Harel: Atrium Better Investment Than Its Parent Gazit Globe

Atrium buys 37,600 square-meter Palace Flora shopping mall and office complex in Prague for 191 million euros from AFI Europe of Lev Leviev's Africa Israel group, and partner Avestus Capital.

Gazit Globe announced last week several major strategic deals by overseas subsidiaries with a total value of about $1 billion. In one deal the company's U.S.-based subsidiary Equity One sold 36 shopping centers to Blackstone Real Estate Partners for $473 million. The properties, located primarily in the Atlanta, Tampa and Orlando areas, as well as in the Carolinas, Alabama, Tennessee and Maryland, had been encumbered by a balance of $177 million in mortgage loans. The sale provides Equity One with a net cash flow of $100 million.

In another deal, Gazit Globe subsidiary Atrium European Real Estate, managed by CEO Rachel Lavine, bought the 37,600 square-meter Palace Flora shopping mall and office complex in Prague for 191 million euros from AFI Europe of Lev Leviev's Africa Israel group and its partner Avestus Capital. Financing for the purchase includes 120 million euros in debt. The transaction, Prague's largest real estate deal in 2011 so far, extends the value of Atrium's portfolio of income-generating assets to 1.96 billion euros.

Courtesy of Gazit Globe

"Atrium, with its financial strength, can finance the asset at lower interest rates than Africa can," commented Elad Kraus, real estate analyst at Harel Finance. "In our opinion Atrium is the most interesting company of the Gazit Globe group, and is better to hold than Gazit Globe itself."

AFI Europe opened the Palace Flora mall in March 2003 at a total investment of about 70 million euros. At the end of 2004 it sold off 50% of the property at a 120 million euro total asset value.

In Canada, Gazit Globe subsidiary First Capital Realty announced that it completed over the past two months a series of purchases and sales totaling 224 million Canadian dollars. The largest of these deals was the purchase of Toronto's upscale Hazelton Lanes shopping mall for 10 million Canadian dollars.