Simultaneously with the publication of its third quarter results, Shikun & Binui held a conference for investors and analysts today at the Tel Aviv Stock Exchange. Shikun & Binui CEO Eyal Lapidot presented his strategy for the coming years at the conference.
Lapidot's remarks indicated that he intends to shake up the group, change its organizational culture, and institute operational and financial streamlining measures at all of the company's subsidiaries, while expanding their business activity. Among other things, Shikun & Binui will focus on income-producing real estate activity in Israel and elsewhere and expand its environmentally friendly energy activity, with an emphasis on Europe and the US.
"Shikun & Binui has a great deal to do, and a great deal of value to create. I agree with (real estate company Alony Hetz controlling shareholder, O.C.) Nathan Hetz, who said that the hot sectors in the 21st century were income-producing real estate and environmentally friendly energy," Lapidot said. "The group's operating expenses amount to NIS 5.86 billion a year, plus NIS 360 million in financing expenses. In my opinion, there is potential for substantial reductions in both of these figures.
"The Shikun & Binui group has an NIS 8.1 billion debt, half of it in the parent company, and in my opinion, this is unreasonable. Just rescheduling the debt can save NIS 120 million a year, and that doesn't take into account the changes in the debt structure that I am introducing. Shifting debt to operating companies will reduce risk and cut costs. We're considering raising marketable debt at the subsidiaries."
"We don't plan on selling land in high-demand areas"
Commenting on Shikun & Binui Real Estate, Shikun & Binui's main subsidiary, Lapidot noted, "We don't plan on selling historic land any more in high-demand areas, such as Tel Aviv, Jerusalem, and the Carmel area in Haifa. We now hold land for construction of 14,000 housing units, including 5,850 housing units in Ramat Efal, Kiryat Ata, Hadera, and other places, for development in 4-6 years. This land has a future value of NIS 7.3 billion.
"Shikun & Binui Real Estate is also undergoing a process of external and business operational streamlining. We will start doing urban renewal and do a lot more. We will also begin rental housing, as well as activity in the luxury housing segment and the Buyer Fixed Price Plan. We'll consider making projects liquid through buyers groups, and we'll prefer developing land to selling it."
Lapidot added, "We have 1.25 million square meters of rights in income-producing real estate rights and properties under construction, an enormous number. These properties have no value in our reports, but they are in attractive places. We also did a calculation here, and arrived at a future value of NIS 6.3 billion. The directions are to do much more in in income-producing real estate. We'll build a lot of rental housing and student dormitories, build assisted living facilities, and so on. We'll build a leading income-producing real estate company. Real estate in Israel is our main activity, and we'll devote a great deal to it."
"We're active in too many countries in Africa"
Commenting on activity in Eastern Europe, Lapidot said, "We'll move into income-producing properties, with which we can reach a profit of $55 million a year." On the energy sector, Lapidot said, "This activity has been minor in most years, and it's now starting to grow, but we don't exist overseas, in contrast to companies like Energix Renewable Energies and Enlight Renewable Energy. I think that we can develop renewable energy activity in the US and Europe, and become an important player. Beyond that, we'll continue to be a leading player in franchising in Israel, and we'll start going into this activity in the US."
Talking about the group's international activity (Solel Boneh Overseas Engineering Services), which focuses on Africa and has posted losses in recent years, Lapidot said, "Africa is the fastest growing continent in the world, but we have to focus. We're active in too many countries there, so we'll focus only on countries in which we have added value and a relative advantage.
"Shikun & Binui is a 100 year-old group, and it had only two shareholders before Naty Saidoff: the Histadrut and the Arison Group. So I think that the business culture in the company should change in favor of business focus and creating value. Our managers are the best around, and we have no doubt that they'll succeed in getting us there."
Published by Globes, Israel business news - en.globes.co.il - on November 28, 2019
© Copyright of Globes Publisher Itonut (1983) Ltd. 2019