Four years after construction of the Electra Tower in central Tel Aviv was completed, the Electra Ltd. (TASE: ELTR) construction and infrastructure company today announced it was selling its share of the property. Electra, a subsidiary of Gershon Salkind-owned Elco Holdings Ltd. (TASE: ELCO), today said that its board of directors had approved acceptance of the offer by the Nakash brothers of NIS 302.5 million for Electra's 25% rights and liabilities in the tower, reflected a total value of NIS 1.2 billion for the tower.
The parties yesterday signed a binding agreement in principle, and completion of the deal is expected by April 2015. A detailed sale agreement is scheduled for signing by the end of the month. Completion of the deal is subject to several conditions, including approval by the financing banks by the end of 2014. Electra said that the deal was expected to generate NIS 105 million in pre-tax surplus cash flow for the company.
There will be no substantial profit on the sale, because Electra already posted a revaluation profit of over NIS 100 million on tower in previous years, in addition to substantial revenue on its work during the course of construction. All in all, the property generated a two-digit percentage return. The sale price is about the same as the value at which the holding was reported in Electra's 2013 financial statements - NIS 298 million, reflecting a price of NIS 18,000 per sq.m.
The sale comes two months after fellow subsidiary Electra Real Estate Ltd. (TASE:ELCRE) announced the sale of its 25% stake in the property to Ampa Investments, controlled by Shlomi Fogel and the Nakash brothers, for a similar amount. After the deal is completed, the Nakash brothers will fully own the property.
Electra Tower is located on Yigal Alon St. near the Azrieli towers. It has 45 storeys, and is fully leased to high-quality tenants, including Google and FIMI Opportunity Funds. A year ago, the partnership in the tower formulated a NIS 780 million refinancing agreement for the property.
Managed by CEO Itamar Deutscher, Electra is considered one of Israel's largest contracting groups. It has five main fields of business: construction of buildings and infrastructure in Israel; overseas construction and infrastructure projects; service, maintenance, and retail; real estate development and construction; and franchises. The company has lost 10% of its value since the beginning of the year, and is traded at a market cap of NIS 1.6 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on December 4, 2014
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