The board of directors of Yitzhak Tshuva-controlled Delek Real Estate Ltd. (TASE: DLKR) yesterday ordered management to review the company's ability to meet its cash flow report, and submit a revised plan by July 21.
The board convened as Delek Real Estate's share and bond prices continued to slide, and amid market assessments about the company's proposed debt settlement with bondholders. Rumors spread following two company announcement earlier this week: a German bank foreclosed on a property, and a British bank raised the interest margins on the company National Car Park Ltd. (NCP) portfolio of 127 parking garages in the UK. Both properties are owned by Delek Real Estate subsidiary Delek Global Real Estate Ltd., in which it owns an 85% stake.
The NCP issue is the more significant of the announcements, as it involves a major asset, which generated NIS 252 million in rent in 2010 - 10% of Delek Global Real Estate's revenue. Following the bank's notice, NCP asked for a 7% reduction in its rent - ₤750,000 per quarter.
The loss of revenue could have a major impact on Delek Real Estate's ability to meet its cash flow report. Delek Real Estate plans to ask its bondholders to convert their bonds to new bonds backed by Delek Global Real Estate shares - but banks have liens on them.
Today, Delek Global Real Estate closed the sale of the Bell Tower in Montreal for C$278 million (NIS 990 million). C$147 million (NIS 524 million) of the proceeds will be used to pay off the debt on the property, and the net proceeds will help finance a ₤69 million (NIS 379 million) buy-back of shares.
Delek Real Estate's share price rose 6.7% in morning trading to NIS 0.238, giving a market cap of NIS 87 million.
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