In the shadow of the corruption scandal, which has become synonymous with Jerusalem's luxury Holyland project, the housing development itself is losing money.

Polar Investments Ltd. (TASE:PLR), which owns 60% of the project, today notified the Tel Aviv Stock Exchange that the project's management company Holyland Park Ltd. lost NIS 57 million in the first quarter of 2010. Thus Polar Investment's proportion of the loss in the first quarter was NIS 34 million.

Polar Investments is due to publish its first quarter financials in a few days but felt it was proper to inform investors about the Holyland losses ahead of time. The notification of the Holyland losses can be interpreted as a type of profit warning by Polar Investments.

Polar's statement said, "The pace of sales is behind schedule in two of the buildings in the Holyland project.

The project comprises 969 apartments in 12 buildings, a lot designated for a hotel and public areas. Construction is yet to begin on three of the buildings and the hotel.

Meanwhile, in the wake of the scandal, the Jerusalem Municipality has frozen the project. The known figures connected to bribery allegations include former Prime Minister Ehud Olmert, the ex-head of his bureau Shula Zaken and former Jerusalem Mayor Uri Lupolianski.

Polar Investment's share price was unchanged on the TASE this afternoon at NIS 8.68.

Published by Globes [online], Israel business news - www.globes-online.com - on May 24, 2010

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