The financial statements of The Phoenix Holdings Ltd. (TASE: PHOE1;PHOE5), published today, reveal that a new valuation carried out for Linchfield, which holds a portfolio of 127 car parks in the UK, caused heavy losses last year to shareholders in the car parks company, headed by Delek Real Estate Ltd. (TASE: DLKR), which, like Phoenix, is controlled by Yitzhak Tshuva.
The updated valuation carried out for Linchfield in December 2011 reduces the value of the car parks by some NIS 1.3 billion. Phoenix owns 5% of Linchfield, Delek Real Estate owns 59%, CPA Yitzhak Suari owns 4%, Giron Development and Building Ltd. (TASE: GRON) owns 8%, and the rest is owned by overseas investors.
National Car Park Ltd. (NCR), the main lessee of the car parks, has run into a difficult cash flow crisis, and may undergo a debt arrangement. The banks have therefore required the lessor company (Linchfield) to carry out a new valuation of the car parks, and to pay a higher interest rate, in accordance with the rise in risk in the assets. This was apparently also the reason that Delek Real Estate sought a debt arrangement with its creditors last July.
Phoenix wrote NIS 49 million off its investment in Linchfield in the fourth quarter. Delek Real Estate, which has still not released its financials, announced that it will make a write down of ₤60 million (NIS 353 million) in the fourth quarter, making it a NIS 800 million write down over the year. Linchfield will be an important part of Delek Real Estate's debt arrangement.
Delek Real Estate added that the write-down is based on a valuation of ₤748 million (NIS 4.41 billion) for NCP as of the end of 2011, which takes into account the company's financial weakness and cash flow problems, since it is still not clear when the restructuring of the company's debts will be completed.
Negative returns on the capital market, a NIS 113 million write down of goodwill in the provident fund activity of investment house Excellence Investments Ltd. (TASE: EXCE) (resulting from the management fee reform), and the write down on the investment in the car parks in the UK, meant that insurance group Phoenix presented a weak quarter. It reported a loss of NIS 74 million, but in the first three quarters it had good results relative to the rest of the sector, so that for the full year it posted a net profit of NIS 54 million, 83% lower than in 2010. Taking into account investment losses posted to its balance sheet, the company lost NIS 30 million last year.
Published by Globes [online], Israel business news - www.globes-online.com - on March 28, 2012
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