One can justify almost almost any number. one of the beauties
of modern accounting...
I believe the value of Elbit over time will be much more than
$3 per share. this is an investment company in assets that is
much closer to a fund than to an operating company. you
should be looking at its individual assets and their performance,
not at the whole.
Blu, couple of things:
The Bucharest complex carries over 60M Euros of debt. the
64M is the equity, so the valuation is ~130M.
When you look at net income of an asset that is levaraged and
not optimized yet, you are better off looking at the EBITDA.
The EBITDA today is over 10M Euro. it will grow once the
additional 210 rooms are available and another 1.5M of capex
is put into the hotel this year (other than the conversion).
The additional appreciation will not be huge to the total price
tag, but will be all equity. as the Romanian economy becomes
better (and especially among the Bucharest area), the casino
there should do better an so do the two hotels and the other
apartments. if they could sell in a year for over the current
valuation, they could payoff the Bank debt with leftover.
Their bank debt is in Dollars, so selling once the Euro is a bit
stronger will make a lot of sense. keep in mind that only 77%
belongs to Elbit.
Good luck to the company and to us.
This is a problematic piece of land with large potential. its
development has been resisted by greens, but it is a large
piece of land that is currently designated for a very high end
boutique hotel (it was designated before for 800 rooms, but
now only around 200 ultra high end).
I do not believe any new hotels were developed in the area for
the last quite a few years. some were renovated, but not new
ones and not very high end.
I think the cost was 50M NIS and the prices of land in Israel
since 2008 have gone up over 200% for residential. I do not
know the pricing for hotel parcels.
Anyway, I hope that somewhat helps.
Novartis seems to not want to control other companies. they want to share profits and finance research,
but not to straight up buyout the company. it sounds like a strategic thing.
Gamida Cell has a lot of the $35M Novartis injected, so they should be able to progress for awhile, but the
risk is higher...
Debt grows as you grow and have to hold more inventory and do more shipping and
build infrastructure. the question is if the cashflow is there to pay down the debt over
time. I think it is there.
Please stop. that was an option, so there will be no breakup. if the transaction would have taken place,
the amount of 142M NIS would have been paid by Elbit Medical to Elbit Imaging in order to pay back the
existing shareholder's loans.
Gamida cell still have money to run its trials (whatever is left from Novartis's $35M) and Novartis said
they are looking to continue collaborating with Gamida Cell (AKA finance for product development).
They are interested in Nicord and the technology other applications, but they have no desire to own
Gamida Cell outright. for better or worse, that is where we are.
No, there was a 21M Euro mortgage. they get 27M Euro, from which they pay 5M towards their bank debt
and they pay 15M Euro towards buying the rest of the Bucharest complex.
They have a net increase of 7M in their cash and they will use it for general corporate purposes (
including interest payments).
A lot of rooms (was 424 and will be at q3 424 + 210) plus some more apartments.
The other revenues (non boarding revenues) are high and with more rooms at higher
class level, they can increase revenues. revenues have been stagnant for two years.
Romania's economy is the fastest growing in Europe and it is growing on real products
and not financial engineering, which is good.
I think that so far this year, tourist numbers have gone up by more than 10% over last
year. that should help the results as well.
With increased EBITDA (currently 10M Euro) the value should go up and the hotel
complex should be able to pay the 6M expense for the upgrade while hardly increasing
That has to count for something...
It does says a lot, but it should:
1. Describe the Romania hotel complex better (the largest asset now of the company).
They probably should provide guidance of what they believe the EBITDA running rate should look like
next year (based on the fact that they will finally have 210 rooms at 4 starts level which are not active
today - and have not been for a while now). they need to explain what parts of the complex need to
still be renovated after this and what is the timeline for that.
424 rooms at Radisson Blu - 5 stars.
210 rooms at Park Inn - 4 stars (?) - will become active 4q of this year. was called Center Ville and
most reviews of its 165 apartments were not good (understatement). wonder what the renovation
will do to the EBITDA.
129 other rooms/apartments - trying to figure out still what is their status. are currently part of
Center ville complex (which included 294 before).
2. Lands in Chennai - what is the status as far as timeline for project to start and when will cashflow
start coming out of it (as building progresses and nearing delivery).
40% of 90 Acres are a lot of money.
3. Lands in Bangalore - Varthur area (not sure if part of Varthur, but close enough to the lake). what is
the timeline for Manti to build and when will cash flow start.
50% of 108 Acres is a huge sum of money.
4. Nothing was said about the land in Tiberius.
Good luck to the company and to us, its stakeholders.
Years ago Elbit Imaging owned a company called Elscint, which was one of the top
competitors of GE medical in CT. GE purchased it, but it did not want to deal with the
(then) young insightec, so Elbit kept it.
You should chill out... this is a long term proposition. everything is happening slowly.
If you noticed from the last reports, Elbit paid 15M Euro to consolidate the Radisson Complex under their
The complex was purchased using total value of 130M Euro and hopefully would be worth more in a year.
The value includes 65M Euro of debt.
Another interesting thing is that an asset called Cina Plaza, which was leased to Plaza Centers for 49
years by Elbit (starting 2007) would be returned to Elbit (for compensation to Plaza).
This is a piece of land to be developed into 5000 sqm of retail in one of the best streets in Bucharest
(Calea Victoriei Venue - next to some of Bucharest's most well known landmarks).
I do not know how much the value is, but it has to be quite a bit. would help in paying debt down...
in 4 years they will finish paying the last of their debts. whatever is left at that point will
be pure equity. I suspect this will be quite more than today's price.
when will the market recognize the equity value? maybe when and if they sell the
Bucharest assets or the India lands or have Plaza much less levaraged or when they
monetize Insightec or when they monetize Gamida cell or sell the 10 Acres by the sea
of Galilee. all of the above could do the job.
Simple answer - nobody knows. the market is based on emotions and fears more than
on rational. good luck to us.
The spp part has run its course. the $85M sale (at way inflated price) has removed a lot of the potential
to use it as a tool to gather new funds. it was too short sighted. look at what happened to the spp
share price since then.
Company is not on the verge of BK at all. the Park Inn by Radisson just opened in Bucharest a few
days ago. with that in place, the hotel complex should be able to generate NOI of 14M Euro.
The complex has 61M Euro debt and its value could easily exceed the book value of 140M Euro.
on top of the equity, Elbit loaned the complex 11M Euro for the buyout (98% now belongs to Elbit).
The PR you are seeing is for the two hedge funds in control, arguing how to manage plaza centers (45%
owned by Elbit). DK was expecting quick returns and York, who is the largest share holder in Elbit and
appointed the plaza manager, is not delivering so far good appreciation.
Lets see if something positive happens here. the asset values here justify a much higher price.
Plaza has 4 remaining active properties (in operation with a NOI). one of them was Liberec. this mall
is not doing very well and its NOI is low (due to stiff competition and some mismanagement).
One of the reasons the mall was neglected was due to the fact that the loans against it were too high
to support. my understanding was that Plaza was responsible for the mortgage, but it seems I was
wrong. cutting the debt against the property could allow Plaza to invest properly in it and develop it and
would increase the equity.
Anyway, that is good news.
Indeed, its been cooking for a while now. they have about 140M NIS at the company level and if they close
on the Chennai sale, that would be anothe 45M (disregarding any repayment of the Indian partner
advancement from 2008).
If they could just find a way to get rid of the Tiberius land, that would be great.
Another interesting thing: last quarter they got a piece of land in Bucharest back from Plaza Centers. the
name of it is Cina Plaza and it is a small piece of land with a building with a restaurant called Cina. it is
almost attached to the Hilton Hotel and very close to the Radisson complex that belongs to Elbit.
Years ago the plan was to build 5000 sqm of exclusive retail area. it would be nice if they could let Radisson
build it and manage it. it would add value to the complex (future growth).
Anyway, the parcel was always classified as immaterial on the Plaza books (and with no value as a
Anyway, the company is on the right track for now (and even Plaza is getting better...).
Buying back debt without issuing new debt means the company is reducing debt.
That is a good thing. I do not know how long the restructuring will take in order to float value.
I do not think that the management knows as well. they do what they can.
The company does not need money now and the liability is mostly finished. I doubt these are
shorts, but if they are things will be very interesting. I would not want to be short with 24 M shares
on a 7M shares company. I doubt it is possible. probably mostly traders in & out.