Clal Insurance to Lend Abu Family Housing NIS 50 Million, May Gain 15% Stake
Translated & summarized from Bizportal by baba
Abu Family Housing, a residential REIT controlled by Tzachi Abu, is securing a NIS 50 million loan from Clal Insurance. Clal may also acquire up to a 15.16% stake in the company through options attached to the loan. The funds will fuel Abu Family's acquisition of new apartments for rental purposes. This deal provides Abu Family with crucial long-term financing and supports contractors by enabling bulk sales.
The story in 5 lines · by baba
- Abu Family Housing secures a NIS 50 million loan from Clal Insurance.
- Clal Insurance could gain up to a 15.16% stake in Abu Family Housing.
- The loan is structured as a six-year, single-payment facility.
- Funds will support Abu Family's strategy of acquiring rental apartments from developers.
- The deal provides Abu Family with long-term financing amid a stock value decline.
Abu Family Housing, a residential REIT controlled by Tzachi Abu, is raising NIS 50 million from Clal Insurance. According to the company's report to the stock exchange, Clal will provide an unlinked shekel loan for six years, to be repaid in a single installment at the end of the term. Alongside the loan, Abu Family will issue Clal non-tradable options. If fully exercised, these options could make the insurance company one of the largest shareholders, potentially holding about 15.16% of the company's equity. The loan is structured as a convertible bond, allowing Clal to convert most of the debt into shares if the stock price rises above NIS 8 per share, instead of receiving the money back. This arrangement provides Abu Family with long-term financing without current principal repayment, crucial as the company's stock has lost about a third of its value. The funds are intended to support Abu Family's acquisition strategy, which involves purchasing new apartment complexes from contractors for rental. The company has recently acquired approximately 140 apartments in three major deals totaling around NIS 366 million, including 40 units in Bnei Brak, 50 in Jerusalem, and 50 in Netanya. This strategy offers contractors immediate income and frees up financing in a market with slower sales to individual buyers. The REIT sector is becoming a significant player in the new apartment market, as evidenced by recent mergers.