Azrieli-Africa Israel Malls Deal Tottering Again

The deal had seemed all but done, the pens poised to sign.

The deal had seemed all but done, the pens poised to sign, but no. Africa Israel's negotiations to sell its shopping centers in Israel to David Azrieli's business group are staggering again.

There are five shopping centers in question, including the Ramat Aviv mall in Tel Aviv. The deal had been expected to close at the end of last week or the start of this one, sector sources told TheMarker. But the parties couldn't agree on the structure of the deal.

It isn't off: The Azrieli group is continuing the due diligence process. "But it isn't closing the matter. It's delaying on signing and is discussing issues in dispute. Africa Israel isn't too pleased with the situation," said one source.

This isn't the first U-turn in the negotiations. A few weeks ago the near-fatal dispute had been over price. With that knotty problem resolved, industry sources assumed that the deal would be done quickly, and that other disputes would be less material.

The deal includes the Ramat Aviv Mall and the Savyonim mall in Yehud, as well as three others, possibly the City Center Mall in Haifa, the Lev Talpiot mall in Jerusalem, and the Panorama Center in Haifa.

Africa Israel's yield-generating assets in Israel are believed to be worth between NIS 7 billion to NIS 12 billion, held through subsidiary Africa Israel Properties. The company has stated its intention of selling these assets to increase liquidity.

Asset assessor Greenberg Olpiner Shelef estimates that the value of the Ramat Aviv Mall has increased by 165% since 2005, from NIS 830 million to NIS 1.3 billion in 2007. For the purposes of the sale to Azrieli, Africa Israel is believed to be insisting on a company valuation of NIS 2.2 billion for the mall. Migdal, which owns the other 27% of the Ramat Aviv Mall, is expected to sell its stake to Azrieli, too.