Bloomberg News

Manhattan Lures Gazit as Web Shops Sink Retail: Israel Overnight

April 24, 2013

Gazit-Globe Ltd. (GZT:US), the Israeli mall owner that has 2 million people through its properties every day, is concentrating on densely populated cities as a hedge against growth in online shopping, said Chairman Chaim Katzman.

“We’re focused on urban real estate given everything that’s going on with e-commerce,” Katzman said in an interview at Bloomberg’s headquarters in New York yesterday. “The importance of urban markets will become greater and greater” as retailers close stores in less populated and rural areas in favor of cities such as Sao Paulo and New York where foot traffic is high, he said.

Gazit-Globe has climbed 21 percent in New York in the past year, beating a 2.4 percent drop in the Bloomberg Israel-US Equity Index (ISRA25BN), as the Tel Aviv-based company’s focus on tenants engaged in essential services -- such as barbershops and supermarkets -- helped it weather the recession in Europe. The Bloomberg gauge of the 25 biggest Israeli companies traded in New York gained 0.8 percent to 88.70 yesterday, as Mellanox Technologies Ltd. (MLNX:US) jumped before reporting earnings today.

E-commerce sales in the U.S. grew 15 percent to a record $186.2 billion in 2012, according to data researcher ComScore Inc., as online retailers including Amazon.com Inc. and EBay Inc. boosted sales by at least 20 percent. While Gazit-Globe, which owns commercial real estate in more than 20 countries, saw revenue rise 22 percent last year to a record 7 billion shekels ($1.9 billion), analysts are projecting an 18 percent drop in 2013 sales to 5.7 billion shekels, estimates compiled by Bloomberg show.

Shopping Re-Invention

Retailers from Wal-Mart Stores Inc. to Sears Holdings Corp. are struggling to re-invent themselves as consumers increasingly shop online. Best Buy Co.’s new Chief Executive Officer Hubert Joly has been closing big-box stores and improving e-commerce operations at the world’s largest consumer electronics retailer.

Gazit-Globe, which spent the equivalent of $1.04 billion on new acquisitions last year, had 41.9 billion shekels in total debt at the end of 2012, data compiled by Bloomberg show. While the company is looking for new opportunities, it is also working on reducing its leverage, through divesting assets that are not performing well and raising more capital, Katzman said.

“We were clearly net buyers until the end of 2012,” Katzman said. “The market has dried up, and since we won’t compromise on quality, there’s not as much to buy today.”

Norstar Holdings

Gazit-Globe slipped 0.2 percent to $12.85 in New York, extending its drop from a six-year high on March 26 to 6.8 percent. Its largest investor, Norstar Holdings Inc., sold a 2.4 percent stake in Gazit, Israel Brokerage & Investments said in an e-mailed note April 9. Katzman is also chairman at Norstar, which had a 54 percent (GZT:US) stake in Gazit-Globe on April 14, according to data compiled by Bloomberg.

“The stock was at highs, so it was a good time for Norstar to sell,” Noam Pincu, an analyst at Psagot Investment House Ltd. in Tel Aviv, said by telephone yesterday. He has a hold rating on Gazit-Globe. “It won’t cause a change in the company.”

Shares of Gazit-Globe advanced 1.9 percent to 47.30 shekels, or $13.08 in Tel Aviv today.

The Bloomberg Israel-US gauge added 0.8 percent to 88.70, capping a third day of gains. Israel’s benchmark TA-25 Index this morning rose 0.6 percent to 1,215.02.

Prolor Biotech Inc. (PBTH:US) led the gains on the Israel-US index, jumping 3.7 percent to $5.83. Shares surged 8.8 percent to 22.96, or $6.35, in Tel Aviv today as Opko Health Inc. agreed to buy the Israeli drug-maker for about $480 million, according to a statement from the companies today. Miami-based Opko will pay about $7 a share in stock.

Syneron, Mellanox

Syneron Medical Ltd. (ELOS:US) declined the most on the index, falling 1.8 percent to $8.84.

Mellanox Technologies Ltd. added 3.4 percent to $61.28, the most since April 4. Shares in Tel Aviv this morning advanced 3 percent to 220.50 shekels, or $60.97. First-quarter sales at the developer technology used to transfer and store data fell 9 percent to $80.8 million (MLNX:US), according to the mean of 14 analysts’ estimates compiled by Bloomberg.

Clicksoftware Technologies Ltd. (CKSW:US)’s revenue rose 21 percent to $26.3 million in the first three months of 2013, according to the mean of three analysts’ estimates collated by Bloomberg. Shares of the maker of computer programs used to manage workforces gained 0.4 percent to $7.05 yesterday.

To contact the reporter on this story: Leslie Picker in New York at lpicker2@bloomberg.net

To contact the editor responsible for this story: Emma O’Brien at eobrien6@bloomberg.net


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Companies Mentioned

  • GZT
    (Gazit-Globe Ltd)
    • $13.81 USD
    • 0.02
    • 0.14%
  • MLNX
    (Mellanox Technologies Ltd)
    • $37.37 USD
    • 0.09
    • 0.24%
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