After "Globes" revealed a month ago that businessman Yoram Globus was negotiating the sale of the site of Neve Ilan Studios, Globus has now sold the property for NIS 180 million to Reality Real Estate Fund, which will have a 50% stake, and four investment institutions: Altshuler Shaham Ltd., Ayalon Holding Ltd. (TASE: AYAL), Union Bank of Israel (TASE: UNON), and Teachers Study Fund, which will jointly hold the other 50%. The Reality Fund plans to push forward a plan to enhance the construction rights and uses in the site, and to rename it Kiryat Tikshoret (Communications City).
The Neve Ilan site covers 60 dunam (15 acres), but only part of the construction rights approved for it have been used, and it consequently contains only 30,000 sq.m. of built-up office and studio space. The Reality Fund plans to utilize the unused construction rights, while promoting an Urban Building Plan (UBP) to increase the construction rights for commerce and business. The site, currently leased to Channel 2 News Studios, the studios where the Big Brother reality television program is filmed, and high-tech companies, generates NIS 13 million in annual revenue, reflecting an annual return of over 7%. Rezoning the site could substantially increase the revenue generated.
Globus, who owns the property through GG Israel Studios, is one of Israel's leading movie producers. His work includes the production of Israeli movies such as Salah Shabati, Kazablan, and Eskimo Lemon. Globus has recently been selling assets to pay his debts. Last August, he sold his holdings in the Globus Max cinema chain of 84 movie houses in 12 cities around Israel and the Noah Films distribution company to Bennett Kaplan, his partner, and a group of US investors. The proceeds from this deal were estimated at NIS 100 million, most of which went to pay Globus's debts to the banks. Globus Max has suffered from increasing competition in recent years in the movie market and the growing strength of its competitors, such as Cinema City and Israel Theaters, the developer of the Yes Planet complex. These competitors have developed mega movie houses with advanced technologies. Globus Max has had to close several movie houses, and suffered heavy losses, leading to a halt in the trading of its bonds, after the parties reached agreement, with the annual yield on the bonds reaching 53%. The company's bonds were delisted in 2011, and the owners injected NIS 44 million in two payments for immediate repayment of NIS 78 million in bonds.
Reality Investment Fund managing partner Ohad Rozen said, "The fund plans to build a unique national entertainment and leisure center, while utilizing and expanding the construction rights, according to the proposed Mateh Yehuda Regional Council plan for development of the area. A new interchange is currently being built that will allow direct access from Tel Aviv and the central region to the site, and accommodate rapid exit in the direction of Jerusalem. Neve Ilan currently contains studios for news, filming television, and offices, and the anchor of the news company. The Broadcasting Law, which requires broadcasting entities to make their broadcasts from the Jerusalem area, is expected to attract additional communications entities to the site. Under the plans we're promoting, new sophisticated offices, studios, visitors' centers, and entertainment areas will be built, making Neve Ilan a magnet."
The Reality Investment Fund, headed by founder and chief investment manager Michael (Miki) Vardi, the former Israel Land Authority general manager, and managing partners Rozen and Assaf Vardi, develops and upgrades real estate. Its investors include investment institutions, pension funds, universities, and private Israeli and foreign investors.
Published by Globes [online], Israel business news - www.globes-online.com - on December 23, 2014
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