Alony Hetz Reports Non-Binding Term Sheet with the Special Situation Property Fund of JP Morgan Chase Bank Regarding Investment in Carr Properties

RAMAT GAN, Israel--()--Alony Hetz (“the company”) (TASE:ALHE), a leading Israeli real estate investment company, announced that on December 21, 2012, it signed a Term Sheet with the Special Situation Property Fund of JP Morgan Chase Bank (“SSPF”) and others to invest in Carr Properties (“CARR”), currently controlled by SSPF.

CARR is a real estate investment company focused on acquisitions, development and property management of commercial office properties in the greater Washington area.

CARR’s management team has many years of experience in the Washington D.C. real estate market, and has been led over the last decade by its President and Chief Operating Officer, Mr. Oliver T. Carr III.

CARR has whole or partial interests in 20 buildings covering 3.5 million sq ft., with CARR’s share at 2.3 million sq ft., leased to hundreds of tenants, in addition to four office building projects in various stages of development.

In accordance with the Term Sheet, a new company will be formed (“NEWCO”), which the current team will manage and to which will be transferred CARR’s properties, as mentioned above. In parallel, the company will invest $300 million in NEWCO. In return for the company’s investment described above, they will be allocated 45% rights in NEWCO, an identical percentage to SSPF holdings in NEWCO at the time.

Based on CARR’s presentation, the parties estimate that NEWCO’s IFRS NAV at the end of 2012 (pro forma) will be $370 million, such that, if and when, the transaction is completed, NEWCO’s equity immediately following the company’s investment, will stand at $670 million, its property value will be $730 million and its annual dividend distribution to parties on their investment in NEWCO will be 6%.

Based on CARR’s business plan and in accordance with their corporate strategy and NEWCO’s equity (pro forma) following the described investment in the company, the parties anticipate that the NEWCO transaction will lead to in the upcoming years, via acquisition and development of additional real estate, to a property value at $1.5 billion, without raising any additional funds from shareholders, by focusing on investing in the office sector in the greater Washington D.C. metropolitan area.

The Term Sheet states that the parties intent is to sign binding definitive agreements (“agreements”), following completion of due diligence and property appraisals to be carried out by the company. The agreements will determine, among others, and as agreed upon by the parties, procedures for the transfer of shareholders rights, as well as of the shared control in NEWCO between the company and SSPF.

It is the company’s intent to complete its due diligence during the first quarter of 2013. If the due diligence is completed to the satisfaction of the company, then it is the parties intentions to sign the agreements no later than March 2013 and to close no later than June 2013.

The company intends to finance the $300 million (approx. NIS 1.2 million) anticipated investment in NEWCO from its own independent sources, via partial utilization of its long term bank credit line and from raising debt/equity, as needed.

Signing of the Term Sheet described above does not obligate the parties, except under the NO-SHOP period in effect until the end of March 2013, such that there is no certainty that at the end of the due diligence period a binding contract will be signed.

The company will continue to report on the development of the above mentioned transaction, upon completion of the due diligence.

About Alony Hetz

The Alony Hetz group is one of Israel's largest real estate investment companies, focusing on investing in leading companies in Israel, Switzerland, Canada and the UK in the commercial real estate sector. It has strong and stable financial resources, and is rated ilA by S&P Maalot and ilA1 by Midroog. For further information about Alony Hetz, please visit the company's website www.alony-hetz.com.

Contacts

Alony Hetz
Moti Barzilay
Vice President Business Development
Tel: +972-3-752-1115
Mobile: +972-52-654-5645
moti@alony-hetz.com

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Contacts

Alony Hetz
Moti Barzilay
Vice President Business Development
Tel: +972-3-752-1115
Mobile: +972-52-654-5645
moti@alony-hetz.com