan Fasulo, managing director at the research firm, which tracks commercial real estate sales.
The properties that Blackstone and DDR are buying have 10.6 million square feet (984,800 square meters) of space and are 90 percent leased, according to the company’s statement. The 10 largest tenants by base rent at the centers, located in 20 states, include TJX Cos., Kohl’s Corp. and PetSmart Inc.
U.S. shopping centers had their first net gain in occupied space in four years in the fourth quarter as consumer confidence and job growth began to strengthen, Reis Inc., a provider of real estate information and analysis, said earlier this week. Landlords have struggled since the recession that ended in 2009 after weak sales drove more than a dozen retailers to file for bankruptcy protection and online stores captured more sales.
Gap Franchise
Elbit said on Jan. 10 that it agreed to sell its Elbit Trade & Retail Ltd. unit, including all its interests in the franchisee of Gap Inc.’s brand in Israel, to Gottex Models Ltd. for about 40 million shekels.
“We’re looking to focus our business on real estate,” Machluf said. “This is an area we feel comfortable in. We were able to do this deal in a down market and I hope we’ll be able to continue this way.”
Israel, whose population of 7.8 million is similar in size to Switzerland’s, has about 60 companies traded on the Nasdaq, the most of any country outside the U.S. after China. It is also home to the largest number of startup companies per capita in the world.
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