Less than three months after joining the Tel Aviv Stock Exchange (TASE), real estate investment fund Megureit Israel Ltd. (TASE: MGRT) has announced the possibility of its first deal, with the company board of directors approving progress in negotiations to buy 30 housing units on a Tel Aviv residential site for NIS 70 million. According to Megureit, which has obtained the exclusive right to negotiate a deal for a short period, construction of the project is slated for completion in 2017, and the company intends “to take action to complete the deal in the coming months.”
This investment corresponds to reports attached to the prospectus published before the company’s offering, which said that the company planned to buy at least 20 housing units in any project it enters, and that it would also enter a project in the construction stages. The Megureit board also approved a plan to spend up to NIS 10 million on buying back the company’s shares by next June. The plan also requires court approval.
The board of directors said that the decision on the buyback was taken “in view of the fact that the company’s shares are being traded below equity… it therefore constitutes a worthy business opportunity. The board added, “This purchase of shares is economically worthwhile for the benefit of the company and all its shareholders, since the prices for the company’s shares are appropriate.” The board also said that the purchase of the shares was “a good alternative to investing the cash in the company treasury.”
Today’s rises corrected a fall in the share price
The Megureit share responded to the announcement with rises that reached 5% around noon, partially offsetting the drop in its value since the company offering. Even after this jump, the share was still 10% lower than the price in the offering, putting the company market cap at NIS 215 million, compared with NIS 240 million when trading in the share began following the IPO, according to the capital raised in late September and before that from a number of entities, including the Tel Aviv Chief Rabbinate and Religious Council and a charity fund for widows and orphans. The two entities invested an aggregate NIS 100 million.
Megureit is the first real estate investment trust (REIT) established under the amendment to the REIT Law. Its officers are very well known. The chairman is former Prime Minister’s Office director general and economic expert Eyal Gabbai, who took part in the IDB debt arrangement. The CEO is former Investment, Development and Construction CEO Mati Dov. Former Ministry of Finance director general Yael Andorn is chairperson of the strategy committee and a company director. The board of directors also includes Guy Pereg, chairman of Aspen Group real estate company, and former Mercantile Discount Bank CEO Ori Baron. The company joined the TASE without assets or liabilities, and it reported NIS 238 million in both cash and equity in its third quarter reports after being listed for trading.
Published by Globes [online], Israel business news - www.globes-online.com - on December 11, 2016
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