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The Harel investment firm thinks Delek Real Estate is worth NIS 2.76 billion, which represents a 12-month price target of NIS 27.20 per share. That is 12.5% above its level on the Tel Aviv Stock Exchange, prompting analyst Amir Avivi to rate the Delek Group (TASE: <a target="_blank" href="http://www.themarker.com/eng/tools/toolsResult.jhtml?application=8&chosen=1084128">DLEKG</a>) company a Buy.

Delek Real Estate continues to demonstrate industriousness and dynamism in the domestic and global real estate markets, he says. The company evinces flexibility and dives into sectors such as parking lots and hotels in England, acquisitions in Canada and Switzerland, and most lately - the Hilton Hotel chain.

The company's diversification of operations and its strong financial backing from parent company Delek Group reduces its risk factor, Avivi says. On the other hand, its diversification precludes it  benefiting from an advantage of size created by having a critical mass of assets in a given sector. It is also highly leveraged.

He believes Delek Real Estate will continue to expand in European properties for commerce, services and trade, and mainly - in REIT operations.

The company has NIS 900 million cash  and a NIS 500 million credit facility. It has room to grow through acquisitions, which Avivi sees coming around the corner.

The analyst believes Delek Real Estate is negotiating with various groups ahead of setting up an REIT, or real estate investment trust. He believes the company is beefing up on properties to sell to the future REIT.

At this stage Delek Real Estate would keep its gas stations, .but even so the properties the REIT would receive would be worth in many hundreds of million of shekels, Aviv says.

He also sees it as a good sign that Bank Hapoalim bought 11% of Delek Real Estate, for NIS 57.2 million. Avivi sees it as a sign that Bank Hapoalim will act in the real estate market via Delek Real Estate. The deal also serves to set a bottom value for Delek Real Estate, of $460 million.

Regarding a possible flotation by Delek Belron International in London, Avivi calculates that the company (which used to be listed in Tel Aviv) could command a market valuation of $500 million.