Rising financing costs are blamed for the on-again, off-again negotiations between Africa Israel and David Azrieli's business group over the sale of five shopping centers, according to a knowledgeable source. The parties have been discussing five yield-generating assets, including the Ramat Aviv Mall (73%) and Savyonim mall in Yehud (100%) for months, for a price of NIS 1.8 billion to NIS 2 billion.

According to the source, Azrieli withdrew from the negotiations because financing costs have made the deal less profitable.

But another source denied that rising financing costs were behind the breakdown in negotiations. "Most of the amount in such deals would have been paid out of pocket," the source said.

Although Africa Israel has not identified the three other properties in question, these are believed to be the City Center mall in Haifa (45%), Lev Talpiot in Jerusalem (40%) and the Panorama Center in Haifa.

The Ramat Aviv Mall is considered one of the most profitable and attractive in Israel, and has attracted the interest of a variety of prospective investors, including Gazit Globe, Delek Real Estate, B++ritish Israel, Amot and large insurance companies. According to a recent real-estate appraisal, the value of the shopping center has shot up 165% since 2005, from NIS 830 million to NIS 1.3 billion in 2007, and if the current deal is ever completed, it will be based on a valuation of NIS 2.2 billion. It includes more than 130 businesses, and in 2007 generated revenues of NIS 105 million.

The Azrieli Group declined to comment for this report.