"Africa-Israel buys high, sells low" is the title of a "The Wall Street Journal" article on the real estate company controlled by Lev Leviev. "Africa-Israel Investments Ltd. (TASE:AFIL) was one of the most aggressive foreign buyers of US commercial real estate during the boom, snapping up or building trophy properties in New York and Miami and hatching grand development plans in Phoenix and Las Vegas," writes the paper. "Now, after big losses, the Israel-based company, which is run by an Uzbek-born diamond tycoon, is selling some of those properties for significantly less than it paid."
"The Wall Street Journal" adds, "In recent weeks, Africa-Israel has struck agreements to sell a major piece of the former New York Times headquarters and the landmark Clock Tower building overlooking Madison Square Park in Manhattan, both at steep losses. It also has unloaded numerous parcels of land in Florida."
During the late stages of the US real-estate boom, Africa-Israel began making highly leveraged bets in big cities. Unlike many foreign investors, which tend to buy stabilized properties with solid cash flows, Africa-Israel made highly speculative bets, buying up empty tracks of land and trying to convert office buildings to condos. It issued bonds in the Israeli market to finance much of the buying, racking up debt of NIS 7.8 billion by the end of 2009.
Africa-Israel CEO Izzy Cohen told "The Wall Street Journal", "We are trying to cash out a little bit," citing the improving commercial markets in New York and other regions as the main reason for its moves.
The paper cites some loss-making sales: the sale of Clock Tower building to Tommy Hilfiger for $170, after buying the property for $200 million in 2007 and spending tens of millions of dollars to convert it to condominiums; and the sale of floors in the old New York Times building to to Blackstone Group LP for $160 million, compared with the 2007 purchase price of $525 million.
Africa-Israel has shelved a project in Phoenix and completely wrote off its $100 million investment in a Las Vegas hotel project to build the world's largest hotel.
"The Wall Street Journal" quotes Africa Israel USA CEO Tamir Kazaz as saying, "We paid market prices. We paid them at the peak." He added however, the company could buy US properties in the future. "We are not buying now. We still have significant inventory to sell."
Published by Globes [online], Israel business news - www.globes-online.com - on July 13, 2011
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