Gazit-Globe Targets Sweden, Brazil After Rally: Israel Overnight

Gazit-Globe Ltd., the Israeli real estate firm that surged to a two-year high yesterday, is seeking to grow in Sweden and sees Brazil’s slowdown as an opportunity to buy properties at lower prices, Chairman Chaim Katzman said.

“We’re still looking to expand in Sweden because we think it’s one of the best markets in Europe,” Katzman, who is also Gazit-Globe’s founder, said yesterday in a phone interview from Miami. “If the economy in Brazil isn’t as hot as it was years ago, it would be better for us as we are looking to expand.”

Gazit-Globe, based in Tel Aviv, said yesterday that its Citycon Oyj unit joined with the Canada Pension Plan Investment Board to acquire the Kista Galleria shopping center in Stockholm for 526 million euros ($698 million). The deal boosted Helsinki-based Citycon’s Swedish assets to 40 percent of its holdings, Katzman said. The company is also looking to buy commercial properties in Brazil, where the central bank has kept borrowing costs at a record low to revive the slowest growth in a decade.

Gazit-Globe’s shares traded in Tel Aviv advanced 0.8 percent to 48.40 shekels, or the equivalent of $12.91, the highest level since Dec. 2007. Israel’s benchmark TA-25 Index fell for the first time in three days, slipping 0.5 percent to 1,220.74.

The company’s price estimate was raised to $14.1 at Citigroup Inc. from $11.5, according to an e-mailed report today.

‘Gradual Recovery’

Shares of Gazit-Globe rose 0.2 percent in New York yesterday to $12.66, the highest level since December 2010. The jump extended this year’s rally to 34 percent. The Bloomberg Israel-US Equity Index of the largest New-York traded Israeli companies advanced 0.9 percent to 87.18, the biggest gain in three weeks. Mellanox Technologies Ltd. rallied after Barclays Plc reiterated its buy recommendation on the stock and Partner Communications Co. posted the biggest climb since 2001.

The Kista Galleria acquisition, which is expected to close in January, is a record real estate purchase in Sweden, Katzman said. Citycon owns nine other shopping centers in the Nordic country.

Gazit-Globe manages assets valued at about $18 billion in mostly supermarket-anchored shopping centers. Europe accounted for $442 million of its 2011 revenue of $1.82 billion while the company’s biggest market is Canada with $549 million in sales.

Katzman said Gazit-Globe is looking to buy properties in the U.S. on expectations that interest rates remain low and the world’s largest economy continues to show signs of a “gradual recovery.” The company operates in the U.S. through its Miami Beach, Florida-based Equity One Inc. unit.

Home values in the U.S., the fourth-biggest source of revenue for Gazit, have been boosted by record-low mortgage rates, with prices jumping 6.3 percent in October from a year earlier, the biggest increase since June 2006, data provider CoreLogic Inc. said Dec. 4.

‘Long-term Prognosis’

A slowdown in Brazil’s growth may provide Gazit-Globe more opportunities to buy commercial properties, Katzman said. The company seeks to take advantage of the country’s “long-term prognosis which we believe is still a very desirable market to enter,” he said.

Brazil’s economy, the largest in Latin America, will grow an average of 1.86 percent in the 2011 to 2012 period, according to the median forecast in a central bank survey, the slowest two-year average rate since the 0.15 percent increase recorded between 1998 and 1999.

Gazit-Globe said Dec. 11 that it received 1 billion shekels ($265 million) of commitments from institutions for its offering of bonds due 2024, exceeding an initial plan to sell 500 million shekels of debt.

Israel, which has a population of similar size to Switzerland, has 54 companies traded on the Nasdaq Stock Market, the most of any country outside the U.S. after China.

Mellanox, Partner

Mellanox, a maker of technology used to transfer and store data, advanced 2.5 percent to $63.40 in New York, after sinking 38 percent this quarter, the worst three-month performance on record. The company’s shares in Israel lost 4.6 percent to 231.9 shekels, or $61.9.

Investors should buy the shares after the retreat, Joseph Wolf, a Tel Aviv-based analyst at Barclays, wrote in a Dec. 18 report.

Oracle Corp., the world’s largest database software supplier that owns 8.94 percent of Yokneam Elit, Israel-based Mellanox, said yesterday that it expects third-quarter earnings of as much as 68 cents, exceeding the 66-cent average of 40 analysts’ estimates compiled by Bloomberg.

American depositary receipts of Partner, Israel’s second-largest mobile-phone provider, surged 11 percent to $6.07 on trading volume that was more than twice the stock’s three-month daily average, data compiled by Bloomberg show. Partner’s shares traded in Tel Aviv today added 1.4 percent to 23.27 shekels, or $6.21.

Saban Capital Group Inc. is seeking to buy additional shares in the Rosh Ha’Ayin, Israel-based company from institutions and Leumi Partners Ltd., the investment arm of Bank Leumi Le-Israel Ltd., and has offered to pay Leumi 25 shekels per share, TheMarker reported yesterday. Moshe Debby, Saban’s spokesman in Israel, declined to comment on the report when contacted by Bloomberg News.

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