There is no shortage of moments around the holding company Norstar, which controls the real estate giant that produces Gazit Globe. The group’s operations in Israel learned that Gazit Globe plans to issue the subsidiary’s operations, Gazit Israel, with the aim of flooding value to its shareholders.
Norstar currently owns 51% of Gazit Globe, which fully owns Gazit Israel. Businessman Haim Katzman holds 28% of Norstar shares, and is defined as its controlling shareholder. This situation defines Norstar as a first-tier company, while Gazit Globe is defined as a second-tier company. The Israeli Centralization Law prevents the establishment of a three-tiered pyramid of public companies issued in Israel, which have controlling shareholders.
For this reason, Gazit Globe is currently barred from operating its real estate business in Israel, even though such a move is expected to flood its shareholders with value. Without a core of control, and will be able to carry out the issue of Gazit Israel.
As of the end of 2021, Gazit Israel, which owns the G shopping center chain, owns 13 income-producing properties with an area for rent of 16,000 square meters, which are registered in the books at a value of NIS 3.7 billion. Current of NIS 578 million, so these are assets worth about NIS 4.3 billion.
The dividend in the eye of Gazit Globe shares is opposed by the real estate company Israel Canada, which holds about 22% of Norstar shares. Another stakeholder in Norstar, which is traded at a value of NIS 1.8 billion, is businessman Rami Levy, who owns about 5% of the shares.
In Israel Canada, which claims to represent owners of over 30% of Norstar shares, sees Katzman’s move as an attempt to defend itself against the threat of a hostile takeover of Norstar, and considers ways to prevent it, either through a letter to Norstar’s board or through a legal move Application for a restraining order against the distribution of the dividend in kind.
Gazit Globe is deepening its operations in Israel
Most of Gazit Globe’s operations are abroad, but it intends to expand and deepen its operations in Israel in the areas of commerce, offices and rental housing. In recent months, the company acquired Beit Cal in Givatayim with an investment of NIS 334 million, as well as land in Tel Hashomer. NIS 430 million.
Haim Katzman / Photo: Eyal Yitzhar
At the same time, the company began construction of an office tower with an area of 67,000 square meters on land owned by it in G City Rishon Lezion, began work to expand the area of the G City shopping center in Savyon and also completed construction of a store and office headquarters in Decathlon, adjacent to G Kfar Saba. Gazit Israel currently constitutes only about 20% of Gazit Globe’s operations, while its operations in Europe, North America and Brazil constitute the bulk (80%) of its operations.
Gazit Globe is currently traded at a value of NIS 4.8 billion, with the company having equity attributed to shareholders of NIS 5.3 billion. In other words, the company is trading at a capital multiplier of 0.91, while other income-producing real estate companies with more significant activity in Israel receive higher capital multipliers.
For example, Melisron is traded at a capital multiplier of 1.46, while companies such as Big and Amot are traded at capital multipliers of 1.56 and 1.44, respectively, so that the issue of Gazit Israel at a capital multiplier of 1.6 may result in Gazit Globe flooding a value of NIS 2.5 billion. , And indirectly also contribute to Norstar shareholders.
Norstar will hold only 37% of the subsidiary
Earlier this week, Norstar reported that the company’s board of directors, headed by chairman Moshe Ronen, had decided on a distribution of 23.3 million shares in Gazit Globe, which it owns. The subsidiary.
The determining day for the distribution is set for May 20, while the distribution itself will take place five days later. In order to make the move without endangering Norstar, the board of directors has determined that the company will go ahead with the issue of raising rights to raise NIS 166 million from its shareholders.
The scope of the raising may increase up to NIS 247 million, if by the time the IPO is completed, all of the Norstar Series 21 options will be converted into shares. The move will strengthen Norstar’s equity and liquidity, which have future liabilities of about NIS 1 billion to bondholders, which will be due by March 2028 (mainly over the next four years).