Alrov Properties and Lodgings Ltd. (TASE: ALRO) controlling shareholder Alfred Akirov says he plans to go ahead with the Jerusalem's Mamilla project near the Old City's Jaffa Gate as soon as possible.
Alrov plans to invest an additional NIS 600 million in Mamilla project. Alrov plans to add 5,000 sq.m. in office space in two building in the northern section of the project, bringing it to a total of 110,000 sq.m. of built-up space, including half in underground service areas, 35,000 sq.m. of office space, and 20,000 sq.m. of residences.
Alrov has already invested over NIS 200 million in the project. Following the arbitrator's ruling, requiring government company Karta Central Jerusalem Development Co. to pay Alrov NIS 75 million for delaying the project, the way has been opened to complete construction.
The Mamilla project was declared a National Project, and Karta was founded in 1972 to carry it out. The Ministry of Housing and Construction owns 76% of Karta and the Jerusalem municipality owns 24%. Alrov entered the picture in 1994, when it acquired 50% of the project from the Ladbrook group. In 1996, Alrov acquired full rights to the project.
The Mamilla complex includes the Citadel of David Hotel - Metzudat David Hotel (formerly the Jerusalem Hilton), which has an operating profit of $2.5 million; an 850-space underground parking lot owned by Karta in the eastern part of the project, above which a 1,800-sq.m. office building, cinema complex, restaurants, and 120 stores on two floors are planned; and an 800-space underground parking lot owned by Alrov in the western part of the project, above which a 25,000-sq.m. commercial center is planned. Alrov also plans to build, together with Africa-Israel Investments (TASE: AFIL), a 12,000-sq.m. residential complex with 110 apartments in five buildings and a 300-room business hotel in the northern part of the project.
Akirov said, "The project's plans conformed to normal practice in the 1980s, which was why we had to insert a number of changes to the plan. Regrettably, Karta, a government company controlled by political interests, was constantly influenced by the worldview of various ministers. For instance deputy minister of housing at the time, MK Meir Porush (United Torah Judaism), did not like the idea of building a cinema complex near Jaffa Gate, and decided to obstruct the project. He appointed a number of his people to Karta's board. In 2000, after the arbitrator ruled that the changes to the Urban Building Plan (UBP) were worthwhile, and ordered Karta to consent to them, then-interior minister Eli Yishai sent his emissaries to block the project.
"In September 2003, after we overcame all the obstacles, and with the goodwill of then-interior minister Avraham Poraz, we obtained a building permit to continue the project.
"I will never again work with a government company. Its considerations are political, rather than economic.
Published by Globes [online], Israel business news - www.globes.co.il - on January 30, 2005