You won’t find it in chic North Tel Aviv or in any wealthy suburban town. Israel’s most profitable mall is a 20-year-old, two-story, somewhat frumpy shopping center in Eilat.
The Mool Hayam (Seaside) mall is a mere 10,000 square meters (107,000 square feet), erected in 1996 at a cost of just 35 million shekels ($9.9 million). But its two owners – the embattled tycoon Ilan Ben-Dov and the insurance company Phoenix – pull in more rent from its limited floor space than any other mall in the country.
Midroog, the bond-rating company, published the figures in a report on the mall released on Wednesday. While Mool Hayam isn’t publicly traded, it is one of the few mall owners to have issued bonds. It has 481 million shekels in 15-year debt coming due in 2019.
Close to 100% of its store space was occupied at the end of 2013, and the mall enjoyed net operating income of 83.5 million shekels last year. Midroog awarded Mool Hayam its very high Aa3 credit rating.
“The rating reflects the high occupancy rate, the level of turnover and the high rents at the mall,” Midroog analyst Dvir Wolf said. There is also “the waiting list for tenants to get in, a strategic location, and a profits-focused management.”
The mall’s secret is its location, close to the Eilat beachfront next to the Red Rock Hotel, making it a natural magnet for beachgoers and guests at the hotels. In fact, reported Midroog, Mool Hayam’s management is confident of seeing off new competition from the nearby Ice Park mall, which opened 16 months ago, even though it features a skating rink and small amusement park.
Other rivals include Big Eilat, a Power Center near the local airport, and the Queen of Sheba mall. Other shopping centers are being planned at the central bus station and on the site of the airport, which is located inside Eilat.
“However, in view of the strategic location and the mix of attractive tenants, any erosion [in business] isn’t likely to significantly harm Mool Hayam,” Wolf wrote. “The malls that have been developed in the past have created competition but in a very limited way.”