Businessman Shmuel Flatto-Sharon is offering $24 million for 26.7% of a holding company that owns the Ramat Aviv shopping mall. Migdal Insurance (15%) and Azorim (11.6%) own the stake. The offer reflects a $90 million value for the mall. Africa-Israel Investments owns the other 73.4% of the mall.
As of now, the deal is not going through, since Azorim and Migdal are asking $25.5-26.7 million.
Flatto-Sharon told "Globes", "This is my final offer. There is no reason to pay more for the mall, especially in the current economic situation."
The profit-making Ramat Aviv mall has 20,000 sq.m. of income-producing space, and is fully occupied. The ownership company distributed a NIS 50 million dividend two years ago and a NIS 25 million dividend last year. Flatto-Sharon is unable to buy the controlling interest; most of the reason for the deal derives from the dividend. If the company distributes a NIS 25 million dividend this year also, Flatto-Sharon would receive $1.45 million, amounting to a 6% yield.
Sources inform "Globes" that Migdal and Azorim initially asked $26.7 million, reflecting a $100 million value for the mall. Azorim, which wants to sell, is more flexible and willing to lower its price. The manager of Migdal's investment division, however, took a more uncompromising stance, and notified Flatto-Sharon that his company was insisting on its initial price. Nevertheless, the owners have recently appeared willing to sell their stake for $26 million or slightly less.
The price in question is equivalent to $1,200-1,300 per sq.m. of built-up space, including a proportional share of the parking spaces and public areas. This price also takes into account the project's debt to the banks.
Africa-Israel, which owns the controlling interest in the holding company, does not have first refusal rights. Africa-Israel nevertheless prefers its current partners. Flatto-Sharon recently contacted Africa-Israel controlling shareholder Lev Leviev and offered to cooperate in ownership of the mall, but as far as is known, he received no answer.
Published by Globes [online] - www.globes.co.il - on September 9, 2002