Jelmoli Holding AG, headquartered in Zurich, Switzerland, is one of the leading real estate and retail companies in Switzerland. It is listed on the Zurich Stock Exchange. The Jelmoli and its affiliates’ real estate portfolio, which is entirely focused on Switzerland, includes such prime real estate as the Jelmoli flagship department store in Zurich and the Grand Passage in Geneva. Save for the two development properties, overall, the real estate portfolio includes 88 assets and comprises a total lettable area of 530,543 m2.
In the acquisition of Jelmoli Holding, DGRE and Delek Belron International have joined forces with Blenheim Properties Group Limited of Igal Ahouvi's Group ('Blenheim'). Blenheim are an internationally well known real estate investor, having a long-term strategy with regard to investing in Switzerland. According to the information DGRE received, Blenheim has to date participated in transactions totalling approximately CHF 12 bn, of which CHF 1 bn was in Switzerland.
For more information please refer to www.jelmoliholding.ch
The Board of Delek Global Real Estate ('DGRE') announces that it has reached agreement to acquire, together with DGRE's parent company, Delek Belron International Limited ('DBI') and with Blenheim Properties Group Limited ('Blenheim'), the Jelmoli Swiss real estate portfolio, which includes a number of Switzerland’s prime retail property sites, for the cost of CHF 3.4bn.
The assets are being acquired through a new company, Empario Holdings Sàrl ('Empario'), a Luxembourg entity, wholly owned by a Dutch entity. Empario has been set up in equal shares by DGRE and DBI on the one hand, and Blenheim on the other hand. Blenheim is a company controlled by the Igal Ahouvi Group.
The CHF 3.4bn consideration will be satisfied in cash on completion of the acquisition. DGRE will finance its share in the new joint company through a combination of debt and cash, together with funding from parent company, DBI.
Empario, the new joint company, will acquire shares in the various companies owned by Jelmoli and its affiliates that are owners of the different properties in the portfolio. As part of the transaction, an exclusive option is granted to DGRE and its partners until the end of 2007, to purchase: (i) all shares in Jelmoli AG, which operates the Jelmoli Department Store in Zurich (ii) 72.5% of the shares in Jelmoli Bonus AG, which operates the Jelmoli bonus card business and (iii) all shares in Jelmolio Service AG, which provides certain services to Jelmoli AG and Jelmoli Bonus AG.
Jelmoli Holding AG is one of the leading real estate and retail companies in Switzerland and is listed on the Zurich Stock Exchange, with a market capitalisation of CHF 2.9bn (as of April 2007). The Group is the oldest operator of department stores in Switzerland and founded Zurich’s first department store in 1833. Today, Jelmoli owns and operates the leading department stories and has innovated the ‘stores within stores’ concept representing some of the world’s leading brands. Within Switzerland, the Jelmoli department stores are equivalent to London’s Harrods, Harvey Nichol’s and Selfridges.
Empario, the joint company, is acquiring from Jelmoli Holding a total of 88 major property assets in Switzerland, comprising lettable areas of 530,543 m2. The real estate portfolio is clearly one of the highest quality portfolios in Switzerland. The portfolio focuses on attractive inner-City locations, mainly in Zurich and Geneva. The assets acquired include two of Switzerland’s most prestigious department stores: the Jelmoli flagship store in Zurich, and Geneva’s oldest department store, the Grand Passage.
Of the 88 assets included in the acquisition, eight properties represent approximately 60% of the consideration. The joint company is also acquiring two development property assets, the St. Gallen and Thonex shopping centres, which are currently under development and are scheduled to open in 2008.
The Jelmoli real estate portfolio comprises: 57% retail sites, 19% office space, 9% warehouse, 7% parking, with the remaining 8% in residential and other property classes. Excluding the two development properties referred to above, all of the properties being acquired are currently rented with 100% occupancy rates, and an average lease length of 13.5 years, with some asset lease terms of up to 25 years. Over 80% of the retail gross rental income is related to unlimited turnover-linked contacts, with a fixed minimum rent.
DGRE listed on AIM in March, 2007 with a portfolio of 281 properties, with an attributable value of £1.6bn. The Group listed on AIM in order to develop its property portfolio through acquisition, enabling it to expand within key Central European and Canadian property markets.
The broad development strategy of the business is to acquire a long-lease portfolio of assets in prime locations with development potential. The Group works to enhance the value of all of its properties and to generate further value through improvements and maximising rental cash flows by improving the terms of existing leases through financial and other tenant incentives.
Since listing, the Group has acquired a number of properties in Europe for a total cost of £171.7m, which include:
- A 17% interest in Marriot Group hotels, including 47 hotels across Great Britain;
- two Deutsche Telekom tenanted sites in Germany
- two buildings occupied by the University of Berlin
- The World Trade Center in Lausanne, Switzerland
- 17 retail assets across Finland
The acquisition of the Jelmoli portfolio gives DGRE trophy assets in key Swiss City locations with major retail tenants and builds on DGRE’s existing Swiss property portfolio.
DGRE’s existing assets in Switzerland include the five WTC office buildings in Lausanne; the University of Zurich (Oelikon) and the Credit Suisse Building (Duebendorf) in Zurich; the Swiss Confederation Building in Bern and the Matran Shopping Centre in Matran. These assets were valued at £267.2m prior to the transaction, and all have a 100% occupancy rate.
Post-completion of the acquisition, DGRE’s property portfolio will alter as follows: The geographical split of the portfolio will be: 45% - UK; 28% - Switzerland; 10% - Canada; 10% - Germany; 7% - Scandinavia. The total value of the properties in the DGRE portfolio will increase by 33% to £5.6bn, and the attributable value (DGRE's share) in the DGRE portfolio will increase by 24% to £2.4bn. The total value of the rental income of the DGRE portfolio will increase by 34% to £240m.