Nochi Dankner and Yitzhak Tshuva have taken another step in their Plaza hotel-casino and business center project on the Las Vegas Strip. Property and Building Ltd. (TASE: PTBL) and Elad Properties LLC have completed the purchase of the lot for the Plaza. The companies’ joint company for the project, Elad IDB Las Vegas LLC, is held in equal shares through IDB Group USA Investments Inc. and Elad Properties Las Vegas LLC.
Property and Building is a sub-subsidiary of IDB Holding Corp. Ltd. (TASE:IDBH), controlled by chairman and CEO Nochi Dankner. Elad Properties is a private real estate developer owned by Yitzhak Tshuva.
The companies paid $1.24 billion for the land. Property and Building took out a $625 million loan to pay for its share. IDB Group USA and Elad Properties also provided $100 million each in loans, and will provide the $400 million balance from equity.
The Plaza hotel, casino and business center will have 1.5 million sq.m. in space, and will be built in stages for a total cost $5.7 billion, financed by both shareholders’ equity and external sources. Construction will take 4-5 years.
Elad IDB Las Vegas obtained a $625 million loan from Goldman Sachs Group Inc. (NYSE:GS) and Credit Suisse Group (NYSE: CSR; SWX: CSGN; XETRA: CSGZ) for the Plaza hotel-casino project. Property and Building and Elad will finance the other 50% of the land purchase from shareholders’ equity. The low proportion of bank funding can be attributed to the terms the two banks offered for $200 million of the loan: LIBOR + 6%, or the US dollar interest rate of 11.25%.
Elad is about to raise $650 million, which will probably be linked to the CPI, amounting to an actual interest rate of 6.5-7%, depending on the inflation rate. IDB Holding raised $450 million in bonds bearing 4.5% interest. Dankner and Tshuva’s decision to finance a large part of the land purchase is therefore correct, since they can also refinance the project if interest rates go down later.
Published by Globes [online], Israel business news - www.globes.co.il - on August 12, 2007
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