Canadian investment fund Mawer Investment Management last week sold its 2-2.5% holding in income-producing real estate company Gazit-Globe Ltd. (NYSE: GZT; TASE: GZT; TSX: GZT) for NIS 170 million. Gazit-Globe parent company Norstar Holdings Inc. (TASE: NSTR), controlled by chairman Chaim Katzman and vice-chairman and CEO Dori Segal, put up NIS 35 million of this amount in an off-floor transaction. Following the deal, Norstar's stake in Gazit-Globe is nearly 52%. As far as is known, several investment institutions bought the rest of Mawer's shares.
Norstar's purchase was at NIS 34 per share, about the same as the current price, and reflecting a NIS 6.6 billion value for Gazit-Globe, following a 4% decline over the past year, while the TASE real estate index was up 17% during the same period. The share price has dropped 16% in the past three years, while the real estate index rose 36%.
The share's performance irritated Katzman
Early this year, Katzman expressed dissatisfaction to "Globes" with the share's performance. "It also irritates me," he said. "Irritate is the right word, not disturb. I'm not used to it. When I try to think why it's happening, it seems to me that it's both the matter of a holding company and some residual negative feeling from our investment in the U. Dori group. The answer to this is not only whether you are generating new business. Some of this discount is a result of previous years, when we didn't generate new business, or at least the market didn't see us generating new business."
Earlier this month, Gazit-Globe made its first direct purchase of an income-producing property in New York since it sold its holdings in former subsidiary Equity One last year. The property, which contains 8,550 square meters in rental space, is located in Upper Eastside Manhattan. Gazit Horizons, Gazit-Globe's new subsidiary, which handles the parent company's US business, acquired the property for $73 million.
In late 2016, then-Gazit-Globe CEO Rachel Lavine unexpectedly announced her resignation after a little more than a year in the job, as far as is known, due to the relatively intensive involvement of the controlling shareholders in the management of the company's business. Segal replaced Lavine as CEO, with Katzman as chairman.
Most of Gazit-Globe's activity consists of the purchase, upgrading, development, and management of commercial centers anchored by supermarkets in North America, Brazil, Israel, and Europe, with a focus on cities in growing urban areas.
Gazit-Globe finished the first half of the year with a NIS 95 million net profit, after posting a net profit of nearly NIS 800 million in 2016.
Published by Globes [online], Israel Business News - www.globes-online.com - on October 22, 2017
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