Gazit Plans More Nordic Property Deals After $1.6 Billion Splash

Gazit-Globe Ltd., which manages more than $21 billion of real estate assets, expects to add more property investments in the Nordic region after its Finnish subsidiary paid up $1.6 billion to expand in Norway.

“The Nordics present great opportunity given transparency, rule of law, the strength of the currencies, the strength of the economies, these are AAA rated economies,” Chairman Chaim Katzman said in an interview in Oslo on Tuesday. “Many international investors don’t recognize all these things.”

The Tel Aviv-based company is focusing on shopping centers in major urban areas in North America, Brazil, Europe and Israel and its Citycon Oyj unit on Monday acquired Norwegian shopping-center owner Sektor Gruppen ASA for about 1.5 billion euros ($1.6 billion). Citycon is the largest shopping-center owner in Finland and Estonia and the deal will make it the second-biggest in Norway. It owns 55 shopping malls, including 21 in Finland, 10 in Sweden and one in Denmark.

“We plan to expand in Denmark,” Katzman said. “Denmark is definitely on our radar screen.”

According to Citycon Chief Executive Officer Marcel Kokkeel expansion in Denmark will focus on Copenhagen and “probably be through asset by asset or smaller portfolios”.

The push in the Nordics is also part of a broader bet on Europe, which offers better returns than the “fully priced” U.S. market, according to Katzman.

Gazit-Globe is “almost exclusively” interested in shopping centers and will in Europe continue to focus on Czech Republic and Poland, besides the Nordics, according to Katzman.

“The ECB policy by Draghi and the decline of the euro makes Europe much more attractive and gives Europe opportunity to revamp its industrial and touristic base,” he said. “I don’t think Europe is going away anytime soon. There’s more opportunity here than in the U.S.”

Gazit-Globe is reviewing its businesses in Israel. In March the company hired Citigroup Inc. as an adviser. No decision has been made yet, he said.

“It’s a small portfolio and we’re not interested in maintaining smaller portfolios in countries,” he said. “It depends on price like anything else.”