Following a "Globes" investigative report and the cancelation of the building permit for a new campus planned by Amot Investments Ltd. (TASE:AMOT) for Amdocs Ltd. (Nasdaq: DOX) in Kfar Saba, Amdocs today signed an extension of its lease for the 76,000-square meter campus it currently rents in Ra'anana.
The new lease states that the property owners, REIT 1 Ltd. (TASE:RIT1), Saan Zahav, and Sunflower Sustainable Investments Ltd. (TASE: SNFL), will receive NIS 41 million annually from Amdocs, compared with NIS 35 million in the previous lease, which expires at the end of 2019. The lease is for 10 years, while Amdocs has an escape clause after five years, with prior notice.
18 months ago, Amdocs solicited bids from Israel's leading real estate companies in a tender for construction of a new campus for the company's thousands of employees in Israel. The campus was to have included 70,000 square meters rented under a 15-year lease, amounting to over NIS 1 billion. The eventual winning bid was by Amot, which owned available land at the entrance to Kfar Saba, not far from Amdocs's current location. Amot bought the land in November 2007 for NIS 56 million.
Following a "Globes" investigation in February, however, the District Planning and Building Appeals Committee canceled the building permit granted to Amot for building the tower at the entrance to Kfar Saba. The appeals committee unanimously decided, "a decision that deviates so grossly from the original plan and creates an improper and illegal planning distortion cannot be allowed to take effect."
"Globes" found that the urban building plan for Amot's site included rights to only 34,194 square meters of office space and 800-1,000 parking places, but Amot sought to increase the number of parking spaces to 3,262. The request also stated that the company had rights to 70,000 square meters. The permit itself was granted with extraordinary speed: on July 21, 2016, two days after the discussion and two days before the new parking standards that would have further reduced the number of parking spaces went into effect, the Local Planning and Building Commission issued a permit for building 3,262 parking spaces in nine underground stories. The condition for obtaining the permit set in the committee's discussion became in retrospect "conditions for beginning construction." As a result of the permit, Amot met the threshold conditions for Amdocs's campus.
At the appeals committee hearing, Amot argued that the Amdocs campus project was "a nationally important project" opposed by "five people frightened by a newspaper story." The company complained about the filing of an appeal, eight months after the permit was issued, following what Amot called "a hostile report by 'Globes', which we do not know who was behind."
In the end, the appeals committee ruled that the Kfar Saba municipality's decision to issue a building permit "was tainted with illegality," and should be reversed. The committee listed all the faults that led to the local Planning and Building Commission's decision. According to the appeals committee, "Of the faults cited, the fault concerning the number of parking places on the site is a fault that reaches the source of the matter, especially when other faults are added to it." The appeals committee reversed the Local Planning and Building Committee's decision and canceled the building permit. "To the extent that what was involved was merely the completion of some requirement or other, it might have been possible to make the permit contingent on fulfilling the requirement and repairing the fault," the committee concluded, "but as we have ruled, the fault concerning the number of parking places is a fundamental fault that cannot be repaired, and there is therefore no alternative to announcing the cancelation of the permit granted under the decision."
Following the committee's decision, Amot stated that it intended to appeal the decision. Meanwhile, however, Amdocs has decided to stay in Ra'anana.
Published by Globes [online], Israel Business News - www.globes-online.com - on July 23, 2017
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