Income producing commercial real estate company Gazit-Globe Ltd. (NYSE: GZT; TASE: GLOB) continues to implement its strategy of realizing holdings in public companies to focus on direct holdings of real estate assets. On Friday, the company reported that it had signed a deal to sell most of its holdings in its Canadian subsidiary First Capital Realty (TSX: FCR) (FCR) for CA$1.2 billion (approximately NIS 3.3 billion) cash. The deal is partly with FCR itself, is therefore subject to approval by a majority of FCR’s shareholders.
Under the agreement, FCR will buy 14.1% of its own shares (36 million shares) held by Gazit Globe for CA$740 million.
Gazit Globe also agreed to sell a further 8.7% of FCR (22 million shares) to a syndicate of underwriters headed by RBC Capital Markets for CA$453 million. The sale will take the form of a fully underwritten, bought, secondary offering in which the syndicate will offer the shares to Canadian investors.
Following the buy back and the bought deal transaction, Gazit will own approximately 21.6 million common shares of FCR, which will represent approximately 9.9% of FCR's outstanding share capital and voting rights.
Gazit Globe founder and CEO Chaim Katzman said, "“This transaction is yet another important step in implementing Gazit Globe’s strategy, announced more than two years ago, to decrease our stake in mature public equity investments, reduce the company’s leverage, and increase our direct real estate holdings while focusing on dominant assets in major urban markets where we can create value through proactive management.
"Following the sale, which is subject to certain conditions, including the approval by a majority of FCR’s shareholders, excluding Gazit, the company’s direct real estate holdings as a percentage of its total investments (based on September 30, 2018 results) is expected to reach 44%, compared to 20% at December 31, 2016, while the company’s leverage (expanded solo) is expected to be reduced to below 45%."
Published by Globes, Israel business news - en.globes.co.il - on March 3, 2019
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