Israeli real estate companies operating overseas are sewing up a huge deal. Africa-Israel Investments Ltd. (TASE:AFIL; Pink Sheets:AFIVY) today announced that its subsidiary Africa-Israel Properties Ltd. (TASE: AFPR) was negotiating to buy the assets portfolio, comprising of ten projects, from BSR Europe Ltd. (TASE:BSR) for NIS 750 million. The purchase will be made through Africa-Israel Properties subsidiary AFI Europe NV.
BSR Europe said it would record a pretax capital gain of NIS 550 million on the sale if a contract is signed.
The ten properties are in Romania, Poland, Latvia and Cyprus. Eight of the properties are residential, one is an office block, and one is a commercial project under construction. BSR Europe said it has recorded the projects in its books at NIS 360 million, and that they comprise 63% of the company’s consolidated balance sheet.
This means that Africa-Israel, controlled by chairman Lev Leviev, is buying the bulk of BSR Europe’s current activity. Since BSR Europe’s current cash flow can be expected to grow by the amount of the purchase price (NIS 750 million, less taxes and transaction costs), the company plans to distribute a large dividend.
The parties opened negotiations ten days ago, and expect to close the deal within two months.
A deal with Africa-Israel means that BSR Europe chairman Kalman Sufrin and CEO Nachshon Kivity, prefer an exit over a flotation in London. They recently revived a plan, shelved in 2005, to raise capital on London’s Alternative Investment Market (AIM).
Kivity said today, “We’re getting more or less the same value, and we preferred Africa-Israel over an offering. We saw a good opportunity here to make a quick sale at a handsome profit, and we now plan to distribute a generous dividend, assuming that a deal is closed.”
Kivity has no plans to slow down. “I won’t shut down BSR Europe. We’ll still own half of our projects, and we’ll continue to develop them and search for new opportunities,” he said.
Similarly to BSR Europe, Africa-Israel also deferred plans for a flotation on the AIM in 2006, when the company’s new CEO decided against an IPO by AFI Europe. The purchase of the bulk of BSR Europe’s business brings AFI Europe closer to an IPO, assuming a deal is closed and the market climate is favorable. Although Leviev and Africa-Israel CEO Erez Meltzer have scheduled AFI Europe’s IPO for 2007, it might still be put off until the latest deal is closed.
Published by Globes [online], Israel business news - www.globes.co.il - on December 25, 2006
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