Tel Aviv's Migdalei Hatzeirim (Towers of the Young ), the largest project ever undertaken by a purchasing group in Israel, was thrust back into the spotlight during the intermediate days of the Sukkot holiday, when an intensive push was made to complete the sale of its remaining 23 units.
Because of its sheer scope and the controversy surrounding it, Migdalei Hatzeirim stole headlines last year - but it was mainly the person who originated and stood behind the huge project that fascinated the public most: Inbal Or, 35, founder, owner and CEO of Or City Real Estate and celebrated organizer of purchasing groups. Today, after 20 months on the market, the project's future looks assured. However, it seems Or's star has faded: She is no longer at the helm.
The venture got underway in February 2010 when Or announced her intention to form a massive buyers group to purchase a property located on the so-called Ayalon triangle - between the Ayalon Highway (Route 20 ) and Menachem Begin Road - near the Kardan Tower and Recital banquet hall. Within a short time Or joined forces with Hagag Group Real Estate Entrepreneurship, a public company controlled by brothers Itzhak and Ido Hagag also specializing in organizing such group endeavors. The project was initially called Arlosorov Towers.
Back then Or was seen as the project's moving spirit: She not only initiated it but promoted it intensively - plugging it in the press and appearing on all the television stations. When they realized that a great many young couples were disturbed by the soaring cost of buying their first home, Or and the Hagag brothers renamed the project Migdalei Hatzeirim and positioned it in the affordable housing niche.
To keep the units small and affordable Or pushed to increase their number and managed to raise this by 56. The final blueprints call for two towers, 46 and 40 stories tall, containing a total of 486 units, mainly small two- and three-room apartments. The lower six floors of the buildings, totaling 4,000 square meters, are earmarked for commercial use and offices. The entire project is located on an area of four dunams (about one acre ).
Talks with the landowner, Sonny Kahn's Florida-based Crescent Heights Investments, got underway with Or at the forefront and the Hagag brothers keeping a low public profile. An agreement was reached giving the group that was assembling an option to buy the land by June 2010 for NIS 280 million. This involved a major challenge - selling hundreds of apartments within an exceptionally short timeframe - but Or had proven herself a master at running promotional campaigns.
The partners claimed that thousands registered on the project's website, and in March they held an immense and well-publicized sale at the Tel Aviv Fairgrounds which was heralded a huge success. But although slightly over 200 units were estimated to have been sold at the event - an impressive feat - this was still far from being enough to buy the land. Also, several dozen buyers were said to have backed out: Some were worried about problems with the site like a high-voltage electrical line running through the property, or the fact that infrastructure work needed in the area could seriously delay construction.
Both companies continued selling apartments, but as the deadline for the option drew nigh they realized the land couldn't be bought just based on the number of units already sold. TheMarker discovered that the Hagag brothers recently managed to find an investor who bought up all the remaining 50 to 100 units, providing the buyers group with the tens of millions of shekels needed to complete the purchase of the property. It appears that from this point, the Hagag group began dominating the management of the project, with its administration being transferred to the company's offices in the Azrieli Center.
Equal partners, but one more equal
It is customary for a group such as this to appoint from among its members a committee to manage the project, including the hiring and supervision of the construction firms and contractors.
Rafi Avraham is a member of the Migdalei Hatzeirim purchasing group committee, who attends its meetings and offered to shed some light on the situation. Avraham says the meetings are attended by four committee members and Ido Hagag, and adds that Or hasn't attended committee meetings in a long time and was only present at the purchasers' meetings in the initial stages of the group's formation. The monthly email updates to its members on the project's progress are sent out by the Hagag brothers, he adds.
At Or City there is no denial of these claims, but they say the project is managed in full and equal partnership with Hagag Group. "Not a shekel is spent on the project without Inbal's approval," said one company official.
"The Migdalei Hatzeirim project has been managed at all stages equally and in cooperation with Hagag Group," the Or City source added. "This includes all management services, and the project's supervision and implementation."
As to Or's absence from meetings of the smaller committee, the firm explained: "The committee's main role is overseeing activity so its meetings are a technical matter, involving reporting. It isn't necessary for all members of the project management to take part. Inbal Or regularly sees the buyers' trustee lawyers at the management meetings."
Regarding the project's activities being conducted from the Hagag Group offices, Or City said that a decision was made that it would be physically more convenient to have the project's management located there, adding that this also explains why the updates to buyers are issued from there. "But this doesn't attest to the balance of power in the management of the project which, as stated, is jointly done," insisted a source at the company.
The Hagag brothers' account of the situation is consistent with Avraham's.
"The project is still both of ours, but it's true we've become more dominant," explains Ido Hagag on the nature of the relationship with Or with respect to Migdalei Hatzeirim. "We have a team with capabilities in engineering, planning and coordination, not just marketing. All in all, it's a complex deal requiring very complicated coordination, like with Ayalon Highway Corporation. Because of the deal's complexity we took over the reins."
Migdalei Hatzeirim has come a long way and, in the meantime, has managed some impressive achievements: getting the Israel Electric Corporation to move the high-voltage line; planning access roads for the complex via construction of an inbound loop from Namir Road and an exit directly onto the Ayalon Highway; increasing the building rights to 486 units; signing a contract with U. Dori Construction; and obtaining permits two months ago for excavation and building of retaining walls. In the next month, they promise, tractors will begin working on the site. The expectation is that occupants will begin to move in in about four years.
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