Last Thursday, stock market players expressed surprise at a deal in which real estate developer Israel Canada (TASE: ISCN), controlled by Asaf Touchmair and Barak Rosen, sold a package of 4% of the shares in Alrov Properties and Lodgings (TASE: ALRPR) for NIS 150 million to the provident funds of More Investment House.
The surprise was not at Rosen and Touchmair’s retreat from their ambitious plan to raise their stake in Alrov in the future, but at the deep discount, of 20%, on the market price at which the sale took place. The discount appears to indicate a need on the part of highly-leveraged Israel Canada for greater liquidity for the sake of investment in its core business, against a background of rising interest rates.
The sale also indicates that, at least for now, Rosen and Touchmair have abandoned their dream of expanding their real estate business through an opportunistic takeover of two publicly traded real estate companies built up by veteran developers Alfred Akirov (Alrov) and Chaim Katzman (G City), in which Israel Canada invested over NIS 800 million in aggregate.
Israel Canada’s share price has responded positively to the report, rising by about 10% since Thursday, thereby reducing the losses that investors in the stock have sustained over the past year, amounting to about 53%. The current price gives the company a market cap of NIS 2.9 billion.
Yields on Israel Canada’s bonds have also climbed down a little from the danger zone, although they are still traded at a yield that will make it hard to recycle the debt without collateral. The series 7 bond, which touched a yield of 9.4% less than a month ago, now has a yield of 7.4%. At the end of September, Israel Canada’s liabilities totaled NIS 6 billion, versus shareholders’ equity of NIS 2 billion. The company has been an aggressive developer of residential real estate projects in central Israel in recent years.
Published by Globes, Israel business news - en.globes.co.il - on January 17, 2023.
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