Africa Israel Residences Ltd., Lev Leviev's local residential-housing business, says it has no cash-flow problems like its parent company, which is struggling to restructure debt. "Africa Israel Residences is a stable and profitable public company, which is separate and independent from the parent company [Africa Israel Investments Ltd.]," Africa Israel Residences CEO Gil Dekel told The Jerusalem Post Thursday. "We don't have a cash-flow problem and have the ability to repay debt without any settlement. There is no dialogue taking place on this issue." The company's equity was NIS 550 million, with NIS 280m. in bonds, he said. Meanwhile Moody's Midroog credit-rating agency on Thursday lowered Africa Israel Residences bonds to A3 from A1 because of its potential exposure to the debt problems faced by Africa Israel Investments. Leviev announced on August 30 that the group was having problems getting new loans to refinance its long-term debt after a plunge in the value of its real-estate investments in the US and Russia. Midroog said Africa Israel Residences's good cash-flow position and the profit surplus available for distribution, NIS 300m., might represent a convenient opportunity by the parent company for the withdrawal of dividends, which in turn could damage the financial situation of the company. "However, we expect that the exposure of the company will be moderate in comparison to other subsidiaries in the group with assets that could be realized in an easier way," Midroog said in a report. Speaking to the Post before the release of the Midroog report, Dekel said the parent company would not be able to withdraw dividends. "The regulator will protect us," he said. "On the individual level, property owners and potential buyers can be reassured of their asset by the regulation that was instated following the Heftsiba scandal." Under the law governing housing sales, a builder must provide the buyer with a guarantee for each payment made using a booklet of payment slips issued by the financing bank. The purpose of the law is to assure that the buyer's money goes where it should, which is to the bank financing the construction project and not directly to the pockets of the builder. Under the Savionim brand name, Africa Israel Residences constructs and develops residential complexes and gated communities in popular areas such as Ramat Gan, Netanya, Rehovot and Kfar Saba. They include shopping centers, schools, green areas, cultural and sports facilities. Dekel said the company and its partners had more than 1,500 apartments under construction and 19 projects in the planning stages. In August, Africa-Israel Residences reported net profit of NIS 12.3m. for the second quarter, up from NIS 3.3m. for the first quarter and a loss of NIS 3.5m. for the second quarter of 2008. Revenues from land and apartment sales for the second quarter were NIS 66.6m., up 28 percent from the NIS 48.1m. generated in the same quarter last year. The company sold 183 apartments during the second quarter, compared with 134 apartments in the corresponding quarter in 2008. Together with its partners, Africa Israel Residences sold 206 apartments in the first half of 2009 for NIS 418m., of which the company's share was NIS 243m. "Despite the global recession and the real-estate crisis around the world, the real-estate market in Israel has been prospering," Dekel said. "The local real-estate market is at a point in time when all the vectors are positive and demand is booming and dominating the supply side, which in turn is pushing up prices. In the first nine months of the year, prices for apartments in the company's projects have rise by about seven to 12 percent." Buyers who at the end of last year were waiting on the fence for prices to drop were beaten by reality and are returning to the market, Dekel said, while near-zero interest rates and distrust of investment in financial markets were boosting demand. Furthermore, the recent trend toward forming buying groups for home construction projects was also driving up prices, he said. The "Global Property Guide" international survey published at the end of August found that housing prices in Israel were 8.4% higher in the second quarter of 2009 than in the corresponding quarter of 2008 - the highest growth in any market in the survey. The data showed that in the second quarter, some residential real-estate markets around the world were showing signs of a recovery. Housing prices rose 3.73% in Australia, 3.31% in New Zealand and 4.9% in Switzerland. "I don't see this train stopping," Dekel said. "Looking ahead, I don't see prices coming down, making it harder for young couples to buy apartments."