Harel Insurance (TASE:HARL1) has suspended negotiations to buy Israel Discount Bank’s (TASE: DSCT ) new headquarters for $25 million. The 25,000-sq.m. building on Abba Hillel St., Ramat Gan, is under construction, and Harel would have invested additional sums in finishing. A senior source at Harel confirmed the report for “Globes”.
The building was due to become Discount Bank’s new headquarters, but the bank’s management cancelled the plan last year, deciding instead to rent a new office building on Yehuda Halevy St., Tel Aviv, that Meshulam Levinstein Contracting and Engineering LEVI) is building for the bank. This deal rendered the building in Ramat Gan superfluous, and Discount Bank has been seeking a buyer for it. The building’s chief contractor, Uri Dori, has already rejected an offer to buy it.
Harel’s official explanation for suspending the negotiations is that the building’s blueprint provided only general outlines and the building’s internal design, intended to be a bank headquarters, did not suit its needs. Moving costs would also have been high.
Harel also probably wants to avoid making major real estate investments at this time. Harel is currently based across the street on 14 floors in Beit Harel, two of which it owns and 12 which it rents from the building’s owners, Ashtrom, FIBI Holdings (TASE:FIBI), and Property and Building (TASE:PTBL). If Harel moves elsewhere, it would have to find buyers for its two floors, which is difficult, and make arrangements for its lease.
Now that the negotiations with Harel have been called off, Discount Bank will have to decide what to do with the building, for which there seems to be no demand.
Published by Globes [online] - www.globes.co.il - on March 30, 2003