Delek Global Real Estate (DGRE) and Israeli investor Igal Ahouvi have acquired a CHF 3.4 bn (EUR 2 bn) portfolio of 88 investment properties in the largest property portfolio sale in Switzerland. AIM-listed DGRE bought the assets together with Delek's Israeli parent Delek Belron International and a subsidiary of the group headed by Ahouvi from retail and real estate company Jelmoli Holdings. In a statement, DGRE said it will acquire 33.33% of the portfolio, Delek Belron International 16.67% and Ahouvi's Blenheim Properties Group 50%.

Delek Global Real Estate (DGRE) and Israeli investor Igal Ahouvi have acquired a CHF 3.4 bn (EUR 2 bn) portfolio of 88 investment properties in the largest property portfolio sale in Switzerland. AIM-listed DGRE bought the assets together with Delek's Israeli parent Delek Belron International and a subsidiary of the group headed by Ahouvi from retail and real estate company Jelmoli Holdings. In a statement, DGRE said it will acquire 33.33% of the portfolio, Delek Belron International 16.67% and Ahouvi's Blenheim Properties Group 50%.

About 80% of the portfolio comprises retail stores and shopping centres. The rest consists of office buildings. The jewels of the portfolio are the landmark Jelmoli Department Store in Zurich, Grand Passage in Rue Du Rhune, Geneva and Place Du Molard in Rue Du Molard, Geneva. There are also two properties under development in Geneva and St. Gallen. The portfolio has a total lettable area of 530,500 m2.

The majority of the properties in value terms, including the world famous Jelmoli flagship department store in Zurich, are fully let on long-term leases for a period of 25 years. The average lease period is 13.5 years. The bulk of the rental income of the retail portfolio is derived from unlimited turnover-linked contracts with a fixed minimum rent. All rental increases are linked to the Swiss CPI.

The rent roll for 2007 is CHF 155m and is estimated to increase to approximately CHF 183m in 2009 when the developments in Geneva and St. Gallen are completed. The majority of the units in these developments are pre-let. DGRE said there are 'significant opportunities to increase the value of the portfolio by efficient property management including lease reorganisation and refurbishment'.

Ilik Rosanski, chief executive of DGRE, added: 'We are delighted to lead this important acquisition of a major prime real estate portfolio including a talented management team. This will be one of the largest property acquisitions in Europe this year. The acquisition gives us the prospect of significant further expansion in continental Europe enabling us to meet our ambitious objectives. DGRE intends to increase its exposure in what continues to be an
attractive market.'

Once the transaction is completed the geographical division of DGRE's property portfolio will be: 45% in the UK; 28% in Switzerland; 10% in Canada; 10% in Germany; and 7% in Scandinavia. The total value of the properties in the DGRE portfolio will increase by 33% to £5.6 bn (EUR 8.3 bn. The total value of the rental income of the DGRE portfolio will rise 34% to £240 mln.

Merrill Lynch International acted as exclusive financial adviser as well as arranger and underwriter of the debt financing on the transaction. Panmure Gordon & Co acted as a nominated advisor (NOMAD) for Delek. Barrs Freer-Smith advised Blenheim Properties.