Real estate investment trust (REIT) Megureit Israel Ltd. (TASE:MGRT) this week completed a NIS 250 million shekel bond issue. The fund raised NIS 210 million on Thursday in the part of the issue for financial institutions and NIS 40 million from the public on Monday.
Demand from institutions totaled NIS 400 million, leading Megureit's managers to increase the planned NIS 150 million issue. The duration of the bonds is 4.75 years. Interest on the bonds was set at 1.65%, compared with the prior maximum of 2.38% set for the issue.
Megureit's management company is expected to charge a 1% annual management fee, amounting to NIS 2.5 million, in addition to NIS 2.4 million a year to which it is now entitled from the money raised by the fund last year, making a total of NIS 5 million in management fees. Megureit chairman Eyal Gabbai, CEO Mati Dov, , and director Yael Andorn each own 5% of the management company, while the fund's founders, Advocates Erez Rozenbuch and Haim Weisfish, who are investors and directors in the fund, have 32% and 11% stakes, respectively.
Before last year's offering on the Tel Aviv Stock Exchange (TASE), Megureit contracted a seven-year agreement with its management company. This agreement will be extended automatically for two additional seven-year periods. In exchange for management services, the Megureit management company receives "annual management fees amounting to 1% of the company's total assets, as reported in the books, including cash and cash equivalents," while "these management fees will be paid to the management company in advance every quarter."
Megureit is the first REIT to be listed on the TASE under the April 2016 REIT Law, which grants substantial tax benefits to funds investing in real estate.
The fund joined the TASE in September 2016, after raising NIS 60 million. Megureit previously guaranteed itself a NIS 180 million financing round from four institutions: Excellence Investments Ltd. (TASE: EXCE), Burial Society Fund, Widows and Orphans Funds, and the Jewish National Fund. As of now, Megureit's market cap is NIS 200 million, reflecting a 20% discount on its equity.
Published by Globes [online], Israel Business News - www.globes-online.com - on August 23, 2017
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