Summit Real Estate Holdings Ltd. (TASE: SMT), controlled by Zohar Levy, is expanding its business in Germany. The company today reported that it had signed a binding agreement to acquire through Summit Germany, its subsidiary, a portfolio of eight properties for €86 million (NIS 363 million).
The properties, which are being used as service centers, are located in the centers of large cities, mainly Berlin, Frankfurt, and Dusseldorf. Rent from the properties amounts to €5.8 million annually, reflecting a 6.7% aggregate rental return. Summit says that under the leases, rent is due to rise to €6.1 million in the coming years.
The services centers, which have 58,000 square meters in aggregate space, were built in 2005-2017 and are fully occupied under leases with a 10-year average lease period. They also include 180,000 square meters in additional construction rights.
The €35 million net acquisition price (the properties have €51 million in liabilities) will be financed from Summit Germany's liquid assets. The deal will be completed in the coming days.
Summit Real Estate's share price is up 1% today and 25% over the past year, pushing the company's market cap up to NIS 2.2 billion.
Summit Real Estate, which operates in Germany and Israel, posted NIS 82 million in net operating income (NOI) in the second quarter, 30% more than in the corresponding quarter last year. The increase resulted from the acquisition and upgrading of properties and the depreciation of the shekel against the euro.
Funds from operation (FFO) were up 63% to NIS 36 million in the second quarter. The company posted a NIS 160 million net profit in the quarter, 10 times its profit in the second quarter of 2017.
Summit Real Estate benefited from a €92 million (NIS 390 million) profit resulting from revaluation of its properties in Germany, whose value reached €1.03 billion at the end of June. Summit Germany attributed the increase in value to "both an upturn in the German commercial real estate market and upgrading of specific properties in Summit Germany's portfolio." The company stated, "In view of the higher rent in lease renewals, combined with other positive developments in the portfolio, an additional increase in properties' value is likely."
Summit Real Estate, managed by CEO Amir Sagy, finished the first half of the year with a 30% increase in NOI to NIS 163 million, a 46% increase in FFO to NIS 63 million, and a nine-fold rise in net profit to NIS 179 million.
Published by Globes, Israel business news - en.globes.co.il - on October 29, 2018
© Copyright of Globes Publisher Itonut (1983) Ltd. 2018