Israel's major investment institutions continued to buy income-producing real estate overseas. "Globes" has learned that Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL), whose investments are managed by Assaf Shoham, and the Aurec group are about to buy jointly an office building in Frankfurt occupied by international accounting firm Ernst & Young, for some €250 million (about NIS 1 billion).
The leverage in the deal is 65%, such that Migdal will actually invest €50 million (about NIS 200 million) for 48% of the equity in the joint company. Aurec will be the managing partner in the deal. It is also reported that additional Israeli institutions are expected to participate in the deal. A few years ago, Aurec Capital entered into a similar partnership with an investment institution, when it twice bought buildings in Germany for hundreds of millions of shekels with Harel Insurance Investments and Financial Services Ltd. (TASE: HARL).
As far as Migdal is concerned, this is a deal that diversifies its portfolio with an income-producing asset that should be a cash-flow anchor regardless of what happens on the capital market. Ernst & Young is a robust tenant on a lease with fourteen more years to run without exit points. Frankfurt, which looks as though it will gain from the UK's exit from the European Union, is a leading city, and investment there is consistent with Migdal's policy of investing in stable locations.
The Aurec group was founded by Morris Kahn with Zvi and Shmuel Meitar. It has made several very large exits from investments in technology and telecommunications, having sold Golden Pages (Israel's Yellow Pages), cable television provider Golden Channels (now part of HOT Telecommunication Systems Ltd. (TASE: HOT)); ISP Golden Lines (now part of Internet Zahav), and Amdocs Ltd. (Nasdaq: DOX), as well as insurance company AIG Israel.
Published by Globes [online], Israel business news - www.globes-online.com - on July 17, 2017
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