Real estate company Alony Hetz Property and Investments Ltd. (TASE: ALHE) is still expanding its US business. The company, controlled by CEO Nathan Hetz and the Wertheim family, today notified the TASE that its Carr Properties subsidiary, which does business mainly in Washington DC, northern Virginia, and southern Maryland, had signed an agreement to buy an office building in the US capital for $150 million (NIS 570 million).
Located in the main Washington DC business center, the building has 17,500 sq.m. of rental space (190,000 sq.ft.). Alony Hetz says that Carr "expects to generate an annual average of $9 million in net operating income (NOI) in the first five years after the deal is closed." Closing the deal is slated for early 2017, subject to a number of conditions.
In order to pay for part of the building's price, Carr has decided to raise capital immediately from its shareholders through a $75 million offering of rights. Alony Hetz announced that it intended to invest its estimated $35 million relative share in the offering, and "to use all the unutilized rights, if any, of other shareholders in Carr." Carr has raised $300 million from its shareholders this year, and Alony Hetz's share of this was over $150 million.
Joint holding with JP Morgan
Alony Hetz holds 45% of the shares in Carr, which it controls jointly with US firm JP Morgan. JP Morgan also owns 45% of Carr through the SSPF investment fund it manages. The Carr family and other investors hold the remaining shares.
At the end of the third quarter, Carr had 16 office buildings with a total of 275,000 sq.m. (three million sq.ft.) in rental space, valued at a total of $1.7 billion. The occupancy ratio in its buildings was 92%. Five development projects for the construction of office buildings with 220,000 sq.m. (2.4 million sq.ft.) in rental space are underway at a total cost of $1.5 billion.
The Trump effect
Nathan Hetz today expressed satisfaction with the acquisition, saying, "Carr is achieving impressive growth. This is its third acquisition this year, bringing the company's total acquisitions over the past 12 months to $500 million. When this acquisition is completed, the value of its real estate will be $2.5 billion."
Hetz added, "The office space market in Washington DC is expected to reap substantial benefit in both projected demand and average rent from President-elect Donald Trump's declared policy. We hope that this will also affect Carr's business."
Other than Carr, Alony Hetz also operates in Boston in partnership with Canadian company Oxford Properties. Earlier this week, Alony Hetz notified the stock exchange that the two companies had both signed a web of binding agreements to buy a Boston office building for $190 million (NIS 720 million) - the third property they have jointly acquired in Boston.
Alony Hetz operates through several holdings: Amot Investments Ltd. (TASE:AMOT) in Israel, PSP in Switzerland, Carr in the US, and real estate funds from the Brockton group in the UK. Alony Hetz also does business in renewable energy through its Energix Renewable Energies Ltd. (ENRG) subsidiary, which is traded at a NIS 4.9 billion market cap, following a 20% climb in its share price this year.
Published by Globes [online], Israel business news - www.globes-online.com - on December 14, 2016
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