On Monday, Azrieli Group Ltd. (TASE: AZRG) notified the Tel Aviv Stock Exchange (TASE) that it had received two private loans, totaling NIS 960 million, from two financial institutions. The borrowing, as first reported by "Globes", is part of the company's plan to recycle the debt it obtained from Bank Hapoalim (TASE: POLI) and Bank Leumi (TASE: LUMI) for the construction of the Azrieli Center in Tel Aviv. The CPI-linked bank loans bear an interest rate of nearly 6%. The interest rate differential of 5 percentage points between the bank loans and the new loans will save Azrieli Group NIS 50 million a year.
Harel Insurance Investments and Financial Services Ltd. (TASE: HARL) will provide most of the loan to Azrieli, granting a CPI-linked NIS 710 million loan bearing an interest rate of 1.16%. The loan will be repaid in 16 equal semiannual installments from February 2014. The loan will be secured by a lien on Azrieli's rights to the 11th through 49th floors of the Azrieli Round Tower, part of the lobby, and the roof.
Altshuler Shaham Ltd. will provide a CPI-linked NIS 250 million loan, bearing an annual interest rate of 0.75%. The loan's principle will be paid in a single installment in August 2015, and the interest will be paid quarterly from December 2013.
Midroog Ltd. has given both loans an Aa2 rating.
Azrieli Group said, "The purpose of the new loans is to replace the previous loan, which has reached maturity, and which bears a higher interest rate of 6% and includes more extensive liens (on the entire Azrieli Center, except for the Square Tower), as well as to finance current needs."
Azrieli Group is Israel's largest income-producing real estate company, with 13 malls with aggregate space of 257,000 square meters; nine office buildings with aggregate space of 293,000 square meters; six income-producing properties abroad, with aggregate space of 179,000 square meters; and seven projects under construction with aggregate space of 400,000 square meters.
Published by Globes [online], Israel business news - www.globes-online.com - on August 20, 2013
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