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David Azrieli's business group has resumed intensive negotiations to buy a number of malls in Israel fro Africa Israel Properties, which belongs to Lev Leviev's Africa Israel Investments group. Earlier reports said that Azrieli wasnt interested because of the high prices Africa wanted, mainly for the Ramat Aviv mall. At stake are that center, in which Africa owns 73%, and the Savyonim mall in Yehud (100%).

The figures being discussed put the value of the deal at NIS 1.8 billion to NIS 2 billion.

As reported earlier this week in TheMarker, the value of the Ramat Aviv mall in this deal is expected to be about NIS 2.2 billion, which is what Africa had wanted. That reflects an attractive yield of about 5.5%. Africa hasn't disclosed the names of the other three properties on the table, but these are apparently Haifa's City Center mall (45%), Lev Talpiot mall in Jerusalem (40%) and the Panorama Center in Haifa. Africa's entire yielding property portfolio in Israel is thought to be worth up to NIS 12 billion.

Talks between the parties began two months ago. David Azrieli, who owns Tel Aviv's Azrieli mall, sent an offer to buy the Ramat Aviv mall to Leviev's daughter, Tzvia Leviev- Elazarov, the marketing VP for Africa Israel. Leviev- Elazarov did talk with Azrieli group president Menachem Einan but the discussions reached an impasse, which appears to have been overcome.

Market sources expected the deal to be closed yesterday, barring unforeseen hitches.

Ramat Aviv is one of Israel's most profitable malls. Not only Azrieli but other development firms, including Gazit Globe, Delek Real Estate, British Israel and Amot Investments, and large insurance companies, were interested. Greenberg Olpiner Shelef appraised it and ruled that its value had shot up by 165% since 2005, to about NIS 2.2 billion. The Ramat Aviv mall opened in 1997 and houses over 130 businesses. Its revenues have risen steadily from NIS 82 million in 2005 to NIS 105 million in 2007.

Migdal owns 27% of the mall and is expected to sell its stake to Azrieli too.

Azrieli owns nine malls, in Tel Aviv, Holon, Hod Hasharon and Modi'in, Ayalon mall in Ramat Gan, Jerusalem's Malha mall, and the Outlet malls in Herzliya and Or Yehuda.

Market sources sounded dubious yesterday about Azrieli's ability to better the properties it will be buying. Still, the group has mentioned plans for an initial public stock offering, and when the markets are once again on a even keel, a successful float for Azrieli would recoup some of the group's investment.

The current sale of the malls will generate nice profits for Africa Israel, ease the financial pressure stemming from its multibillion-shekel financial obligations and help the company maintain its bond rating.