Africa-Israel Investments (TASE:AFIL01; AFIL1) and Minrav (TASE:MNRV) are trying to buy building rights for 20,000 sq.m. in the Tel Aviv Kirya from Israel Land Administration (ILA) without a tender for NIS 75 million. Ministry of Finance Accountant General Nir Gilad and other officials are studying the offer.
The two companies want to utilize the additional building rights to add 20 floors to the 26-storey office building under construction at the corner of Petah Tikva Rd. and Kaplan St., Tel Aviv. The additional floors will cost an estimated NIS 90 million.
Africa-Israel and Minrav say they will give the Kirya administration an option to rent up to ten floors at $14 per-sq.m. per month, in a 20-year lease.
It is doubtful if the deal can be carried out, due to the short timetable. Gilad and the ILA must decide whether to approve the offer within a month, since construction of the building’s skeleton would have to proceed immediately after reaching the 26th floor. Approval procedures, including the approval of the Urban Building Plan and building permits, usually take months.
Africa-Israel and Minrav say that if the government does not lease the ten floors, they can find private sector tenants. Despite the severe market climate, they believe there will always be private sector demand for office space near government offices and in a centrally-located area like the Kirya. All the new office space built to date in the South Kirya project has been leased.
Africa-Israel and Minrav bought the compound in an ILA tender for NIS 180 million three years ago. The compound is currently zoned for 46,000 sq.m. of space, almost entirely for offices, plus the usual underground parking lots. The developers have asked the Tel Aviv municipality to transfer part of the 450,000 sq.m. South Kirya project building rights to the new building.
Published by Globes [online] - www.globes.co.il - on February 2, 2003