Real estate company Dorsel (BAZ) (TASE: DRSL) is selling its rights in buildings and land located in the northern Netanya industrial zone for NIS 134 million plus VAT to a company in which Israel Canada Ltd. (TASE: ISCN) owns a 60% controlling interest.
The 54-dunam (13.5-acre) property, acquired by Dorsel in 2005 for NIS 54 million, is now listed in Dorsel's books at NIS 85 million. When the deal is completed, Dorsel will therefore post a NIS 48 million pre-tax profit (net of expenses in the deal). Tax on the deal will amount to NIS 16 million.
Israel-Canada, controlled by founders Barak Rosen and Assaf Tuchmeir, plans to finance the purchase with a bond issue, raising capital, recruiting partners, or from its equity.
The land currently contains industrial buildings with a total of 21,400 square meters leased to businesses for annual aggregate rent of $1.3 million (NIS 5 million). Israel Canada says that it plans to "enhance the land's value through a substantial addition of construction rights with mixed uses by promoting a detailed plan in the Planning and Building Commission."
Dorsel says, "The price received by the company in the deal is a very good one. The company is making an extremely profitable exit with a 30% annual return over the period since it bought the property. The company intends to use the proceeds to buy additional income-producing properties, thereby significantly bolstering its annual revenue from rent."
Published by Globes, Israel business news - en.globes.co.il - on November 4, 2018
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