Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) is moving its offices from central Tel Aviv to land it owns at Mesubim Junction (Saqiya) near Or Yehuda, sources inform "Globes." Bezeq currently rents 17 floors with 22,400 square meters in the Azrieli Center Triangle Tower, amounting to about half of the tower's space. Bezeq's lease was signed in 1999, and Bezeq has since exercised its option to extend it. The current lease period expires at the end of 2020. As a veteran anchor tenant in the tower, Bezeq is currently paying significantly less than the market price.
The sources add that Bezeq has already begun looking for a real estate company to buy the land at Mesubim Junction from it and build a large business area there that will include 30,000 square meters of offices, which will be leased back to Bezeq.
In April 2013, Bezeq signed an authorization agreement with the Israel Land Authority (ILA) for a 115-dunam (28.75-acre) area in Saqiya. After the land was zoned, Bezeq stated in its 2016 financial statements, "The signing of a lease for the property for a net area of 70 dunam (17.5 acres) is expected."
In its 2016 reports, referring to the Saqiya area, Bezeq added that it was "considering various options for exercising its rights in the property, including the sale of the property or part of it, which would be likely to lead to the posting of a substantial profit that the company, before all the relevant checks have been conducted, believes is likely to amount to hundreds of millions of shekels."
The fair value of the rights in the land was estimated at NIS 460 million at the end of 2016.
Azrieli will profit if Bezeq leaves
Bezeq, controlled by Shaul Elovitch, has recently been in the headlines because of an investigation by the Israel Securities Authority into suspicions of offenses under the Securities Law and the penal code concerning deal involving Elovitch. Bezeq's share price dropped 6% in three days of trading following the reports of the investigation.
The Azrieli Triangle Tower has 35 office floors and two services floor, making 47,000 square meters total space.
Azrieli Group Ltd. (TASE: AZRG) is likely to benefit if Bezeq leaves its offices, because Bezeq's rent is relatively low, and the tenant that replaces Bezeq will probably pay substantially higher rent. Located near the Hashalom railway station and Ayalon Highway, the Azrieli center is currently Israel's largest business center, with three towers and total space in excess of 131,000 square meters.
Published by Globes [online], Israel Business News - www.globes-online.com - on June 22, 2017
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