SolarEdge to sublet part of new campus to ease crisis

Impression of new SolarEdge campus at Glilot credit:  Gilad Lan
Impression of new SolarEdge campus at Glilot credit: Gilad Lan

The solar energy company is seeking tenants for its new campus in Glilot, which it has leased from Azrieli.

Israeli solar energy technology company SolarEdge Technologies (Nasdaq: SEDG) is looking to sublet part of its new campus, which is currently under construction in Glilot. A source familiar with the matter has told "Globes" that SolarEdge is at this stage seeking to sublet an entire floor on the campus for an asking price of NIS 120 per square meter per month, although a tenant has not yet been found.

The Glilot campus is being built north of Cinema City between Tel Aviv and Herzliya. The campus is being built by Azrieli Group (TASE: AZRG), which will own it, and it will comprise 43,000 square meters - 42,000 square meters above ground and 1,000 square meters underground commercial space and 1,055 parking spaces. Estimates are that construction is costing NIS 800 million.

Azrieli signed a deal to lease the campus to SolarEdge for 15 years with an option to extend for a further nine years and 11 months. Annual NOI for Azrieli will be NIS 62 million. In Azrieli’s financial reports in the first half of 2024, the value of the campus was booked at NIS 560 million. The ground-laying ceremony for the campus was held in April 2022 and construction is due to be completed in the first quarter of 2025.

Sources in the income-producing office real estate sector say that SolarEdge should have no problems in finding tenants. One source said, "This is an area with attractive prices in an excellent location between Herzliya and Tel Aviv. The specific location is excellent with nearby new construction such as the Allied and Big complexes."

Striving to achieve financial stability

SolarEdge, which has developed an optimized DC inverter system for solar energy panels, has been in crisis for some time. At its peak in July 2022, the company had a market cap of $20 billion on Wall Street, when it signed the huge lease with Azrieli. Since then SolarEdge has lost 97% of its value and has a market cap of just $582 million, and estimates are that the crisis, which is mainly due to a fall in demand leaving distributors with overstocked inventories, will continue for some time. Meanwhile, occupancy of the campus nears and the company is looking to limit the damage.

In the third quarter of 2024, SolarEdge’s GAAP operational loss was NIS 1.09 billion and net loss amounted to $1.2 billion. Interim CEO Ronen Faier recently said, "While SolarEdge is going through the most difficult period in its history, we are striving to achieve financial stability, regain market share, and renew focus on core opportunities - solar and energy storage."

Over the past year, SolarEdge has conducted two rounds of layoffs with over 1,000 employees in Israel and worldwide leaving the company.

Published by Globes, Israel business news - en.globes.co.il - on November 21, 2024.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2024.

Impression of new SolarEdge campus at Glilot credit:  Gilad Lan
Impression of new SolarEdge campus at Glilot credit: Gilad Lan
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