Africa-Israel Investments Ltd. (TASE:AFIL; Pink Sheets:AFIVY) is facing a slew of cancelled purchases, despite large discounts, on its residential projects in New York's financial district. A "Globes" examination found that the company's actual sales figures are significantly lower compared with the official numbers in the full-year financial report for 2007, and updates through March 2008.
In its financial report for 2007, Africa-Israel said that it sold 76 apartments, and 87 apartments by March 26, 2008, when the company published the financial report. "Globes" found, however, that as of today - March 2009 the company had actually closed just 72 deals out of the 163 apartments in its 111 Fulton Street project. The company began marketing the property in May 2007.
The 111 Fulton Street project was Africa-Israel's first residential project in Manhattan that was not carried out through its joint venture with Shaya Boymelgreen's Boymelgreen Developers LLC, Leviev Boymelgreen. It is owned through Africa-Israel Properties Development USA Inc.
In July 2008, then Africa-Israel CEO Rotem Rosen said about the Fulton Street project, "We have 16 apartments left for sale in the project." In effect, he was claiming that the company had sold 147 apartments in the project.
According to New York City land registry figures, the first sales in the project were only closed in November 2008, and that 72 deals were only closed in the past four months.
Africa-Israel said in response, The company will publish official figures in its financial report for 2008, at the end of March. We only obtained occupancy permits for the project in November 2008, and we subsequently began to close the deals, the apartments were occupied, and ownership registration completed."
As for Rosen, the company added, "Rosen was recently replaced by Richard Marin."
Africa-Israel offers a broad interpretation of "apartment sold", which ranges from the early registration for a non-binding deal, through the final closing. Such an interpretation becomes highly significant in times of real estate market upheaval, like the one now underway in the US, where the normal practice is to make a down payment only close to the final closing.
A New York real estate expert told "Globes" that the down payment on similar projects in Manhattan was usually around 15% of the price.
Citibook Israel CEO Eli Kashden said, "Homebuyers who have signed contracts and paid hundreds of thousands of dollars in down payments, have seen the collapse of real estate prices in Manhattan, and prefer to break contracts and forego the down payment." Citibook offers land registry insurance in the US.
Published by Globes [online], Israel business news - www.globes-online.com - on March 15, 2009
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