Azrieli Group Ltd. (TASE: AZRG) is expanding its overseas income-producing real estate portfolio. This morning, the group, managed by CEO Yuval Bronstein, announced the completion of the acquisition of an office building in Houston for $76 million. This is the fifth property that the group has purchased in Houston, where most of its foreign assets are located (83%).
The current acquisition is a four-story 21,000 square meter structure in the Westbelt neighborhood of Houston, which was sold by US corporation AG 8 West Centre LLC. As of today, the building is fully occupied, and the vast majority of the space (99%) is leased to two parties with long-term (ten-year) leases. Azrieli Group has reported that the leases include fixed mechanisms for raising rent over the course of the agreements, such that the net operating income (NOI) is expected to be $5.3 million annually, and the property is expected to have an annual yield of 7%.
Roughly 65% of the total cost of the deal - $49 million - will be funded by a loan that Azrieli Group will receive from an international source. The loan will be for a five-year term, bearing 3.16% annual interest. The balance will be financed by the group. Azrieli Group, most of whose real estate activity is in Israel, has a relatively small portfolio of income-producing real estate abroad, which constitutes only 7% of its assets (as of June 2014). Other than one project in the UK, all of Azrieli Group’s overseas income-producing properties are in Houston, Texas.
Published by Globes [online], Israel business news - www.globes-online.com - on September 15, 2014
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