swiss property 8 8298.
(photo credit: Courtesy)
Delek Global Real Estate Ltd., the AIM-listed real estate company controlled by Yitzhak Tshuva's Delek Group, together with Igal Ahouvi Group's Blenheim Properties, is buying the prime real estate portfolio from Jelmoli Holding AG in Switzerland in the largest ever portfolio acquired by an Israeli investor abroad. The deal is worth NIS 12.3 billion.
"This will be one of the largest property acquisitions in Europe this year," said Ilik Rozanski, CEO of Delek Global Real Estate. "We are delighted to lead this important acquisition of a major prime real estate portfolio, which includes the acquisition of a talented management team. The acquisition gives us the prospect of significant further expansion in continental Europe."
Under the terms of the agreement, Delek Global Real Estate is acquiring 33.33 percent of the portfolio, its parent company Delek Belron International 16.67% and Igal Ahouvi Group's Blenheim Properties 50%. In addition, the consortium is examining the possibility of using the option it has been granted until the end of this year to acquire Jelmoli's retail operations, which include the Jelmoli House of Brands, the majority of Jelmoli Bonus Card Ltd. and the Jelmoli Service Ltd.
"This is a very big deal for Delek Global Real Estate and it fits like a glove with the company's strategy," said Shai Lipman, a real estate analyst at IBI investment house. "Risks of the deal remain very low as economic fundamentals in Switzerland are very good and the majority of the properties have long-term leases linked to the consumer price index."
The Swiss portfolio comprises 88 investment properties encompassing an area of 530,543 square meters of retail outlets, currently rented by major outfitters in the Swiss market in Zurich and Geneva such as the Jelmoli Department Store, Grand Passage and Place Du Molard.
The majority of properties are fully let on long-term leases for a period of 25 years with an average lease period of 13.5 years About 60% of the portfolio are retail stores and shopping centers and 19% is comprised of office buildings. Net rental income from the portfolio is expected to generate NIS 659m. annually. In 2006, Jelmoli Holding AG generated NIS 4.3b. in revenues.
An additional 2 properties are currently being developed in Geneva and in St. Gallen
As a result of the acquisition, the total value of the properties in the Delek Global Real Estate portfolio will increase 33% to NIS 45b, while the total value of the rental income of the portfolio will rise 34% to about NIS 1.9b.
Upon completion of the acquisition, Delek Global Real Estate's portfolio will have 45% of its holdings in the UK, 28% in Switzerland, 10% in Canada, 10% in Germany and 7% in Scandinavia.