Habas H.Z. Investments announced Monday that its Dutch subsidiary Nieuwe Steen Investments, of which it holds a 21% share, has approached another Dutch REIT fund, Vastned Offices/Industrial, proposing a merger between the two through a share swap.
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After completing its Rothschild and YOO luxury real estate projects in Tel Aviv, Habas is now focusing on finding attractive investment properties abroad.
The Nieuwe Steen Investments real estate investment trust has already spent about 11 million euros in acquiring 4.99% of Vastned's shares.
Both firms are traded on the Euronext Amsterdam stock exchange: NSI at a 650 million euro valuation and Vastned at a 230 million euro valuation.
Talks between the two companies indicate the swap could involve Nieuwe Steen Investments putting up 0.85 of its shares for every share of Vastned; this ratio would reflect a 15% premium on Vastned shares according to their price on December 10.
Vastned Offices/Industrial was founded in 1984. The company doesn't have any dominant controlling ownership, with its shares mostly distributed among large institutional investors like BNP Paribas, Nomura Asset Management and ING Clarion Real Estate Securities.
Habas' ownership share in the amalgamated company, if the deal goes through, would come to about 17% - making it the largest shareholder in the new entity - while current Vastned shareholders would end up with a combined 25% of its equity.
Nieuwe Steen Investments believes the merger fits both companies' growth strategies and that the joint firm would provide a strong platform for further acquisitions. The deal is subject to approval by shareholders of both companies, but sources close to Habas claim NSI has received indications from Vastned shareholders that they favor the move.
Nieuwe Steen Investments owns assets worth approximately 1.4 billion euros in total and Vastned has holdings of about 1 billion euros. A combined company would have equity totaling 900 million euros and net financial debts of 1.1 billion euros; its net asset value would come to 884 million euros, with occupancy rates surpassing 90%.
The joint company would become one of the three largest public income-generating real estate firms in the Netherlands, with more than 300 commercial and office properties spread among prime locations in Holland, Belgium and Germany.
Annual rental income for the companies are expected to exceed 200 million euros and the merger would lead to various cost savings totaling 3.5 million euros per year.
The construction company, which is controlled by the Habas family, Idan Ofer (the chairman of the Israel Corporation) and Ehud (Udi ) Angel, and which is managed by Eyal Reggev - has long declared its intention to expand its real estate holdings abroad. The Israeli company is trading at a market cap of NIS 350 million on the Tel Aviv Stock Exchange. Its shares lost 1.2% yesterday.