Beit Gaon, an office tower on Tel Aviv seafront near Neve Tzedek, is set to become a hotel. Netanel Group Ltd. (TASE:NTGR) has notified the Tel Aviv Stock Exchange (TASE) that it has signed an agreement to lease 10 floors of Beit Gaon in Kaufmann Street to Brown Hotels. The lease is for 10 years with three options to extend for five years each. Under the terms of the agreement, Netanel Group and Maor Hotels, which each own 50% of the building, will bear the estimated NIS 50 million cost of converting the office building into a hotel.
Brown Hotels will pay a rent of NIS 16 million per year, which will be divided equally between Netanel Group and Maor Hotels. The annual rent will rise by 55 in between the end of the 10 year contract and the end of each 5-year option.
Netanel Group and Maor hotels bought 10 of Beit Gaon's 17 floors in 2017 for NIS 78 million. The 10 floors encompassing 6,000 square meters will be converted into a hotel with 173 rooms and a gourmet restaurant.
Plans have been drawn up to convert many of the high-rise office buildings in the Textile House seafront office complex into hotels. Built in the 1960s and 70s, firms leasing there have abandoned the area for office buildings near Rothschild Boulevard and adjacent to the Ayalon Highway and even further afield to Bnei Brak and Ramat Hahayal.
Tel Aviv Municipality is encouraging such conversions from offices to hotels due to the shortage of hotel rooms in the city.
Published by Globes, Israel business news - en.globes.co.il - on February 24, 2019
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