Jerusalem's Holyland Park residential project continues to cause financial woes to Polar Investments Ltd. (TASE: PLR), which owns 60% of the project's rights. Although Polar, once one of Israel's leading holding companies, reported improved revenue thanks to NIS 51 million in sales in the project, the cost of sales of these apartments nearly equaled the sales proceeds.
Polar made a NIS 32 million write-down in the second quarter on the Holyland's inventory of apartments for sale and the land following a revaluation. The write-down in the first half was NIS 108 million, resulting in a net loss attributable to controlling shareholders of NIS 68.8 million, compared with a net profit attributable to controlling shareholders of NIS 18.1 million in the first half of 2009.
The downward revaluation was due to the corruption scandal surrounding the project, for which the Israel Police have recommending indicting former Prime Minister Ehud Olmert, former Jerusalem Mayor Uri Lupolianski, and other municipal officials. These suspicions have raised doubts about the future of some of the still unbuilt Holyland apartments. 642 apartments of the 969-apartment project have already been built.
Polar Investments' cash flow from operations was NIS 27.4 million in the first half, mostly from the sale of Holyland Park apartments, and after deducting the increase in inventory on apartments under construction.
In response to the repercussions of the Holyland scandal, Polar said, "Work at the project continues as usual, and the sale of apartments in the project continues." It added, however, that as a consequence of the scandal, "Holyland's management, partly with the assistance of external consultants, reviewed the net use value of the inventory of buildings for sale and the land that it owns."
Published by Globes [online], Israel business news - www.globes-online.com - on September 1, 2010
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