Property and Building Corp. Ltd. (TASE:PTBL) has completed the acquisition of Aaron Frenkel's 37.22% stake in income producing real estate company Bayside Land Corp. Ltd. (Gav Yam) (TASE:BYSD1) for NIS 3.026 billion, subject to adjustments.
Frenkel has recorded a 100% return on his investment in Bayside and a huge profit of NIS 1.25 billion. Following completion of the deal, Property & Building has increased its stake in Bayside to 86.72%.
The deal was completed after Property & Building last week received a NIS 950 million loan from Mizrahi Tefahot Bank and other financial institutions. The 12 month loan was granted at prime plus 2.5% and can be extended, if necessary to the end of 2023.
Property & Building is the real estate investment arm of Discount Investments Corp. (DIC), which has a 29.9% stake in Mega Or and a 29.8% stake in Elco Holdings.
Property & Building had planned to finance acquisition of the Bayside stake by selling the HSBC tower in New York but the sale deal for the US building was recently canceled, as the buyers struggled to find the required financing for the transaction, compelling Property & Building to seek alternative financing. Due to all this uncertainty, Bayside's share price fell 27% last week to give a market cap. Thus Frenkel is receiving NIS 3.026 billion for share that are currently worth NIS 2.372 billion - a 28% premium. In addition, Bayside distributed a NIS 400 million premium at the start of 2022, of which Frenkel received NIS 149 million.
Frenkel believes that Bayside is a quality company and would have been prepared to become controlling shareholder had Property & Building been prepared to relinquish its stake. Bayside develops and manages high-tech parks and offices, logistical centers and industrial zones.
Published by Globes, Israel business news - en.globes.co.il - on June 7, 2022.
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