Africa Properties Gains on Plans to Raise Debt: Tel Aviv Mover

Africa Israel Properties Ltd. advanced to the highest in almost two years after the real estate developer said it is seeking to raise debt, boosting investor bets about the company’s project financing abilities.

The shares advanced 7.9 percent to 41.48 shekels, the highest level since May 2011, at the close in Tel Aviv. The yield on the 5.9 percent bond due July 2019 rose seven basis points, or 0.07 percentage point, to 6.35 percent. The shares of Africa-Israel Investments Ltd., which holds a 56 percent stake in the company, advanced 2.4 percent to 9.025 shekels. The benchmark TA-25 Index lost 0.3 percent.

Africa Israel Properties said it would seek an extension of its July 2019 bonds, raising as much as 130 million shekels ($35 million) worth of bonds in a private placement to institutional investors, according to a filing today to the Tel-Aviv Stock Exchange. The company’s shares have advanced 17 percent this year compared with a 1.4 percent rise of the benchmark equities gauge, as the the real estate developer has expanded its portfolio of properties in Israel and Europe. Property rental income rose by 5 percent in the first nine months of last year to 243.6 million shekels, according to a November company presentation.

“There is positive momentum in the stock,” Noam Pincu, an analyst at Psagot Investment House Ltd., said today by phone. “The debt extension shows investors that the company is able to raise money to finance more projects without having to sell assets.”

Falling Yield

The yield on the 2019 bond has dropped 33 percent from last year’s high of 9.53 percent on Sept. 20.

Net operating income advanced 7 percent to 236 million shekels in the first nine months of the year, according to the presentation. Total equity at the end of the third quarter of the year was 2.7 billion shekels, according to data compiled by Bloomberg.

In February, Moody’s Midroog raised the outlook on company’s bonds to positive from stable and maintained its Baa1 rating, citing an anticipated improvement in the company’s operations and a rise in expected rental revenues, as well as a significant improvement in liquidity, according to the properties company’s presentation. S&P Maalot upgraded the company’s rating to BBB in February.