Amot Investments is negotiating to purchase 25% of the Canyon Holon mall from businessman Efraim Eliyahu. Amot is offering to pay $11.25 million, on the basis of an estimated $45 million company value. Eliyahu is asking $15 million, on the basis of a $60 million company value. The deal is not certain to be completed, due to the price difference between the parties.
The 17,000 sq.m. mall currently has an occupancy rate of 87%, with rent revenues amounting to NIS 1.5 million a month ($4.5 million a year). Amot is willing to purchase 25% of the mall based on a 10% yield at a company value of $45 million. Eliyahu is offering a deal based on an 8% yield at a company value of $60 million. Alternatively, Eliyahu is offering deal based on 100% occupancy rate, under the assumption that the mall will be filled in the future, leading to a similar result.
Sources involved in the negotiations say that the Discount Bank, which financed the mall's construction, is recommending that Eliyau sell part of his holdings in order to pay back his large debt to the bank. Eliyahu has denied this, and a Discount Bank spokesperson declined to comment.
$80 million was invested in building the mall, but due to the occupancy rate, and the low rent paid by some tenants, nobody is mentioning a deal based on $80 million.
"Globes" has learned that Eliyahu recently negotiated with additional potential buyers, although the most serious negotiations are with Amot.
Ownership of the mall is shared by two groups:
- The Eliyahu group - 60% (Eliyahu - 52%, and two other investors - 4% each). The other investors have given Eliyahu power of attorney.
- Provident Yield - 40%. This company is owned by International Consultants (51%) and Bank Leumi's provident funds (49%). The agreement between the parties stipulates that the bank's provident funds will not participate in the mall's management, in order to avoid tax liabilities on revenues. International Consultants is owned by David Azrieli (75%) and Leumi & Partners (25%). In effect, Azrieli manages Provident Yield, although he holds only 38% of the company and 18% of the mall.
Relations between Eliyahu and Azrieli are poor, and management of the mall was recently transferred to Azrieli's company. In the past Eliyahu offered to sell according to BMBY (Buy Me, Buy You), but Azrieli rejected the offer. Azrieli is interested in purchasing Eliyahu's holdings, but not at the prices Eliyahu is asking.
Eliyau, Azrieli's spokesperson and an objective concern close to the project said no negotiations are currently under way between Azrieli and Eliyahu.
Published by Israel's Business Arena on 2 April, 2000