The offices of Menorah Mivtachim Holdings Ltd. (TASE: MORA) in Tel Aviv will become part of a growing hotel chain. Sources inform "Globes" that the former offices will be renovated and be turned into a boutique hotel of the Brown Hotel chain. Menorah will provide a NIS 35 million loan to finance the renovation.
As far as is known, Menorah Mivtachim will continue owning the building and rent it out to the Brown chain for up to 25 years at rent averaging NIS 70 per square meter with a mechanism for adjusting the price every few years. As far as is known, there is an escape point from the lease after 10 years, if Menorah decides to build a new tower in place of the existing one. Several floors in the building are currently used by Bank Hapoalim (TASE: POLI).
The Brown chain plans to establish a hotel with 226 rooms. Menorah moved earlier this year to its new address in an office tower built at the Elite Junctions in Ramat Gan. Its old headquarters were at 115 Allenby Street in Tel Aviv, with the rear of the building facing Yavne Street, in the heart of central Tel Aviv near Rothschild Boulevard. The sources added that renovations for the new hotel would begin next month, with the hotel's opening scheduled for mid-2019.
This is the second deal with financial institutions by the Brown chain, owned by Nir Waizman, Leon Avigad, and Nitzan Perry and managed by former Fattal Holdings (1998) Ltd. (TASE:FTAL) CEO Reuven Elkes. Two months ago, "Globes" reported that Hachshara Insurance, managed by Shimon Meron, was providing a NIS 60 million loan convertible into shares to the hotel chain in a deal that would make it a partner and give it a holding of up to 20% in the hotel chain at a company value of NIS 300 million, after money.
The Brown chain operates in Israel and overseas. According to the company website, it currently has four boutique hotels in Tel Aviv, two hotels in Jerusalem, and one in Croatia. The company is expanding its business as an owner of carefully designed hotels in attractive locations. The chain acquired its first hotel in 2010.
The financial institution sector has been increasingly attracted to the hotel business ever since Migdal Insurance and Financial Holdings Ltd.'s (TASE: MGDL) very profitable investment in the Fattal chain years ago. Fattal has since held its IPO and entered the Tel Aviv 35 Index.
Published by Globes [online], Israel business news - www.globes-online.com - on July 29, 2018
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