Delek Glbl Share Discussion Threads

[kenny] 28/4/2010 00:26

Hot off the presses, confirms everything I have been banging on about these last two years.
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Delek Real Estate is utterly worthless, at best, says Maalot

By Michael Rochvarger

Delek Real Estate will be facing a big test in another six weeks. On May 31 the company has to pay bondholders NIS 215 million - which it does not have. On Sunday, the Israel securities rating company Maalot S&P realized that Delek Real Estate might be running into trouble.

Delek Real Estate reported losing NIS 1.1 billion in 2009, ending the year with a shareholders equity deficit of NIS 746 million. The company's equity leverages a massive balance sheet of NIS 20.8 billion, and there is only NIS 90 million in the company's coffers. Maalot downgraded Delek Real Estate's credit rating by three notches, from BBB to the speculative BB rating.

Delek Real Estate's net asset value is between zero and minus a few hundred million shekels, depending on how much the company can get from selling properties.

In order to meet the end-of-May payment, Delek Real Estate plans to borrow NIS 100 million from banks, sell the company's Vitnia holdings (48%) for NIS 193 million and issue about NIS 100 million worth of rights.

That payment, however, is only the first in a series of challenges approaching. At the end of 2009 Delek Real Estate declared that its ability to meet its NIS 1.5 billion in financial obligations for the coming year would depend on selling more properties, continued support from the banks, the dividends from held companies and postponing loan payments to the Delek Group.

Delek Real Estate has survived without a debt arrangement with bondholders thanks to the internal arrangement orchestrated by Delek Group.

This includes postponing repayment of about NIS 600 million in loans to Delek and the Phoenix insurance group, a NIS 75 million loan from Phoenix, and NIS 122 million in insider transactions with Delek Israel.

Controlling shareholder Yitzhak Tshuva also provided Delek Real Estate with a cash infusion.

During the boom years on the markets, Delek Real Estate was a big money-maker, disbursing hundreds of millions of shekels in dividends. In 2002 CEO Ilik Rozanski embarked on an acquisitions campaign with Igal Ahouvi, Electra Real Estate, Phoenix and others. Their shopping spree included hundreds of parking lots, hotels, showrooms, offices, residential projects, gas stations and convenience stores in Britain, Switzerland, Germany, Sweden, Finland, Canada and Eastern Europe.

They also bought holdings in companies such as Industrial Buildings, Vitnia and Sahar Developments.

The acquisitions were made mainly with non-recourse loans. This financing, which was defined as "from independent sources," came from bond issues or bank loans with yield spreads (the difference between the cost of the loan and cash flow from rents) of 3%-4%.

The 2008 real estate crisis caught Delek Real Estate unprepared, without any practical plan for meeting its tremendous obligations. In November 2008 Delek Real Estate's bonds were trading at yields of up to 120%, the company hit a real cash crisis and many investors were sure the company was headed for bankruptcy.

Now, when other income-producing real estate companies, such as Gazit-Globe, Alony Hetz and Housing and Construction have left the crisis behind them, Africa Israel Developments has reached a debt arrangement and Scorpio Real Estate is close to signing one, Delek Real Estate's future is shrouded in uncertainty.

In July 2009 Tshuva decided to replace Rozanski as Delek Real Estate's CEO, although he has stayed on as a consultant, at a monthly fee of NIS 150,000. The replacement CEO, Yarom Oren, resigned after less than two months, and Eran Meital was appointed in his stead. Meital continued the clearance sale begun by Rozanski.

Since the beginning of 2009 Delek Real Estate has sold NIS 1.4 billion in assets, using the cash to repay banks and bondholders. Meital is planning to sell everything except Dankner Investments, which builds residential complexes and which Delek Real Estate plans to float on the stock exchange; and Delek Global Real Estate, which handles Delek Real Estate's income-producing real estate operations in Western Europe and North America.

Maalot is pleased with Delek Real Estate's success in selling off properties, and the analysts say that the company's current rating is based on Delek Real Estate's intentions to continue bolstering its equity structure with cash flow.

Delek Real Estate needs to sell its holdings in Motorway Service Area (25%), which owns the Roadchef chain of 29 roadside service stations in Britain, and in Linchfield (59%), which owns 127 parking lots in Britain. Other assets that must be sold are residential projects in Eastern Europe; a holding in Impact, a hotel project owned jointly with David Fattal; and the Hof Carmel project in Haifa.

If Delek Real Estate cannot sell all these assets, it may have to sell parts of DGRE and Dankner Investments. DGRE owns close to 350 properties with an estimated net value of 500 million British pounds, and is considered Delek Real Estate's most prized possession.

DGRE provides Delek Real Estate with a strong source of liquidity, including NIS 160 million in annual dividends. DGRE's public investors, however, have not faired as well. DGRE was floated on the London stock exchange at a market cap of $1 billion, but was delisted less than a year ago after losing 80% of its value. Delek Real Estate will use the revenues from the sale of its assets to pay its financial obligations over the next two years. The company owes NIS 1.6 billion to NIS 1.8 billion to the banks, and NIS 2.2 billion to bondholders. While most of Delek Real Estate's assets are collateralized to the banks, the bondholders have no such safety net.

In November 2008 Delek Real Estate tried to offer bondholders a haircut, proposing to replace two bond series with one, essentially asking investors to forego over 50% of the debt, but that was a no-go.

At this stage there are no plans for a debt arrangement because Tshuva, who is in the midst of arranging billions of dollars in financing for oil and gas exploration and production, cannot take loans from foreign banks for his energy operations and at the same time claim he cannot repay debts to real estate investors. Tshuva, who until now has always repaid his debts, probably prefers to avoid the humiliation faced by Lev Leviev, the controlling shareholder in Africa Israel.

"The company is continuing to implement its strategy to strengthen its capital base and to get back on a growth track," responded a spokesman for Delek Real Estate, who reiterated Maalot's favorable view of this strategy and the diversification and quality of Delek Real Estate's assets, the high occupancy rates in the various rental properties and the long-term leases.
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Looks like my suspicions about sales by DGRE, and therefore dividends to us shareholders, will prove correct!! A little premature perhaps, but congratulations to everyone who held on and did not sell out - including myself!!!

[kenny] 27/4/2010 08:26

A dividend in May from DGRE to DRE may be on the cards:

Maalot S&P yesterday downgraded Delek Real Estate bonds three notches from BBB to BB, which is speculative grade. The bonds are on negative outlook for three months, which indicates another downgrade in the offing. The company has a shareholders equity attributable to shareholders of NIS 748 million and a leverage ratio above 100%, which have weakened its financial profile, Maalot explains. Also, its repayment ability depends to a large degree on its ability to sell assets, not to mention injections from controlling shareholder Yitzhak Tshuva, says the agency. From the start of 2009 Delek Real Estate has sold NIS 1.3 billion worth of assets and used the proceeds to repay bondholders, but in the next 12 months it has to repay a billion more. Just in May it has to repay bondholders NIS 215 million, which the company doesn't have at present. (Michael Rochvarger)

[kenny] 26/4/2010 23:38

If I was sceptical, I would say this Elad Canada float looks like a repeat of DGRE - float it off at full value and buy it back after a couple of years' for a quarter of that price!?! And if property prices stay high, at least Mr Yitzhak Tshuva's will have sold highly geared assets into the market relieving gearing pressure on his personal balance sheet.

However, there is a hint that it might enable him to asist in repaying Delek Real Estate's bonds in coming years.
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Elad Canada to offer the public a piece of the action

By Michael Rochvarger

Yitzhak Tshuva's Elad Canada real estate firm led analysts on a tour through Canada a week ago, in advance of an initial public offering next month on the Tel Aviv Stock Exchange.

The company, one of Canada's largest real estate firms, is seeking to issue 15% to 20% of the shares of a new entity, which will hold a portion of Elad Canada's assets.

Elad is hoping to conduct the offering at a $700 million valuation for the new company, meaning it would bring in $100 million to $150 million from the IPO. The money would go to fund operations and to retire debt.

The new firm will hold assets including office buildings, residential income-producing property and assisted living facilities, among them Park Way Forest and Maple Grove in Toronto and Olympic Village, Westmount Square and Tournesol Residences in Montreal.

The small group of analysts who took the Elad Canada trip included Yuval Ben-Zeev, director of research at Clal Finance Batucha Brokerage; Alon Glazer, deputy CEO of research at Leader Capital Markets; and Shai Lipman, a real estate analyst with IBI Investments. Joining the group were Miki Naftali, the CEO of Elad Canada's parent company, the Elad Group; deputy CEO of finance Shay Ben Yakar; and the new CEO of Elad Canada, Shay Braverman. The analysts, not Elad Canada, covered the costs of the trip.

The three-day tour included visits to projects in Toronto and Montreal and meetings with Elad Canada's management. The analysts refused to comment to TheMarker about the trip, and also declined to give their assessment of the prospects for the IPO, since they have signed confidentiality agreements.

Sources with knowledge of the offering said the analysts were impressed by how Elad Canada was being run and by some of the assets the new company will hold. The same sources said, however, that "it will be a challenge for Elad Canada to get the $700 million price tag pre-money. It will have to fall on an especially nice day in the markets for that to happen."

The issuing company currently has an estimated $500 million in shareholders' equity, but because the development activity is currently recorded at cost, Elad Canada will attempt to conduct the offering at a value that is several hundred million dollars higher, reflecting additional profits and asset values, while the development project is completed and assessed at its fair market value.

Elad Canada's assets generate annual revenues of tens of millions of dollars, but some Canadian real estate sources have noted that not all of the firm's assets are of high quality and some are encountering low profitability and environmental problems involving nearby ground pollution.

"As of now, it's not realistic to offer the entire Elad group in the United States. Tshuva, who is identified with the Israeli capital market, prefers at this point to conduct an offering of his Canadian assets, which were hurt less by the [financial] crisis and thereby improve his balance sheet and expand his liquid resources in advance of the anticipated repayment of about $400 million to bondholders in Israel in the coming years," said an institutional financial source.

Elad Canada is expected to release an initial public draft prospectus in the coming days in advance of the public offering, after the Israel Securities Authority provides its amendments and comments. The company will then undertake a road show for institutional investors. The management of the Elad group and Elad Canada are expected to be in Israel then.
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[kenny] 26/4/2010 23:24

No mention of dividends, so I asked the company and their reply is below:

"As to your question regarding dividend distribution, I do not know at this stage whether such payment would be made. The matter of dividend distributions is considered in the occasional board meetings held by the directors, the next of which is planned to take place in a few weeks."

[tiltonboy] 26/4/2010 18:14

Kenny,

Any news of a dividend in the R & A?

[kenny] 26/4/2010 17:14

Another nail in the coffin for the holding company:

Maalot lowers Delek Real Estate bonds rating
The bonds were lowered by three levels to BB allowing Series B bondholders to demand immediate repayment.
Avi Shauly and Ron Stein 26 Apr 10 19:00

Standard & Poor's Maalot Ltd. argues that investing in the bonds of Delek Real Estate Ltd. (TASE: DLKR), controlled by Yitzhak Tshuva, is speculative. Consequently Maalot lowered the bonds' rating by three levels to BB.
The lowering of the rating allows bondholders of the Series B bond to demand immediate repayment. To prevent this scenario, Delek Real Estate is considering depositing the balance of the unredeemed bonds - NIS 73 million - in the hands of trustees, and thus neutralizing a possible snowball effect.

The danger is that if Series B bondholders demand immediate repayment, other bondholders with bonds worth NIS 1.8 billion could submit a similar claim.

Delek Real Estate's share fell 2.25% on the TASE today to NIS 3.43.

Published by Globes [online], Israel business news - www.globes-online.com - on April 26, 2010

[kenny] 25/4/2010 13:32

Received a copy of the 2009 annual accounts in the post. Very honest and detailed set of accounts this time around, presumably instigated by the new management. Large write-offs take NAV down to 134p.

The numerous one off transactions and write-offs make it very difficult to deduce "clean" net rental income. As far as I can compute, net rental income is £28.031m or 10.57p per share. This is after adding back the one off write offs as well as the one off credits of £41.17m for derivitives and £12.326m for a bank liability settlement.

Hopefully, this is the low point in terms of valuations albeit DGRE have quite a lot of work ahead in relation to re-financing. News on disposals over the next 12 months is likely to be 'interesting' if that is the appropriate phrase.

[grollfam] 19/4/2010 08:06

MORE DISPOSALS BY HOLDING COMPANY.......


Delek Real Estate has sold its 50% stake in the RamLod shopping center and gas station to its partner in the property, Nehemia Kaplan, and to parent company Delek Israel. The sale is pursuant to Delek Real Estate CEO Eran Meital's policy of selling assets to reduce the company's debt. Kaplan is paying NIS 40 million for the shopping center. Delek Israel, meanwhile, is paying NIS 40 million for the gas station to Delek Real Estate and Kaplan, who is selling his share in the gas station in the transaction. After repaying debt on the property, Delek Real Estate will be left with negligible profit on the investment. As for Delek Israel, the deal is pursuant to its policy of owning the gas stations operating under its brand, of which there are currently 177. (Michael Rochvarger)

[horse19] 29/3/2010 14:12

a website called investegate which gives out company announcements

[grollfam] 29/3/2010 13:17

horse19
Where did you see the release of 26th March ?????

[grollfam] 29/3/2010 13:16

lets wait for the accounts, unlikely as they have paid out 3 dividends in the last 9 months....

[tiltonboy] 29/3/2010 12:57

Any mention of the dividend?

[grollfam] 26/3/2010 20:48

Thanks horse19



What is Delek Real Estate actually worth? Its market capitalization on the TASE is NIS 710 million. In Bank Hapoalim's financial statement, we find that it's worthless. Hapoalim owns 9.7% of Delek Real Estate's stock, which is worth NIS 68.7 million on the TASE. But in its financial statement for 2009 Hapoalim elected to write down the value of its investment to zero. (Eti Aflalo and Michael Rochvarger)

[horse19] 26/3/2010 11:31

FOR RELEASE 0N 26 March 2010

Delek Global Real Estate plc

Annual results for the year ended 31 December 2009 - Highlights



Delek Global Real Estate plc ("DGRE" or the "Company"), a leading real estate investment company with properties including NCP car parks and other high quality investment properties throughout the UK, Europe and Canada, announces the highlights of its annual results for the year ended 31 December 2009.



During the course of 2009, the Company continued to demonstrate stability and strength in its core business, and benefitted from resilient cash flow, high occupancy rates and the proven strategy of establishing a portfolio of blue chip tenants backed by a conservative, non-recourse and long-term financing structure, all assisting in putting DGRE in an optimal position against the current challenging market conditions.



At 31 December 2009, the attributable fair value of the assets to DGRE was £2,160 million. The attributable net asset value (value of DGRE's share in the portfolio less DGRE's share in outstanding loans) at the year end was £481.65 million (2008: £630.74 million) equating to 182 pence per ordinary share (2008: 238 pence per share).



DGRE reports a loss (excluding the minority interest) of £97.4 million (2008: loss £104.3 million). The loss for 2009 is recorded after: (i) property revaluation provisions relating to subsidiaries (before tax and minority interests) of £133.1 million, (ii) property revaluation provisions relating to associates (after tax) of £9.9 million, and (iii) a mark-to-market profit (before tax and minority interests) of £41.2 million on long term interest rate swaps relating to NCP. The NAV for accounting purposes (IFRS Equity less minority interests) is £354.2 million (2008: £498.3 million) equating to 134 pence per ordinary share (2008: 188 pence per share).



During the year, DGRE sold two assets (in Canada and in Sweden), the disposal of which contributed a net cash flow after expenses of £12.5 million to the Company. In addition, the Company successfully led two refinancing activities during the year (in Canada and in Switzerland).



The rental income, at £170.5 million, increased by 3.8% over the previous year amount of £164.2 million. Occupancy rates remained high at 97.68%, and average lease length remained long at around 12.5 years. Net cashflow generated from operating activities during 2009 was £115.2 million, and consolidated cash & cash equivalents amounted to £31.5 million.



The full annual financial statements of DGRE will be posted shortly to the registered shareholders of the Company, together with details and time set for the annual general meeting of the Company. It is noted that some recent changes to the board of directors due to certain retirements will also be addressed in the financial statements.

[grollfam] 16/3/2010 13:18

Thanks Kenny,

[kenny] 16/3/2010 12:47

Thanks for the info. The NIS 56m is only about £10m or 3.7p per share. However, it will come in handy to partly cashflow the next dividend - which I am hoping will be 7p per share.

[grollfam] 16/3/2010 11:51

Are we going to get our 15% share of NIS 56 million, or is it going to Delek Real Estate as a "Soft" loan ?????


Delek Real Estate unit sells Canada building
Delek Real Estate has been sold numerous properties in the past few months in order to meet its bond payments.
Adi Ben-Israel 16 Mar 10 12:00


Delek Real Estate Ltd. (TASE: DLKR), controlled by Yitzhak Tshuva and run by CEO Eran Meital, is continuing its sell-off of properties to meeting its liabilities under its new strategy. Wholly-owned subsidiary Delek Global Real Estate plc (DGRE) has sold its 85% stake in a residential property, Place Elgin, in Montreal for C$47.5 million (NIS 172 million).
The figure is 3.6% higher than the value at which Delek Global Real Estate carries the property in its books - C$45.8 million at the end of September 2009. The company will use proceeds from the sale to repay the C$ 32 million (NIS 116 million) balance of the loan on the property, leaving it with a cash flow of NIS 56 million.



Delek Real Estate has been sold numerous properties in the past few months in order to meet its bond payments. The company plans to sell properties for several billion shekels, and focus on two core holdings: residential real estate in Israel through Dankner Investments Ltd. and foreign income-producing properties through Delek Global Real Estate.

Published by Globes [online], Israel business news - www.globes-online.com - on March 16, 2010

© Copyright of Globes Publisher Itonut (1983) Ltd. 2010

[grollfam] 15/3/2010 08:17

Yes, but we have to be careful that if they sell any of the properties from DGRE, no "soft" loans are given to the holding company again.....

[flying pig] 14/3/2010 09:58

Super - those European "income producing properties" implies dividends!
Looking OK.
Thanks Kenny

[kenny] 14/3/2010 09:17

Interesting:

Delek Real Estate mulls floating Dankner Investments
Dankner Investments is the company's Israeli residential development arm.
Globes' correspondent 14 Mar 10 10:51

Yitzhak Tshuva-controlled Delek Real Estate Ltd. (TASE: DLKR is considering floating its Israeli residential development arm, Dankner Investments Ltd. on the through Tel Aviv Stock Exchange (TASE). The company is also considering a reverse merger with a stock market shell for this purpose. The proposed offering would comprise of equity and/or debt.
Delek Real Estate has been selling off some of its properties and subsidiaries in order to refocus on two core markets: Israeli residential real estate through Dankner Investments, and European income producing properties through Delek Global Real Estate Ltd.

Delek Real Estate's share price for 4.4% in morning trading to NIS 3.84, giving a market cap of NIS 688 million.

Published by Globes [online], Israel business news - www.globes-online.com - on March 14, 2010

[kenny] 11/3/2010 18:13

He has already underwritten a NIS 50m bank loan the company took out. That money will be repaid to him via a rights issue but the rights issue has been delayed by the Israeli Regulator enquiry.

This company has more plots and turns than a soap like Eastenders!!

[grollfam] 11/3/2010 15:57

Nothing like hope...Will he underwrite a large rights offer in DRE to sort out the bond holders later this year ????

[kenny] 11/3/2010 15:28

Forbes Reports:

"463rd ranked Delek Group Ltd. (TASE: DLEKG) controlling shareholder Yitzhak Tshuva has a fortune of $2.1 billion."

Therefore, hopefully, he has the where with all to support Delek Real Estate, in which he holds a direct controlling interest.