The banana-picker who collects hotels

By 2008-03-06, April 3, 2008
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Fifteen years ago, Ilik Rozanski’s main business was selling bananas on a kibbutz in Israel. Today, he runs a major property company with a net asset value of £700m and is thought to be Israel’s highest-paid businessman. But, as Mr Rozanski puts it, business is business, whatever the scale.

The 48-year-old Israeli is the president and chief executive of AIM-listed Delek Group Real Estate (DGRE), a subsidiary of the Delek Group, an Israeli investment company with a market capital of $3bn. It owns some of the most sought-after properties in the UK.

He tells JC Business: “For 15 years, I was a kibbutz member on Kibbutz Massaba, in the Jordan Valley. I spent most of my days working in the banana fields, carrying and selling bananas. Some people think bananas are simple things. But this wasn’t. Yes, it was totally different to what I do now — but it was still business.”

Mr Rozanski recalls how he carried the bunches — weighing 30 or 40kg — on his head: “You had to be very careful to avoid bruising the bananas.” He says he made it his business to come up with ideas for improving the crop’s yield and marketing. He was promoted to farm manager, and became finance director in charge of 300 staff.

“It was at a time when the government was breaking up the monopoly on petrol stations. We formed an energy company. This was the first time I was introduced to business life outside of the kibbutz movement.”

In 1993, he left the kibbutz, going on to work for the government’s transportation department. Seven years later, he joined Delek’s real-estate division, where he has made several headline-grabbing deals.

His Delek Real Estate Group currently owns some prime properties in the UK. Among them are 130 NCP car parks, 47 Marriott hotels and 16 Hilton hotels, in addition to multiple office blocks and shopping centres. Last year, the company bought RoadChef, the motorway service-station group, for £425m.

“We have made some very good investments,” says Mr Rozanski. “We look for prime-location properties with long leases, good tenants, fixed debt and a high loan to value.”

Citing NCP as an example, he says: “We have a fixed rent from the tenants for over 30 years, which generates good, solid revenue.” When NCP sold its land to Delek, it leased the car parks back for the next 35 years, at a rent with a fixed increase of 2.7 per cent a year. Around 60 per cent of DGRE’s net operational income comes from companies that are leased for more than 30 years without any breaking option for the tenant. “This means a low risk for us,” he says.

Understandable, then, why Mr Rozanski remains bullish in the current climate, planning to invest £1bn into new properties within the next two years: “There is a little bit of a crisis in the UK at the moment, but we are not feeling it. We have good properties and the cash flow is not changing. All our tenants are paying the rent: Deloitte, Hilton, Marriott, the foreign ministry. They are all good tenants.

“Everything we own is in a prime location and the rent in London is high all the time,” he adds. “So, as for the crisis, we believe it is raining and everybody is getting a bit wet, but we are not in the wet too much.”

At the end of last year, DGRE bought 12 supermarkets in Germany from Metro for 240m. Under the agreement, Metro will lease back the buildings for a total of ?16m a year. Ten buildings have a lease until 2022, while the remaining two are leased back until 2020 and 2021 respectively.

“We expect to achieve a 15 per cent return on equity from the deal,” he says. “And we did it in the middle of the crisis. Everybody thinks that you cannot invest at the moment or get a loan, but we proved to everyone that you can.”

How did he learn to master the market? “Every day we learn something from the market. It about being creative and coming up with ideas.”

Mr Rozanski listed DGRE on the Alternative Investment Market last year. He is considering a move from AIM to the main market later this year.

“We own 400 properties throughout the UK, Israel, Canada, Switzerland, Germany, Sweden and Finland and think a company of our size should be on the main market. A lot of investors are not buying a lot of the shares because the liquidity is not as good as on the main market.

“We want to continue to grow and we believe we have to do this with the capital market in the UK. We need to get the public to own 50 per cent of the shares.”

He acknowledges this will not be easy. “Our problem at the moment is the market price. It has fallen a bit recently. It is around £250m, whereas the net asset value is £700m. This means there is a share discount and investors lose a bit of money.”

How does he intend to convince investors? “We are not going to change our strategy,” he says. “We will continue looking to invest in the UK. DGRE has a lot of equity and we want to show people we are serious about business. We know how to make a good deal.”

He lives in Ramat Yahai with his wife. They have two children.

    Last updated: 12:55pm, June 4 2008