European banks are appointing receivers for more properties owned by Yitzhak Tshuva-controlled Delek Real Estate Ltd. (TASE: DLKR) through its subsidiary Delek Global Real Estate plc. In Germany, a bank has appointed a receiver for the T Systems Building in Mülheim, and in the UK, the company's portfolio of car parks faces higher interest rates on its loans following a downward revaluation. The actions come after the Royal Bank of Scotland plc (LSE; NYSE: RBS) appointed a receiver for the UK Marriott Hotels portfolio, in which Delek Global Real Estate owns an 17% stake
Delek Global Real Estate owns 60% of the T Systems office building, and Dorea Investment and Developments Ltd. (TASE:DORA) owns 20% and has a NIS 3.8 million exposure to the property. The companies were due to repay the secured loan against the property in January. When they failed to do so, the lending agreed not to take proceedings during negotiations. The second extension expired at the beginning of July.
The bank refused a further extension and appointed a receiver after a bank-appointed appraiser valued the property at €17.7 million. Delek Real Estate says that the balance of the loan was €21.3 million at the end of March, and that it books the property at €25 million. The company says that it will report a €1.9 million (NIS 9.3 million) loss on the foreclosure.
In the UK, Delek Global Real Estate owns 59% of the portfolio of 127 car parks, which are leased to National Car Park Ltd. (NCP). The spread on NCP's loans was raised from 1.75% a year to 3.282%, which will add ₤2 million in annual interest payments. The lender's appraiser valued NCP at ₤656 million - ₤257 million less than the value in Delek Real Estate's books. Delek Global Real Estate rejects the new valuation.
At the same time, NCP has asked Delek Global Real Estate for a 7% rent reduction, amounting to ₤750,000 reduction per quarter (₤3 million per year) from September. Delek Global Real Estate has not yet reviewed the request.
In its financial report for 2010, Delek Real Estate says that its revenue from NCP was NIS 252 million, 10% of its total rental income, and added that rent would rise by 2.7% a year. The long-term leases on the car parks will expire in 15-26 years. Delek Real Estate noted, "There is special dependency given that NCP is the sole tenant."
Delek Real Estate's share price has plummeted from its peak. The share price fell 3.1% by mid-afternoon today to NIS 0.279, giving a market cap of NIS 110 million.
Published by Globes [online], Israel business news - www.globes-online.com - on July 10, 2011
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