The Gazit Group - Holdings in First Capital Realty Inc.

TORONTO, Jan. 3, 2012 /CNW/ - Gazit-Globe Ltd. ("Gazit Globe"), Gazit Canada Inc. ("Gazit Canada") and Gazit 2003 Inc. ("Gazit 2003") (collectively the "Gazit Group") announce that the Gazit Group exercised its conversion rights in respect of  $83,447,000 principal amount of 5.50% convertible unsecured subordinated debentures ("5.5% Debentures") of First Capital Realty Inc. (the "Issuer") to acquire an aggregate of 5,119,447 common shares of the Issuer ("Common Shares") and exercised its conversion rights in respect of $579,000 principal amount of 6.25% convertible unsecured subordinated debentures ("6.25% Debentures") of the Issuer to acquire an aggregate of 40,452 Common Shares, representing together an aggregate of approximately 2.9 % of the total issued and outstanding Common Shares.

Following the conversion of the 5.5% Debentures and the 6.25% Debentures, the Gazit Group beneficially owns an aggregate of 90,085,901 Common Shares, representing approximately 50.5% of the total issued and outstanding Common Shares calculated in accordance with applicable Canadian securities laws (the "Gazit Group Securities").

In addition to the foregoing, for purposes of applicable Canadian securities laws, one or more members of the Gazit Group may be considered to be acting jointly or in concert with the Other Gazit Parties (as defined below), each of whom beneficially owns or exercises control or direction over securities of the Issuer as described in more detail below. Accordingly, for purposes of applicable Canadian securities laws, Gazit Globe, together with the Other Gazit Parties, may be considered to beneficially own or exercise control or direction over an aggregate of 93,514,828 Common Shares (being comprised of the Gazit Group Securities and the Common Shares beneficially owned or over which control or direction is exercised by the Other Gazit Parties, including Common Shares issuable on exercise or conversion, as the case may be, of securities exercisable or convertible into Common Shares), representing approximately 51.5% of the Common Shares, calculated in accordance with applicable Canadian securities laws.

The Common Shares acquired on conversion of the 5.5% Debentures were acquired at a conversion price of $16.30 per Common Share. The Common Shares acquired on conversion of the 6.25% Debentures were acquired at a conversion price of $14.313 per Common Share.

The securities of the Issuer referred to in this release were acquired by the Gazit Group for investment purposes.  The Gazit Group intends to review its investment in the Issuer on a continuing basis.  Depending on various factors including, without limitation, the Issuer's financial position, the price levels of the securities of the Issuer, conditions in the securities markets and general economic and industry conditions, the Gazit Group's business or financial condition and other factors and conditions the Gazit Group deems appropriate, the Gazit Group may in the future take such actions with respect to its investment in the Issuer as the Gazit Group deems appropriate including, without limitation, acquiring, converting, selling, or otherwise disposing of securities of the Issuer. In addition, the Gazit Group may formulate other purposes, plans or proposals regarding the Issuer or any of its securities to the extent deemed advisable in light of general investment and trading policies, market conditions or other factors or may change its intention with respect to any and all matters referred to in this release.

Each of Gazit Canada and Gazit 2003 is a wholly-owned subsidiary of Gazit Globe.  Gazit Globe is a publicly traded corporation whose shares are listed on the Tel Aviv Stock Exchange and the New York Stock Exchange.

For purposes of applicable Canadian securities laws, each of the individuals described below (collectively, the "Other Gazit Parties") may be considered to be a joint actor with one or more of the entities comprising the Gazit Group.

Chaim Katzman, the Chairman and a director of Gazit Globe and Chairman of the Issuer, owns or may be deemed to exercise control or direction over approximately 56.5% of the outstanding common shares of Gazit Globe.  Mr. Katzman also beneficially owns or exercises control or direction over 203,453 Common Shares, and holds options to acquire an additional 116,913 Common Shares and RSUs which are exercisable into an additional 74,995 Common Shares.

Dori Segal, Executive Vice-Chairman and a director of Gazit-Globe and Vice-Chairman, President and Chief Executive Officer and a director of the Issuer, and Erica Ottoson, Mr. Segal's spouse, own shares directly and indirectly in the holding company which controls Gazit Globe and Mr. Katzman has been given voting control over certain of these shares. In addition, Mr. Segal directly owns 900,000 common shares of Gazit Globe, representing approximately 0.5% of the outstanding common shares of Gazit Globe.

Mr. Segal beneficially owns or exercises control or direction over 945,226 Common Shares (including 23,068 shares held by Ms. Ottoson) and holds options to acquire an additional 1,952,087 Common Shares and RSUs which are exercisable into an additional 136,253 Common Shares.

Gazit Globe is party to a shareholders' agreement with Alony-Hetz Properties and Investments Ltd ("Alony-Hetz"), dated January 9, 2011, in connection with Gazit Globe's holdings in the Issuer, which replaced a stockholders agreement with Alony-Hetz that had been in place since November 2000. Gazit Globe has agreed to support the election of a specified number of the representatives of Alony-Hetz to the Issuer's board of directors. Alony-Hetz is entitled to appoint two directors to the Issuer's board of directors, so long as Alony-Hetz holds at least 7% of its issued share capital and one director to Issuer's board of directors, so long as it holds less than 7%, but not less than 3% of its issued share capital. Alony-Hetz loses its right to appoint two directors if, for 60 consecutive days, it owns less than 7% of the Issuer's issued share capital. Pursuant to the shareholders' agreement, Alony-Hetz has agreed to vote all of its Issuer shares in favor of Gazit Globe's nominees for Issuer's board of directors. Under the agreement, Gazit Globe has a drag along right, which is triggered when Gazit Globe or any affiliate sells its shares of Issuer to a third party for a minimum price of $20.00 per share. Gazit-Globe also has a right of first offer and Alony-Hetz has a tag along right. The shareholders' agreement also provides that, in the event that either of the parties, or the offeror, acquires additional securities in the Issuer, the offeror will then offer the other party, or the offeree, the opportunity to acquire a proportionate part of those securities. Alony-Hetz has agreed not to take certain enumerated actions to interfere with the way that Issuer is managed or engage in an attempt to acquire control of the Issuer. The shareholders' agreement terminates on January 9, 2021 or the earliest of (i) Alony-Hetz's holdings in the Issuer's shares representing less than 3% of the Issuer's issued capital for 90 consecutive days, (ii) all of Gazit-Globe's holdings in the Issuer's shares representing less than 20% of the Issuer's issued capital for 90 consecutive days, and (iii) a determination by one of the parties to terminate the agreement upon a change of control of the other party.

Share ownership information provided herein has been calculated based on a total of 178,224,865 Common Shares issued and outstanding as reported by the Issuer on January 3, 2012.

The filing of this release is not an admission that any person or entity named in this release owns or controls any described securities or is a joint actor with any other named person or entity.

The address of the Gazit Group is:

1 HaShalom Road
Tel-AvivIsrael
67892

A copy of the early warning report filed by the Gazit Group in connection with holdings referred to in this press release may be found at www.sedar.com or otherwise obtained from:

Alex Correia,
Gazit Canada Inc.
109 Atlantic Avenue, Suite 303
Toronto, Ontario, Canada M6K 1X4
Tel: (416) 216-2055
Fax: (416) 703-2350

Gazit Globe is a publicly-traded company listed on the New York Stock Exchange (NYSE: GZT) and the Tel-Aviv Stock Exchange (TASE: GLOB).

SOURCE The Gazit Group

For further information:

Alex Correia,
Gazit Canada Inc.
109 Atlantic Avenue, Suite 303
Toronto, Ontario, Canada M6K 1X4
Tel: (416) 216-2055
Fax: (416) 703-2350

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The Gazit Group

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