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.
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...
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.
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.
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...
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).
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.
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.
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...
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.
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.
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.
The trial you are talking about uses Nicord in addition to another dose. the interesting
trial is the one that uses Nicord alone. that removes huge amount of cost from the
procedure and moved frozen would remove more cost as well.
Lets hope so. if that happens, Elbit will be sitting on over 350M NIS. I hope they are buying back
their bonds on the open market.
Good luck to us.
Most importantly - cash:
Company has 85M Euro consolidated, but only 41 of which is Plaza. means company has ~40M Euro
(probably a bit less). once the Anwerp hotels are sold, add 22M Euro and reduce 5M Euro of debt.
For sale - their land in Tiberius is on the block and should generate well over cost (12M Euro).
Second - debt:
Company has 870M NIS (203M Euro) of debt. once deal with KKR closes, reduce 5M Euro.
Mortgage debt (out of corporate) will be left only for Bucharest hotel.
Expected development this year:
Novartis has an option until end of 1H 2016 to purchase Gamida Cell (20% net owned by Elbit) for
$200M + future milestone payments up to $435M. unknown about royalties.
Elbit Medical (who owns Gamida and is 82% owned by Elbit) owes Elbit $35M which should be paid once
Novartis exercises its option (invested already $35M in Gamida). assuming Gamida's Nicord finishes
its phase 2 (as expected based on initial indications).
Insightec is finally succeeding in getting insurance companies in the u.s on board. the company was stuck
at about $20M of sales. they also lately released a 1.5T version (its a big deal - most MRI machines are
not the expensive 3T, but the cheap 1.5T and Insightec was not present there).
Insightec is net 30%-35% owned (depending on revenues 2015-2016).
Elbit's bonds are trading at a discount and each buyback of it would add to equity -
Serie H is trading at 88 cents, inflation adjusted value 105 cents - about 480M NIS.
Serie I is trading at 58 cents, inflation adjusted value 110 cents - about 240M NIS.
The only debt that can not be bought at a profit is the $43M debt to the bank.
Assets for sale:
~10 Acres in Tiberius. cost was 12M Euro in 2007. worth - much more today. limited for hotel only.
very few hotels added by the sea of Galilee over the last 30 years.
Bucharest hotel complex will be ready
India lands are well discussed already.
Sentiment: Strong Buy
The only India assets in the JV are the lands in Varthur, Chennai and whatever
Kochi is worth.
The Hotel in Romania is actually a complex of hotels. the Radisson has 424
rooms and then the new Plaza inn will have 210 rooms (starting q3 2015)
instead of 165 apartments (today). there are more rooms/apartments, but the
major overhaul will be finished this year.
The land in Tiberius should be worth a pretty penny.
Good luck to the company.
Yes, Chennai is going to be developed before Bangalore.
The partner for Bangalore is Mantri, which a large builder. the 20% IRR is in Rupee, so in
Dollar terms it is 13.8% (from 2009 to today the rupee went from 1/48 to 1/64 of a dollar) / year.
Elbit people believe that Mantri will act in accordance to the term sheet (which is not a formal
agreement). Mantri will start developing the land next year in phases. I will tell you that the Chennai
deal is much more simple. it is also much smaller. if you assume 1200rupee/sqf *75 acres
(only 80% is plots - rest is roads etc.), you will have $24M as Elbit's portion. it will be mostly a
return of capital. Plaza will get the same. selling plots is much easier. I assume 1500 price as it is
10% bellow market. Bangalore is much bigger (epi owns or paid for 108 acres) and the area
sells at ~ 2500 rupee/sqf. assume 2000 and 80% salable land. using those parameters, the
part of Elbit should be at least $58M. that would be at selling well bellow market (Mantri is
usually a premium name). according to the framework, the value would be now $94M.
Keep in mind that each of those two items is equally owned by Plaza, so it would increase
Elbit's value of its 45% in Plaza. Elbit's share should be $80M. so is Plaza's share.
The question is when. the good thing is that a return of capital does not get taxed...
You have to show patience. this is a work in progress and would remain so for a while.
You could buy some of the bonds of theirs that are trading at 50c of pari, if you want to
reduce your risk. my guess is that over time this company could have enterprise value of
$400M and market value of close to $200M, but that will take a long time. how long -
Invest what you can afford to lose without worrying too much and get back to it in two years.
Absent of any more financial crisis, they should be able to sell assets, pay back much of
I do not understand why Elbit is even mentioned at the same sentence as Plaza. Plaza is a
free option for Elbit's shareholders. thats it. these are two companies that are in different
situations. Elbit is in a much better position.
Lets hope Novartis exercise their option on Gamida and that Insightec's sales are finally
ignited by the expanding insurance coverage and the fact that GE medical is promoting
them through their sales force.