The Ticker: U.S. Property Company CMCT Draws 860m Shekels in Orders for Stock Offering

Energy shares fall after Egypt dashes hopes for Israeli gas exports ■ Discount Bank quarterly net jumps 66% from a year ago ■ First Int’l Bank posts 59% rise in third-quarter profit ■ Tel Aviv shares post decline as energy industry takes a hit

Ofer Vaknin

U.S. property company CMCT draws 860m shekels in orders for stock offering

CIM Commercial Trust Corporation, a U.S. real estate investment trust formed by Israelis Shaul Kuba and Avi Shemesh, drew 860 million shekels ($243 million) in orders in the institutional tranche of an offering of preferred shares. The sale, the first of preferred shares by a U.S. real estate company on the Tel Aviv Stock Exchange, was expected to raise as much as 800 million shekels from institutional investors an effective dividend rate of 6.3%. CMCT, which trades on the Nasdaq at a market value of $950 million, owns and operates office buildings across the U.S. Unlike other North American property companies to raise capital on the TASE, CMCT opted to issue preferred stock over debt even though its leveraging is a low 30-35%. It may decide to issue common stock later. Proceeds from the sale will be used to pay down a $200 million bank loan and buy additional real estate, the company said. (Michael Rochvarger)

Energy shares fall after Egypt dashes hopes for Israeli gas exports

Israeli energy shares dropped on Wednesday after Bloomberg news reported that Egypt will stop importing liquefied natural gas in the next year and may eventually export gas after the giant Eni-operated Zohr field begins production. Oil Minister Tarek al-Molla said in an interview that Zohr would mostly supply the domestic market but that any surplus could be turned into LNG by the country’s two gas liquefaction facilities starting in 2019. Molla’s remarks dashed hopes that Israel could become a supplier of natural gas to the two facilities, which have been idle since Cairo barred LNG exports in 2011.  Israel energy companies had been encouraged by the approval in August of a law that would open Egypt’s gas market to competition. The Tel Aviv Stock Exchange’s Oil and Gas index ended down 1.8% at 922.24 points, led by a 3.2% decline for Tamar Petroleum to 21.20 shekels ($5.99) and a 3.1% drop to 9.55 for Delek Drilling. (Eran Azran) 

Discount Bank quarterly net jumps 66% from a year ago

Israel Discount Bank on Wednesday reported a 66% year-on-year rise in its third-quarter net profit, boosted by bond sales, higher commissions and lower expenses. Israel’s fourth-largest bank by assets said net grew to 313 million shekels, up from 188 million shekels a year earlier. It had been forecast to earn 251 million shekels, by analysts surveyed by Thomson Reuters I/B/E/S. Net interest income rose 1.7% to 1.207 billion shekels, while operating expenses dipped 4.1%. The bank had credit loss expenses of 187 million shekels, compared with 141 million shekels a year earlier, boosted by a 50 million shekels provision to Shaul Elovitch’s Eurocom Group. In the first nine months Discount set aside 180 million shekels against 600 million shekels in loans to Eurocom. The bank’s tier 1 capital adequacy ratio, which measures equity capital as a percentage of total risk-weighted assets, was unchanged at 9.8%. Discount shares ended down 0.3% at 9.55 shekels. (Michael Rochvarger)

First Int’l Bank posts 59% rise in third-quarter profit

First International Bank of Israel, the country’s fifth-largest bank by assets, reported on Wednesday a 59% rise in quarterly profit on higher interest income and lower credit loss expenses. FIBI posted net profit of 203 million shekels ($57 million) in the third quarter, up from 128 million shekels a year earlier, giving it a return on equity of 11.1%. Net interest income rose to 565 million shekels from 553 million shekels in the same period of 2016.  Expenses from credit losses slipped to 9 million shekels from 21 million shekels. FIBI also benefited from 32 million shekels of tax credits from previous years as well as a 3.3% drop in operating expenses for the quarter, to 640 million shekels, as part of a cost-cutting drive. The bank’s tier 1 equity ratio rose to 10.32% from 10.09% at the end of 2016. FIBI shares finished down 0.2% at 68.50 shekels. (Michael Rochvarger)

Tel Aviv shares post decline as energy industry takes a hit

Energy shares led the Tel Aviv Stock Exchange lower on Wednesday amid concerns about the prospects of energy exports to Egypt. The benchmark TA-35 index lost 0.8% to close at 1,400.05 points, while the broader TA-125 index dropped 0.7% to 1,283.60 points, on turnover of 1.21 billion shekels ($340 million). Outside of energy shares, losses on the TA-125 index were led by El Al Airlines, which dropped 5.4% to 1.56 shekels, and by Frutarom, whose shares marked their seventh decline in the last eight sessions, falling 2.4% to 268.30. Aeronautics, whose shares were slammed a day earlier by news of a police investigation against the drone maker, rebounded 1.8% to finish at 11.19. Mirland climbed 4.2% to a 2.19 close after it reported a third-quarter profit of $1.6 million, turning around from a $34.4 million loss a year ago. In foreign currency trading, the euro gained 0.5% to a Bank of Israel rate of 4.1824 shekels. The dollar weakened 0.3% to 3.5320 shekels.
(Shelly Appelberg)