May 22--Harel Insurance Investments and Financial Services Ltd. (TASE: HARL), controlled by the Hamburger family, is further expanding its credit portfolio, with a euro75 million (NIS 360 million) loan to Beny Steinmetz and his Austrian partner Signa Holding GmbH to acquire the giant Berlin department store KaDeWe. The loan is part of a syndicate of lenders that is financing the deal.
Sources inform "Globes" that Harel also provided NIS 300 million in private credit to Azrieli Group Ltd. (TASE: AZRG), controlled by chairman David Azrieli. The mall owner will use the loan to improve its debt structure by exploiting prevailing low interest rates to recycle debt. The agreement was signed on Wednesday. Harel will receive a lien on a property, probably the Ramle Mall, as collateral.
The nine-year Consumer Price Index (CPI) linked loan, with an average duration of 4.5 years, bears a real interest rate of 0.74%. According to Azrieli, the average interest rate on its loans is 4%; by recycling the debt should improve the company's funds from operations (FFO) and net profit.
This is Harel's second big loan to Azrieli. In August 2013, it lent the company NIS 710 million. The CPI-linked loan bears an interest rate of 1.16%; the collateral is a line on Azrieli's holding in the Azrieli Center's Round Tower in Tel Aviv. Also in August 2013, Azrieli took a NIS 250 million loan from Altshuler Shaham Ltd. at an interest rate of 0.75%. There is no collateral on this loan. Azrieli used these loans to recycle debt taken from Bank Leumi (TASE: LUMI) and Bank Hapoalim (TASE: POLI) to build the Azrieli Center.
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