WASHINGTON, DC-Israeli real estate investment company Alony Hetz is buying a stake in local investment firm Carr Properties. The Israeli company inked a term sheet with the Special Situation Property Fund of JP Morgan Chase Bank and other entities to invest in Carr, which is a private REIT owned by JP Morgan Asset Management.
The term sheet calls for a new company, dubbed Newco, to be formed, which will manage the portfolio once the assets are transferred to it. Alony Hetz will invest $300 million in the new company. In return, it will be allocated a 45% share in the company–an identical percentage with the JPMorgan Chase Bank fund.
The two companies estimate that Newco’s IFRS NAV at the end of 2012 will be a pro forma $370 million. When the transaction closes, Newco’s equity will stand at $670 million, its property value will be $730 million and its annual dividend distribution will be 6%.
The transaction is also expected to lead to the acquisition and development of additional real estate, eventually expected to value $1.5 billion. Newco won’t raise additional funds from shareholders, but instead will focus on investing in the office sector in the greater Washington D.C. metropolitan area.
Carr Properties, headed by president and COO Oliver T. Carr III, has a whole or partial interest in 20 buildings covering 3.5 million square feet. Carr’s share in these properties comes to 2.3 million square feet. It also has four office building projects in various stages of development, among them 1700 New York Ave., NW, and 4500 East-West Highway in Bethesda, MD.