Harel Insurance Investments and Financial Services Ltd. (TASE: HARL), whose investments are managed by chief investment officer Sami Babkov, is expanding its overseas real estate portfolio in Germany. Sources inform "Globes" that Harel recently completed an equity deal in which it invested NIS 280 million for 15% of the shares in private real estate company Golden Capital, controlled by the Dayan family's Vivion group.
Golden Capital, led by Amir Dayan, makes deals for properties with improvement potential. The deal was conducted as a company value of NIS 2 billion for Golden Capital. It is believed that the money invested in the German company by Harel will be used for investments in developing and improving Golden Capital's existing properties and acquiring new ones.
As far as is known, Golden Capital's properties have an aggregate value of over €500 million. The company's portfolio includes over 30 properties in different sectors spread all over Germany. Golden Capital is active in offices, residential properties, hotels, and commerce in central locations in large cities in Germany, including Berlin, Dusseldorf, Munich, Hanover, Leipzig, and others. As far as is known, Golden Capital's business strategy is based on finding properties with significant potential for improvement (value-added and opportunistic properties) with the aim of attaining a return of over 10%.
The Dayan family, which made a great deal of money in German real estate, late last August acquired a substantial share in income-producing real estate company ADO, which operates in the Berlin apartment market. This acquisition, made in partnership with European private equity fund Apollo, gave rise to a prospect of a struggle with Shari Arison's Shikun & Binui group for control of ADO.
The parties eventually signed a joint management agreement for ADO, which currently has a NIS 1.86 billion market cap. Through Moshe Dayan, the Dayan family currently owns 19.7% of ADO, which operation in the Berlin apartments market through a 38.2% holding in Frankfurt Stock Exchange-listed company ADP. ADO's activity is quite different than that of Golden Capital; there is no connection between the two companies.
Harel diversifying its investment portfolio
Harel's real estate investments are managed by senior VP and global head of real estate alternative Ron Kovalski. Harel has a substantial presence in real estate investment, with a NIS 15 billion portfolio in income-producing real estate. As in earlier deals promoted by Harel and other large investment institutions, the deal is being made because Golden Capital's properties strengthen Harel's alternative investments element at a time of negligible interest rates and a boom in the prices of negotiable properties.
Harel has direct holdings in Israeli and foreign real estate. The group, controlled by the Hamburger family, conducts overseas operations together with local partners, usually with an affinity towards Israel. A few months ago, "Globes" revealed that Harel and US group CIM, controlled by former Israelis Avi Shemesh and Shaul Kuba, had jointly purchased an office building in San Francisco for NIS 435 million. This was the two companies' second joint deal, following the acquisition of an offices and commerce site in the central business district of Dallas, Texas. Harel has also acquired many properties in the US and Europe, including a collection of logistics properties in the US for $380 million and an office building in central Los Angeles together with US REIT fund Colony NorthStar.
For Harel, the new investment diversifies the investment portfolio of it policyholders with an income-producing property designed to be an anchor of positive cash flow in its investment portfolio with no direct dependence on what happens in the capital markets. As of the end of 2017, the Harel group managed NIS 214 billion in assets, including NIS 172 billion in nostro accounts of the insurance group and from the assets of its members in long-term savings investments.
Published by Globes [online], Israel business news - www.globes-online.com - on May 21, 2018
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