Infrastructure and construction company Electra Real Estate Ltd. (TASE:ELCRE) is selling off holdings, starting with its pumped storage hydroelectricity infrastructure project in Gilboa. Electra Real Estate owns 25.5% of the shares in the franchise holder for the plant, together with its partners: Shikun & Binui Holdings Ltd. (TASE: SKBN) (25.5%) and foreign investment fund InfraRed, which owns the rest. The project involves construction of a 300-megawatt hydroelectric power plant based on pumped storage technology.
In its reports, Electra Real Estate, controlled by the Elco group, explains, "This technology is based on height differences, with water from the upper pool falling to the lower pool, while a turbine produces electricity." The budget for building the project is nearly NIS 1.7 billion, and the cost of operating it is estimated at NIS 750 million.
The projects is scheduled to begin working in the coming months, which could explain Electra Real Estate's decision to sell its share. As far as is known, the company plans to sell its current share in the project in the next few months close to the date for commencing operations. In its 2017 reports, Electra Real Estate reported the value of its investment in the project at a value of over NIS 100 million.
Electra Real Estate reduced its holding in this project in 2016 by selling half of it (together with Shikun & Binui, which sold the same number of shares) and posted a NIS 35 million gross profit on the sale. The sale included the shares in the project's franchise holder, but not the construction, operating, or maintenance shares, all of which Electra Real Estate and Shikun & Binui still own in equal shares.
Waiting for Highway 16 tender results
In addition to the pumped storage hydroelectric project, Electra Real Estate is considering taking a partner in the Highway 16 (Ariel Sharon Road) construction project at the entrance to Jerusalem. The winner in the tender, in which several other companies are also competing, has not yet been announced.
Last March, six groups submitted bids in a tender for the project - a five-kilometer tunnel from the Motza Interchange to neighborhoods in Jerusalem. In addition to Electra Real Estate, foreign companies also bid in the tender. As far as is known, if Electra Real Estate wins the tender, whose results are expected shortly, it will add the Allied Holdings group, headed by Yitzhak Suari, as a partner by selling it half of the project.
Electra Real Estate last week reported its financial results for the first quarter of 2018. The company's net profit shot up 14% to NIS 39 million and its revenue grew 10% to NIS 1.54 billion, together with improvement in gross and operating profit. Electra Real Estate's share price has gained 8% this year, bringing its market cap up to NIS 3.25 billion.
Electra Real Estate does business in five sectors: construction and infrastructure projects in Israel and overseas, service and maintenance, real estate development and construction, and franchises. The trend in all of the company's main sectors was positive in its first quarter results. Electra Real Estate's orders backlog totaled NIS 10.3 billion at the end of March, the same as at the end of 2017.
With the publication of the company's reports, Electra Real Estate CEO Itamar Deutscher said, "During the first quarter, we continued deepening our activity in the residential development market, in which Electra Real Estate is becoming an important player in accordance with our business strategy. Global expansion, combined with growth in the high-tech sector, substantially boosted demand for the array of services provided by the group. As a result, we added to our customers international groups such as Amazon, Apple, Mercedes-Benz, and Audi, together with leading high-tech companies using Electra Real Estate's solutions in management and maintenance services."
Published by Globes [online], Israel business news - www.globes-online.com - on May 28, 2018
© Copyright of Globes Publisher Itonut (1983) Ltd. 2018