Harel in fourth San Francisco office building deal

San Francisco

Insurance group Harel has bought 33% of the rights in two buildings in San Francisco's South Financial District.

Israeli insurance group Harel Insurance Investments and Financial Services Ltd. (TASE: HARL) continues to expand its overseas real estate portfolio, with an emphasis on the West Coast of the US. Sources inform "Globes" that the insurance company has joined a US real estate investment trust, Paramount Group, in the purchase of an office campus in San Francisco, worth a total of NIS 2.5 billion.

Harel is buying 33% of the rights in the campus, for which it will pay NIS 380 million from the funds of its insurees and savers, with the NIS 480 million balance being financed through leverage, giving a leverage ratio of 55%.

The asset acquired by Harel and Paramount Group consists of two buildings in San Francisco's South Financial District, one 21 floors and the other 40 floors, with total built space of 70,000 square meters. A source involved in the deal said: "A substantial part of the space in one of the buildings is leased to a large technology company, and the remaining space is mainly leased to law and accounting firms and other technology companies, with an average occupancy rate of 94%." Paramount, which has carried out deals with Harel in the past, will manage the buildings.

For Harel, which has a market cap of NIS 5.4 billion, this is a fourth purchase of a San Francisco office building. The other buildings too are in the city's main business district. "The San Francisco office market is a strong market that attracts technology companies. It features growing demand and limited supply, as a result of regulatory restrictions limiting the extent of construction in the city. In recent years, this market has been characterized by steadily rising rents and rising asset values," sources at Harel told "Globes".

In the past few years, Harel has become the Israeli insurance group with the largest real estate portfolio. At the end of 2019, the portfolio, two thirds of which are overseas, was valued at over NIS 15 billion.

Published by Globes, Israel business news - en.globes.co.il - on January 13, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

San Francisco
San Francisco
Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018