Azrieli signs huge lease with law firm for new tower

New Azrieli Tower Image: View Point

The value of the land has risen by almost NIS 200 million since it was purchased from "Yedioth Ahronoth."

Real estate giant Azrieli Group Ltd. (TASE: AZRG) has not yet begun building the tower on the land that used wherethe "Yedioth Ahronoth" building used to be in Tel Aviv, near the Azrieli center, but it has signed a first major lease for it with Fischer Behar Chen Well Orion & Co. (FBC & Co.), a leading law firm slated to be an anchor tenant in the tower.

Sources inform "Globes" that the law firm is expected to rent 10,000 sq.m. and 200 parking spaces in the tower in a NIS 100 million 10-year lease at the currently prevailing rent for offices in the Azrieli towers (NIS 90-100 per square meterper month for fully completed offices with a high level of finishing). FBC & Co. is currently located on Daniel Frisch Street.

Led by Adv. Reuven Behar and Adv. Amir Chen (as far as is known, Chen represented FBC & Co. in the Azrieli deal), FBC & Co. is one of Israel's largest and most prominent law firms, representing local and international clients in a range of areas. It was Israel's fourth largest law firm in 2015 with 170 lawyers. Adv. Michael Zellermayer, one of Israel's leading lawyers, recently joined FBC & Co. as a senior partner in its mergers and acquisitions department, following the dissolution of his own law firm, Zellermayer, Pelossof, Rosovsky, Tsafrir, Toledano & Advocates, when most of its employees left to join competingfirms.

Azrieli is planning to build an 80-storey tower on the "Yedioth Ahronoth" site. The built space 140,000 square meters is about the same as the three nearby towers. A large increase in the commercial space in the neighboring mall is also planned. Azrieli is currently promoting a change in the urban building plan for the land. Azrieli recently completed its acquisition of full ownership of the property from the @Yedioth Ahronoth" newspaper, controlled by the Mozes family, three years after the acquisition contract was signed. During this time, Azrieli made a NIS 150 million profit from the increase in the land's value in its first quarter financial statements. The land,8,400 square meters in area, is located at the intersection of Menachem Begin Boulevard and Noah Mozes Street, near the Azrieli Center in Tel Aviv, has an estimated value of NIS 570 million (the acquisition price was NIS 374 million).

Azrieli's total quarterly profit from the revaluationof the property was NIS 357 million, including profit on the Migdal Sarona property located nearby opposite the Azrieli center, whose value is already nearing NIS 1.5 billion. In the past few days, Azrielicompleted aNIS 2.2 billion bond issue at 1.3% interest that willhelp the group reduce its financing costs and extend the duration of its debt. Azrieli initially planned to raise NIS 900 million, but increased the amount when the offering drew lively demand, receiving permission for the expansion from the Midroog rating company, which rated the debt Aa1 with a stable outlook.

Azrieli is expected to use the amount raised to repay debt and continue its development, currently in an especially intensive period, with nine development projects totaling 680,000 square metersat a total investment of over NIS 5 billion. Azrieli raised NIS 2 billion in a bond issue last year, and has reported issuing NIS 400 million more in private debt since the beginning of the year. Azrieli is riding the boom in the local bond market; its debt issues are the largest of any company (apart fromthe banks) this year.

Published by Globes [online], Israel business news - www.globes-online.com - on July 14, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

New Azrieli Tower Image: View Point
New Azrieli Tower Image: View Point
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