Reit 1 buys 51% stake in Hayovel Tower for NIS 120m

Shmuel Sayad  photo: Tamat Matsafi

Most of the tower, in central Tel Aviv, is leased to the Israeli government until the end of 2030.

Income-producing real estate company Reit 1 is acquiring a controlling interest in the Hayovel Tower located at the intersection of Kaplan Street and Begin Road in Tel Aviv. Reit 1 reported today that it had signed an agreement to acquire a number of corporations indirectly owning 51% of the shares in the Mahazit Hayovel company, which owns the Hayovel Tower. The seller is Gabriel Katri, who acquired the shares from Africa-Israel nine years ago.

In its announcement to the TASE (Tel Aviv Stock Exchange), Reit 1 said that it was paying NIS 120 million for acquiring all of the rights in the corporations, including NIS 10 million in cash already paid as an advance. Reit 1 will pay NIS 90 million more in cash when the deal is completed and will allocate NIS 20 million in its own shares to the seller. Completion of the deal depends on approval by the Antitrust Authority, among other things.

Hayovel Tower has 67,000 square meters of space and a parking lot with 1,300 parking spaces. Reit 1 says that the tower is almost fully occupied, including 45,000 square meters and 550 parking spaces rented by the government until the end of 2029. The state has an option valid until January 2025 to purchase the space that it rents.

Reit 1 president and CEO Shmuel Sayad said, "In this deal, for the first time, the seller of the property asked that part of the proceeds be paid through an allocation of shares. This enables the seller to maintain exposure to income-producing real estate by being a shareholder in Reit 1, while benefiting from a diversified portfolio of properties and professional administration. We believe that the model of payment in shares will develop further in the future in Israel, as occurred in the US."

Following its purchase of shares, Reit 1 will become a partner in the asset of Africa-Israel Properties, which holds the other 49% of the shares in Mahazit Hayovel. Figures published by Africa-Israel Properties show that the value of the tower was NIS 557 million at the end of 2017. The tower generated a NIS 44 million net profit for Mahazit Hayovel (NIS 30 million, excluding an increase in the fair value of the tower).

At the same time, Mahazit Hayovel also has a NIS 361 million owners' debt to Africa-Israel Properties, so that its loan-to-value (LTV) ratio is 65%. Africa-Israel reported its 49% holding in Mahazit Hayovel at a value of NIS 164 million at the end of 2017.

Published by Globes [online], Israel business news - www.globes-online.com - on August 9, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

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Shmuel Sayad  photo: Tamat Matsafi
Shmuel Sayad photo: Tamat Matsafi
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