ISSTA Lines (TASE: ISTA) announced today that it would sell its 66.67% holding in Hotel Publica in Herzliya to Israel Canada (TASE: ISCN) for NIS 142 million. ISSTA is currently a partner in the hotel, which opened two years ago, with Reuven Ella. ISSTA will post a NIS 38 million pre-tax capital gain on the sale.
The letter of understanding for selling ISSTA's share represents a valuation of NIS 123 million for the hotel, which is managed by Isrotel. According to the contract, it was agreed that ISSTA would retain one third of the future construction rights in the land. ISSTA's announcement states that plans to obtain additional construction rights are already under consideration.
Hotel Publica is a business hotel located in the Herzliya industrial zone. Isrotel calls it an "urban" hotel. ISSTA explains, "Sale of Hotel Publica is direct continuation of the group's strategy for selling hotels that do not generate synergy with tourist activity, while concentrating on the acquisition of hotels in strategic overseas targets that create an advantage and differentiation in the conventional retail tourist sector."
Last week, ISSTA reported that it was entering the hotel sector in New York, the group's leading tourist target, with the acquisition of two hotels, together with local partner Gal Sela.
ISSTA Assets CEO Shimon Siboni said, "We are convinced that Israel Canada, the leader in the residential and office market in the Herzliya area, will utilize the full upgrading potential of the land by pursuing a plan that will lead to additional construction rights and added value. We are continuing to further deals that take advantage of specialization and experience in the hotel sector, marketing capabilities in tourism, and the group's financial capabilities. Our real estate business, especially hotel activity in Israel and overseas, as well as logistics in Israel, is an important growth engine for us."
ISSTA's hotel activity in Israel includes a partnership in the Cramim Hotel, the Neptune Eilat Hotel, and hotels that the company is building in Tel Aviv and Eilat. Overseas, as part of its partnership with the Fattal Group, ISSTA is active in nine hotels in Greece, Cyprus, and Portugal (some of these hotels are active, while others are in various stage of construction).
ISSTA Assets, ISSTA's real estate arm, includes construction and leasing of logistics centers in joint ventures with moshavim and kibbutzim. This activity is taking place together with developer Nadav Belila. The company has a 20,000-square meter logistics center in Beit Hilkia used by Orian and 13,000 square meters of space used by Logisticar. ISSTA Assets also has a 102-dunam (25.5-acre) site at Moshav Magen Shaul.
In residential real estate, ISSTA is building 1,500 housing units in Buyer Fixed Price Plan projects in Glil Yam-Herzliya, Rishon Lezion, Ramat Efal, and Jerusalem, and 10,000 square meters of commercial space. The company's pre-tax profit from its Buyer Fixed Price Plan activity will amount to NIS 183 million. ISSTA has 18 urban renewal projects with 500 housing units in the Tel Aviv area and Jerusalem. This activity is being carried out together with Ohana group.
ISSTA also has an income-producing real estate portfolio. Its real estate business generated NIS 53 million in net operating income (NOI) in 2018, and the company says that its NOI will reach NIS 88 million in 2023.
Published by Globes, Israel business news - en.globes.co.il - on December 15, 2019
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