Migdal buys Elbit's Netanya land and offices

Elbit Netanya Industrial Zone  / Photo: Bar Al, Globes

The real estate was purchased from Beit Shomer and contractor Reuven Damari for NIS 223 million.

Israeli insurance company Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL) has in recent days completed a deal for the purchase of the Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT) land and offices in the new Netanya industrial zone, sources inform "Globes."

The real estate contains several buildings on Hamakhshev Street next to the Netanya municipality building. The site, which contains 32,000 square meters of built-up space and 500 parking spaces, has been leased to Elbit Systems for a decade. The sellers are the Beit Shomer group, the original landowner, and contractor Reuven Damari and companies related to him. Beit Shomer and Damari initiated construction of the buildings as part of a combination deal. Under the agreement, in which Elbit Systems was also involved, it was agreed that the company would remain as a tenant for an extended period.

The average prices of space in this area are NIS 12,000 per square meter and NIS 6,000 per parking space. The average price in this deal is NIS 7,000 per square meter, probably because additional service spaces are included in the general calculation. At this stage, Migdal is refusing to disclose information about the returns that it expects from the project and the rent that it will receive from Elbit Systems.

Adv. Meir Lefler and Adv. Oren Lustigman from the Lustigman Lefler Rosenberg law firm, Adv. Doron Ariel and Adv. Yuval Schatz from the Doron Ariel law firm, and Adv. Yehuda Zahavi from the Epstein Rosenblum Maoz (ERM) law firm represented the sellers in the deal. Adv. Hagit Bavly from the Yigal Arnon & Co. law firm represented the buyers, and Adv. Ron Genat and Adv. Itzhak Narkiss from the M. Firon & Co. law firm represented Elbit Systems.

Migdal's purchase of the land and its buildings comes less than a month after the insurance company, controlled by Shlomo Eliahu, completed another deal that increased its real estate holdings - the purchase of lot zoned for construction of a multi-storey, multi-use tower at Elite Junction in Ramat Gan. Migdal paid a group of diamond dealers NIS 325 million in that deal. The company said that construction of the tower, part of which will be built on the area that formerly housed the Elite chocolate factory, would cost an estimated NIS 800 million and last five years. Construction is scheduled to begin within a few months.

Last May, Migdal entered into partnership with the Prashkovsky Investments and Construction company in a major office project in Rishon Lezion. The insurance company paid NIS 300 million for half of the project, which will be built in the Haelef compound.

As of the end of 2018, Migdal held NIS 11.6 billion in its real estate investment portfolio. Most of the company's portfolio consists of properties in Israel. The large insurance companies, like the other large investment institutions, each of which manages tens of billions of shekels of the public's long-term savings, have become some of the largest holders of income-producing real estate in recent decades. For them, these properties provide a safe return and regular cash flow, plus a hedge against capital market fluctuations that directly, and sometimes strongly, affect the large marketable portfolio managed by the investment institutions for savers.

Published by Globes, Israel business news - en.globes.co.il - on October 22, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

Elbit Netanya Industrial Zone  / Photo: Bar Al, Globes
Elbit Netanya Industrial Zone / Photo: Bar Al, Globes
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