ISA probing Tzrifin logistics park sale

Golbary warehouse, Tzrifin  credit: Assaf Lev

Losing bidders in the auction have alleged possible conflicts of interest on the part of directors of the pension fund selling the site.

The Israel Securities Authority (ISA) has opened an investigation into the auction held by The Management Company of the Provident and Pension Fund of the Jewish Agency for Israel Ltd. for the sale of the Tzrifin logistics park. In the auction, which took place over just a few days, the winning bid came from income producing real estate company Amot Investments Ltd. (TASE:AMOT).

The ISA is examining whether the members of the pension funds were harmed, or, in other words, whether the sale of the site was entirely above board and for the maximum possible return. The examination began even before the questions raised by some of the participants in the auction as to its propriety.

In the auction, which took place last week, Amot Investments won with a bid of NIS 1.52 billion plus VAT. After the auction, Issta Lines (TASE: ISTA) (which is active in both tourism and real estate) claimed that the pricing process ought to have continued, after its bid turned out to be just NIS 12 million lower than that of Amot.

Issta has asked for clarifications concerning Amot's win from the board of directors of The Management Company of the Provident and Pension Fund of the Jewish Agency for Israel Ltd. Other participants in the auction also claimed yesterday that they were considering submitting higher bids of up to NIS 1.55 billion in the event of further pricing.

Conflict of interests

Some participants in the auction questioned the propriety of the process, in the light of the fact that the chairperson of the investment committee of the pension fund company, Yarom Ariav, has served as an external director of Amot for the past month.

Ariav stated that because of his double position he was barred from involvement in the matter, both on the Amot board and at the pension funds that were selling, and in the opening of the bid envelopes in the auction. Ariav, a former director general of the Ministry of Finance, was an external director of Alony Hetz Property and Investments Ltd. (TASE: ALHE), the parent company of Amot Investments, between 2010 and 2019.

After two years in which he had no position in the Alony Hetz group, he was recently appointed an external director of Amot, as mentioned. Another director of the pension funds, Gittit Guberman, is currently an independent director of Alony Hetz, and so she too was barred from dealing with the matter.

The Tzrifin logistics park occupies 274 dunams (68.5 acres) on the east side of Road 44 between Ramle and Beit Dagan, near the Assaf Harofe Hospital and Moshav Nir Zvi, close to highways 6,4, 1, and 20. There are currently eighteen logistics buildings on the site, with a total built area of some 113,000 cubic meters.

The park is fully occupied, with 28 lessees. Rents, including management fees, total NIS 56 million annually, giving a fairly low annual return of 3.7% on the price in the deal. Amot Investments estimates, however, that it will be possible to enhance the site substantially over the next few years, such that the return on it will rise.

The Management Company of the Provident and Pension Fund of the Jewish Agency for Israel Ltd. stated: "We succeeded in obtaining the best possible result for the members of the pension fund, and we welcome that. We worked night and day to ensure this result. We wish to thank the other participants in the process as well. We set out on an orderly, uniform and competitive process that included many participants representing the main players in the market. We were forced to act under mandatory time constraints arising from regulations and expected legislative amendments. We are delighted that we coped with all these constraints and managed to secure the highest possible price for our members."

Published by Globes, Israel business news - en.globes.co.il - on September 14, 2021

© Copyright of Globes Publisher Itonut (1983) Ltd. 2021

Golbary warehouse, Tzrifin  credit: Assaf Lev
Golbary warehouse, Tzrifin credit: Assaf Lev
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