Developer plans new stores for Dizengoff Center
Edri Holdings, which owns about 7,500 square meters of commercial space in Tel Aviv's Dizengoff Center, is planning to downsize the New Mashbir Lazarchan store renting there to make space for three new shops. TheMarker has learned that the new stores will be Nike, Mango and Billabong surfwear, one of whose shareholders is Fox.
Edri purchased the space in 2006, and charges its current renters, Zara and Mashbir, an average of $25 per square meter monthly. The company's estimated revenues totaled NIS 7 million in 2006. Market sources figure Edri could charge $60-$70 per square meter for first floor space in the center, and $50 per square meter on the second floor.
Edri will invest NIS 15 million in improving the property and increasing the amount of commercial space, which would then yield an average rent of $41 per square meter. This plan is due to be implemented in 2008.
Nissim Hassan, COO at the Mashbir, said in response to questions from TheMarker that the chain is negotiating to reduce its space at Dizengoff Center from 6,500 square meters gross (4,200 meters of store space) as part of the recovery program declared by Rami Shavit, the Mashbir's CEO and owner, when he purchased the chain. After the downsizing, the Mashbir will be leasing 3,200 square meters, including 2,800 of store space. Hassan said the goal of this process is to increase revenues per square meter and reduce expenses.
Compared to the $25 per square meter rent at Dizengoff Center, rents in Israel's periphery are much lower. Most of Edri's properties in the north of the country, including the Shmona Center Mall, the central bus station in Kiryat Shmona and Nahariya Center (leased by Super-Standard of living) charge rents ranging from $7-$17 per square meter. Space at the Ramat Aviv mall in North Tel Aviv, on the other hand, can cost upwards of $100 per square meter.
Over the next two years Edri Holdings plans to upgrade several assets. Among other projects, the company is planning to build a power center in a joint venture (50 percent) with Terminal, at the Kiryat Shmona central bus station, a power center with Gazit Globe Israel and a power center near Moshav Tzur Natan, on 12 dunams of land. Edri also plans to enlarge the Shmona Center by 4,000 square meters (including 2,500 square meters of commercial space), and to reduce the space used by Super-Sol in Nahariya in order to open a row of stores facing the street, where space will be leased at $50 per square meter.
Yesterday, Edri Holdings held a public tender as part of its initial public stock offering of up to NIS 120 million in triple B-rated bonds and up to NIS 25 million in shares. This stage of the IPO follows a successful institutional investor tender last week, which attracted 80 percent of the funding sought.