Uncertainty about Brexit is not deterring Israeli income-producing real estate company Alony Hetz Property and Investments Ltd. (TASE: ALHE), controlled by CEO Nathan Hetz and David Wertheim, from increasing its investments in London. The company reported yesterday to the Tel Aviv Stock Exchange (TASE) that Brockton Everlast, in which it holds a 77% controlling interest, is in advanced negotiations to separately buy two office buildings in central London with a combined total of 22,000 square meters at a combined price of £206 million (NIS 970 million).
Alony Hetz says that 95% of the first property is leased to a number of tenants for an average of four years. The company plans to add to the building on the site and upgrade it to a more modern office complex in the coming years. The second building is fully leased to a government department for eight years. At the same time, Alony Hetz plans to raise up to NIS 300 million in the coming years by expanding its series of six-year shekel-denominated bonds, currently traded at a 1.8% yield.
Alony Hetz reported its intention of expanding its business in the UK a year ago, when it said that it planned to invest up to £340 million (NIS 1.6 billion), together with senior partners of the Brockton funds group, in Brockton Everlast, which will buy, develop, upgrade, construct, manage, and maintain income-producing real estate in the UK, with a focus on metropolitan London.
Alony Hetz has invested £40 million (NIS 180 million) to date, and is due to inject £150 million (NIS 710 million) more in the coming months, plus a further £150 million starting in the second half of 2019, depending on the pace at which the company buys properties. Brockton's managers invested £13 million in Brockton Everest, and will add £30 million more to this in the coming years.
As part of this measure, Alony Hetz sold a million shares in PSP, a company active in the Swiss real estate market, two months ago for NIS 365 million. This sale left Alony Hetz with 10% of PSP's share capital. Alony Hetz said at the time, "The sale of shares in PSP was part of the company's preparations for making investments in the UK market in 2019… The company still regards its investment in PSP as an important long-term anchor in its investment portfolio."
Alony Hetz has a long and successful record in real estate investments in the UK, where it made its first major overseas investment in 1993-1997 by buying a portfolio of properties there amounting to £188 million with £12 million in equity. Alony Hetz sold this investment at a large profit.
Before founding Brockton Everlast, Alony Hetz operated in the UK income-producing real estate market through a holding in the Brockton group, which invests primarily in central London. As part of the founding of Brockton Everlast, Alon Hetz recently acquired Brockton funds for £40 million from Brockton Group's managers and other minority partners, who will continue selling all of their properties in the next four years.
Alony Hetz is active in income-producing real estate in Israel through its subsidiary, Amot Investments Ltd. (TASE:AMOT). It operates in the US in Washington, DC through a partnership with Carr and in Boston in partnership with Oxford Properties. Alony Hetz also has activity in renewable energy through a subsidiary, Energix. Alony Hetz's share price has climbed nearly 30% in the past year, pushing its market cap up to NIS 6.8 billion.
Published by Globes, Israel business news - en.globes.co.il - on February 18, 2019
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