Summit Real Estate Holdings Ltd. (TASE: SMT), controlled by chairperson Zohar Levy, has signed an unconditional agreement to acquire a 72% controlling interest in German real estate company GxP from German firm Consus Real Estate for €45 million (NIS 190 million). The deal is through Summit Germany Ltd. (AIM: SMTG), Summit's subsidiary. GxP holds 12 office buildings with a total of 107,000 square meters, mainly in Frankfurt, Berlin, and other cities, worth a total of €166 million (NIS 710 million).
An announcement published about Summit today indicates that as of the end of March, rent on the properties held by GxP totaled €11 million a year, reflecting a 6.6% return on the value of the properties and a loan-to-value (LTV) ratio of just over 59%.
The figures published by Summit also show that the occupancy rate for GxP's properties is 89% with a 3.5-year average lease period. The acquired company's total after-tax profit in 2017 was €15.5 million.
Summit Germany will pay €40 million when the deal is completed and the remaining €5 million when the acquired company publishes its second quarter reports, "subject to meeting preset minimal targets."
Levy said today, "The acquired properties are being purchased at an attractive price of €1,500 per square meter. In addition to a stable cash flow from a large number tenants, the properties have substantial upgrading potential resulting from the leasing of opens spaces, saving on management costs, and a rise in rents to the current market prices."
Levy offered shares in Summit Germany on the AIM in 2014 at a company value of €185 million. He earlier delisted the company in 2009 after its share price plunged in the wake of the global economic crisis.
Summit Germany currently holds over 80 properties, mostly in or near the major German cities, with a total of 910,000 square meters and a value estimated at €939 million at the end of the first quarter. Summit German raised €300 million in unsecured bonds at 2% interest at the beginning of the year. The bonds were listed on the Luxembourg Stock Exchange. Summit Germany's share price reflects a $530 million market cap. Summit owns a 50.01% controlling stake in Summit Germany.
In addition to its business in Germany, which consists mainly of commercial properties offices, logistics buildings, and shopping centers, Summit is also active in income-producing real estate in Israel, where it holds close to 20 properties, mainly for offices, commerce, and logistics.
Summit's share, which is currently on an uptrend, has gained 9% in price this year and now reflects a NIS 2.1 billion market cap, still 7% short of the peak it reached last May.
As a result of the properties it acquired and support from the shekel-euro exchange rate, Summit's revenue jumped 37% to NIS 92 million in the first quarter of the year. Financing expenses were down, with the company's net first-quarter profit jumping fivefold to NIS 19 million, compared with NIS 4 million in the corresponding quarter last year.
Published by Globes [online], Israel business news - www.globes-online.com - on August 6, 2018
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