Electra Real Estate Ltd. (TASE:ELCRE) is expanding its Swiss activities. Two weeks after announcing the purchase of eight shopping centers in Germany and Switzerland for NIS 1.15 billion, the company yesterday announced another purchase in Switzerland. The company and its partners bought a downtown Zurich building from Royal Philips Electronics (NYSE: PHG; AEX: PHI) for NIS 88.1 million. Electra Real Estate’s share of the deal is 70%.
The property is a five-storey building leased in full to Philips subsidiary Philips Semiconductors, Philip’s semiconductor arm in Europe, through 2011 at an annual rent of NIS 6.9 million. Philips undertook to renovate the building at a cost of NIS 22 million, which will improve the property’s value for Electra Real Estate. The rent reflects a net return on investment of 6.9%, considered high for the Swiss market.
The buyers, headed by Electra Real Estate, obtained a NIS 68.9 million five-year non-recourse loan at 4.05% fixed interest to finance the purchase.
Electra Real Estate managing director Shlomo Sherf said yesterday, “Switzerland is a suitable country for our strategy. We’ll continue to locate attractive properties in Switzerland and other countries with significant betterment potential for income-producing properties with long-term leases.”
Two weeks ago, Electra Real Estate announced a framework deal for the purchase of eight shopping centers in Germany and Switzerland leased to German DIY retailer Hornbach Holding AG (XETRA:HGH). Electra Real Estate’s share in the deal is 45%.
Electra Real Estate’s first quarter 2006 financial results showed substantial improvement. The company’s funds from operations (FFO) rose 45% to NIS 21.7 million in the first quarter from NIS 15 million in the corresponding quarter of 2005. The company posted a net profit of NIS 12.1 million for the first quarter.
Electra Real Estate owns over 60 income-producing properties in eight developments in Israel and other countries. The aggregate space of the properties is 528,000 sq.m.
Published by Globes [online], Israel business news - www.globes.co.il - on May 22, 2006
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