Alony Hetz Property and Investments Ltd. (TASE: ALHE) has been expanding its US operations, and yesterday reported that it had signed, together with a partner, binding agreements to buy a Boston office building for $190 million (NIS 720 million). The building in East Cambridge has 21,000 square meters of space. Alony Hetz will hold a 55% of the property, with the rest held by its US partner Oxford Properties Group, which will also manage it.
The two companies have already made a $15 million deposit and intend to close the deal by mid-February, contingent on conditions precedent. Alony Hetz, controlled by CEO Nathan Hetz and the Wertheim family, said, "Based on the current rental agreement, starting in April 2018 the entire building will be occupied by one of the property's current renters, which has a binding contract for a 9.5 year period ending in October 2017."
According to Alony Hetz estimates, the property will generate $8 million net operating income (NOI) next year, which will rise to $13 million in 2021. The company added, "the partners intend to finance about 50% of the value of the property using a loan from a US financial entity, via the property company," and said that Alony Hetz "will provide its share of equity required to buy the property, $50-60 million, from its own sources."
Oxford Properties Group is the real estate arm of the Ontario Municipal Employees Retirement System (OMERS) and owns over 179 buildings in Canada, the US and Europe. Alony Hetz already co-owns two Boston office buildings with Oxford Properties Group; after the completion of this deal, they will together own properties with a total value of $600 million.
Alony Hetz CEO Nathan Hetz said today, "The East Cambridge area is considered to be the US 'IQ Valley', because of its proximity to MIT. The area houses the elite of research centers of global technology, pharma and biotech companies. It is also a high-demand area for various kinds of high tech companies."
Published by Globes [online], Israel business news - www.globes-online.com - on December 12, 2016
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