Some months ago, the Histadrut received a better offer than that of the Ofer brothers and the Nimrodi family for the formation of a joint company to manage Histadrut-owned real estate. It provided that the Histadrut would receive, forthwith and in cash, the full consideration for the real estate owned by it. The Ofer-Nimrodi agreement, by a contrast, provides for the Histadrut to receive only 50% of the value of the property.
The offer was as follows: The Histadrut would found a joint company together with a major firm and a banking concern, each partner holding one third. The joint company would purchase, for cash, from the Histadrut, all the real estate owned by it. The Histadrut was neither to invest money nor to provide any security.
The offer further provided that the Histadrut would in future receive one third of the property betterment, despite the advance cash purchase. The Histadrut conducted these contacts through Dr. Aliza Schluss, manager of its present property company. The deal was initiated by a well-known economist and accountant, who established the contact between the company, the banking concern and the Histadrut.
This offer was made to the Histadrut before that of Ofer-Nimrodi. The idea was propounded that the property be managed through a joint company. Previously, the Histadrut had tried to offer individual properties, or property clusters, for sale. The cluster method failed, since no investor financing was available for purchasing multiple properties. Another reason was that, under this method, investors generally check out one or two properties only, and offer a very low price for properties not examined.
The deal signed by the Histadrut stipulates considerably worse conditions. The Histadrut will put all its real estate into a joint company, will receive 50% of its value at an assessor’s valuation plus, in future, another 50% of the betterment. Whereas under the previously proposed deal, the Histadrut would have received 100% consideration for the properties and another one third of the betterment.
Published by Israel's Business Arena January 13, 1998