Nathan Hetz is substantially expanding his income-producing real estate business in the UK, where he has achieved major successes in the past.
Income-producing real estate company Alony Hetz Property and Investments Ltd. (TASE: ALHE), controlled by Nathan Hetz and David Wertheim, today announced its intention of investing, together with the senior partners in the Brockton group of funds, up to £340 million (NIS 1.6 billion) in a new company named Brockton Everlast (BE). The new company will acquire, develop, upgrade, construct, manage, and maintain commercial income-producing real estate in the UK, with a focus on Greater London.
Alony Hetz has a long record of large-scale success in real estate in the UK, where it made its first significant investment outside of Israel in 1993-1997, when it acquired a portfolio of properties in the UK worth £188 million, and had £12 million in equity. Alony Hetz later sold this investment at a large profit. Alony Hetz is currently involved in income-producing real estate in the UK through its holding in the Brockton group, which began in 2006, and which invests mainly in properties in central London.
BE will be managed by the managers of Brockton for at least eight years. Alony Hetz, which will be the controlling shareholder in BE, plans to inject £40 million into the company when the deal is closed (probably in the coming weeks), up to £150 million more starting in September 2018, and another £150 million starting in the second half of 2019, subject to rate at which the company acquires properties. The managers of Brockton have undertaken to invest £13 million in equity when the deal is closed and £30 million more in the coming years.
The first Brockton fund in which Alony Hetz invested has already been almost completely sold (one development property is left). Its second fund is in the advanced sale stages, and the third fund has begun selling its investments, with its investment period slated to end in August 2018. As part of the deal, BE will buy Brockton Funds for £40 million from the Brockton managers and other minority shareholders, while Brockton will continue managing its three funds until their properties are sold, which is to take four years. Alony Hetz adds that BE plans to begin investing in real estate only after the end of the Brockton 3 fund's investment period six months from now. In the short term, the Brockton fund managers will manage BE's new activity, while also managing the fund.
The book value of Alony Hetz's existing investment in Brockton is NIS 200 million, while its share in the three funds that raised £1.5 billion from investors over the past 12 years varies from 5% to 25%, and its share in the partner managing the funds, which is entitled to management fees, is 6-10%.
In addition to Brockton Funds, Alony Hetz operates in income-producing real estate in Israel through its Amot Investments Ltd. (TASE:AMOT) subsidiary. In the US, it operates in Washington through a partnership in Carr, and in Boston through a partnership with Oxford Properties. In Switzerland, Alony Hetz operates through a holding in the PSP company. Alony Hetz also has renewable energy business through Energix Renewable Energies Ltd. (ENRG). Alony Hetz's share price was down slightly today, but has climbed 14% over the past year, with the company's market cap reaching NIS 5.8 billion.
Nathan Hetz said today, "After a prolonged period of tracking, study, and analysis of a number of Western real estate markets, we decided to establish an arm for business in income-producing real estate in the UK, while undertaking to invest £340 million in the coming years. We believe that the London income-producing real estate market is likely to prove attractive for investment in the coming year, among other things because of the Brexit process and the changes that have occurred in the market over the past two year.
"Fortunately, we have reached agreements and recruited the senior Brockton Funds management team to build a new company that will buy, develop, upgrade, construct, manage, and maintain commercial income-producing real estate the UK, while focusing on the metropolitan London area. The team is native to the UK, talented, and topnotch, and is very familiar with metropolitan London," Hetz added.
Last week, Alony Hetz reported a recent deal by the Wertheim family, the company's largest shareholder, in which David Wertheim acquired the shares of his sister, Drorit Wertheim, in the M. Wertheim private company. This company holds 19% of Alony Hetz's shares. David Wertheim owned 61% of the private company's shares before this deal. He shares control of the company with CEO Hetz, who owns 15% of its capital.
Published by Globes [online], Israel Business News - www.globes-online.com - on February 8, 2018
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