Israel Canada Ltd. (TASE:ISCN), controlled by Barak Rosen and Assaf Tuchmeir, together with partners, is acquiring a Tel Aviv office tower from Bank Leumi (TASE: LUMI) for NIS 77 million (excluding VAT).
The building is located at 13 Ahad Haam St. The deal includes a 1,470-sq.m. lot with a five-story office building having 6,250 sq.m. in area. According to the urban building plan in effect, there are no additional construction rights on the site. Nevertheless, Israel Canada's report to the Tel Aviv Stock Exchange (TASE) stated that the company intends to promote the sale of housing units on the site, either through a development project or by organizing a buyers group. This means that the buyers plan to try to make a new plan for rezoning the site for residences, demolishing the existing building, and constructing a new building in its place.
The building, which is located in central Tel Aviv, parallel to Rothschild Blvd. and near the Neve Tzedek neighborhood, formerly housed Bank Leumi offices. As of now, only 13.5% of the building's space is leased for proceeds totaling NIS 1.3 million a year.
Israel Canada said today, "The company plans to demolish the existing building and build a residential building with 40 apartments. According to the urban building plan in effect, the area is zone for a mixture of commerce, offices, and residences. The expected cost of the project is NIS 160 million." Another possibility available to the company is rezoning the existing building for residences. The company added that it was considering interim use of the existing building to generate annual revenue until a building permit for the residential project is issued.
According to the company's report to the TASE, the property is being sold as is, together with the seller's rights and obligations pertaining to the property. The company intends to pay for the deal in one of the following ways: an owners' loan, marketing rights in the land to potential buyers, recruiting partners, or obtaining financing from a financial concern.
According to the structure of the deal, in the first stage of the signing of the deal, the buyers will pay the seller NIS 7.7 million. The remaining NIS 69.3 million is slated for payment by December 24, 2015 in exchange for handing over the holding in the property, a request to register a warning note, and providing the relevant approvals and fulfillment of the terms of the deal.
Advocates Ari Wechsler and Dikla Betzalel from the Berkman Wechsler Bloom & Co. law firm represented Israel Canada in the deal, and the Meitar & Co. law firm represented Bank Leumi.
Published by Globes [online], Israel business news - www.globes-online.com - on September 17, 2015
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