Brack Capital hopes to expand German venture with TASE float

Brack Capital Real Estate, controlled by Shimon Weintraub, is moving ahead with its planned flotation on the Tel Aviv Stock Exchange.

	A Brack Capital housing project in Germany.
	Photo by: Courtesy

The company is bolstered by its real estate operations in Germany under Brack Capital Properties, which is held by Brack Capital Real Estate, Brack Capital Holdings, Weintraub, company employees and others.

With equity of 130 million euros, Brack's balance sheet shows between 400 and 450 million euros. The company has no bank debt and its bond debt is effectively to Brack Holdings.

The company liabilities are concentrated in its subsidiaries, which hold its assets. These are non-recourse loans (secured against the assets themselves only ) worth 270 million euros.

The company generates annual operating profits of tens of millions of shekels, and sources close to the company say it also turns a net profit.

Brack Capital is hoping to be valued in its initial public offering at between NIS 700 million and NIS 1 billion with eyes toward being admitted to the TA-100 index. That will require an IPO of at least 20% of its shares.

Company management have still not decided whether to float the full 20% in the IPO, or go for less and hit the 20% mark later. The IPO is meant to increase the company's liquid capital to take advantage of investment opportunities in Germany.

The company is currently in talks to enlarge its portfolio of rental properties and sources close to the company say Brack managers believe a real-estate operation run by experienced managers might offer a worthwhile entry for Israeli investors.

For Weintraub, who has steered clear of the TASE in recent years, this will be a kind of homecoming after de-listing parent corporation Brack Capital in 2005.

The company is currently completing the prospectus in Israel and will then begin a series of meetings with financial market institutions in preparation for an IPO over the next few months, subject to market conditions. They will also consider listing the company shares on one of the European stock exchanges, for instance one of the seven in Germany.

A consortium of underwriters to lead the IPO has still not emerged and the company is considering the alternative of a private offering if the market does not look favorably on an IPO. The company previously raised 30 million euros in 2009 in a private share allocation.

Brack's German operations are currently managed by Gal Tenenbaum and Ofir Rahamim. The headquarters in Dusseldorf has 60 employees which oversee some 30 profit-yielding properties in 20 German cities, including 2,300 residential office, commercial and hotel rental properties, covering approximately 300,000 square meters.

The company has building rights for approximately 250,000 square meters in a giant real-estate site zoned for residences and offices in the most desirable part of Dusseldorf.

Development of the project is expected to yield hundreds of millions of dollars in profits. Among the company rental clients are Real Hypermarket, Deutsche Telekom, Commerzbank and the local governments of Offenbach and Duisburg.

Brack is hoping to take advantage of the recent recovery of the German economy. Investment in residential real estate in Germany over the first half of 2010 totaled 2.3 trillion euros - 35% better than 2009. But this was still substantially lower than the 2005-2008 period. Approximately 37% of the investments were via specialist real-estate funds, 30% through institutional bodies and the rest through public and private real-estate companies.

Weintraub and Peled founded Brack Capital (which is currently managed by Eyal Gutman ) in 1992 and later added Rony Yitzhaki as a partner, with whom they recently parted company. Weintraub and Peled manage most of their businesses through the holding company Brack Capital, which they de-listed at a valuation of NIS 200 million in 2005. It is now estimated to be worth four times that.

The company manages assets worth 2 billion euros worldwide, as well as investments in energy, infrastructure, oil refining, water purification and high-tech at an estimated value of $150-200 million. The company issued private bonds to major investors and they are consistently traded only among institutions.

Brack Capital concentrates most of its real-estate operations through its Dutch subsidiary Brack Capital Real Estate Investments, of which it owns 75%. The remaining shares are held by the U.S. private equity firm Warburg Pincus.

Brack Capital Real Estate Investments sets up major projects in partnership with large financial bodies such as Barclays Capital and Merrill Lynch. The company has over 150 employees in New York, Miami, London, Frankfurt and Tel Aviv.

Over the past 16 years it has completed investments worth over $8 billion covering more than 3 million square meters. It sold and rented accommodation units for over $1.5 billion from 2005-2008.

Among the outstanding ventures it was involved in was the purchase of Dutch real-estate company Haslemere, with assets of 2.6 billion euros, for 1 billion euros. It subsequently realized its investment in 2004 with a capital profit of 12 million euros. The company bid on a tender to sell a German housing company in a deal due to total 3.4 billion euros a few years ago, which would have been the biggest Israeli real estate purchase to date.

The company refused to comment.