Ministry of Finance Supervisor of Capital Markets, Insurance and Savings Yadin Antebi recently ordered insurance companies to publicly disclose online their real estate investments and the return on these investments on their websites. This order makes it possible to examine the property portfolios of two of the largest insurance investors in Israeli real estate: Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS) and Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL).
Clal Insurance’s real estate portfolio almost quadrupled from NIS 350 million in January 2005 to NIS 1.25 billion today. The company exploited low interest rates and delayed recovery in the real estate industry to make a number of purchases, including 25% of the Givatayim Mall, the Ackerstein Building in Herzliya Pituah, a power center in Ness Ziona, the Israel Police building in Ramat Hahayal in Tel Aviv, and the Nahum Ezra business center in Netanya.
Clal Insurance’s real estate portfolio is highly diversified. In addition to industrial and commercial properties, it includes the Sha’ar Ha’ir Tower in Ramat Gan (the Moshe Aviv Tower), Beit Rubinstein in Tel Aviv, and the Vered Building in Givatayim.
According to data Clal Insurance has disclosed on its website, which only covers figures for participating insurance policies, the net average return on investment is 8.5%, considered fairly high.
In contrast to Clal Insurance, which also invests in real estate from its nostro portfolio, all of Migdal’s real estate portfolio is intended for policyholders. Migdal’s real estate portfolio leans towards large government projects, at the expense of return on investment. At the end of the first quarter of 2006, Migdal’s real estate portfolio was worth NIS 880 million, not including its purchase of the Weizmann Mall adjacent to Tel Aviv Sourasky Medical Center (Ichilov Hospital) and half of a shopping center in Netanya from Kobi Rogovin and Prashkovsky ASI Building Co. Ltd.
NIS 500 million of Migdal’s real estate portfolio comprises three government compounds in Haifa, Beersheva and Rishon LeZion. The return on the Haifa government compound is 8%, the return on the Rishon LeZion government compound is 6.8%, and the return on the Beersheva compound is 5.1%.
The Achilles’ Heel of Migdal’s real estate portfolio is the museum deal on the Tel Aviv Courthouse lot on Berkowitz St., which Migdal records at a cost of NIS 312 million and which generates a return of 2.5%. The Top Dan project, which cost Migdal NIS 108 million, generates a return of 4%.
Published by Globes [online], Israel business news - www.globes.co.il - on July 30, 2006
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