Tshuva buys half of Delek Bavli project

When the sale is closed Delek Real Estate subsidiary will own half of the project and Tshuva will own half through a private company.

By AVI SHAULY/ GLOBES
YITZHAK TSHUVA (photo credit: Avi/Wikipedia)
YITZHAK TSHUVA
(photo credit: Avi/Wikipedia)
Yitzhak Tshuva will buy 50 percent of a flagship project of Delek Real Estate subsidiary in the north Tel Aviv Bavli neighborhood for NIS 130 million.
He signed a conditional agreement with the landowners to buy the lot in cash and the assumption of their debt to Bank Hapoalim. When the sale is closed Delek Real Estate subsidiary will own half of the project and Tshuva will own half through a private company.
Elad Israel did not exercise its first refusal rights to the project, “due to the company’s financial situation,” as the notice to the Tel Aviv Stock Exchange put it.
The Bavli project has been stymied for years due to a dispute between the landowners, which resulted in Elad Israel suing its partners.
Tshuva’s buyout of the private landowners will enable Elad Israel to secure financing for the project.
Elad Israel and Tshuva plan to build 1,155 apartments in six high-rises on the 52-dunam (13-acre) lot.
Assessors have valued the land at NIS 385 million.
Elad plans to begin construction by the end of the year, and finish the first stage in 2014.
Meanwhile, financially troubled Delek Real Estate is continuing negotiations with its creditors. At the last bondholders meeting, CEO Eran Meital said that the company was in initial contacts with other foreign investors in addition to the CIM Group Inc. of Los Angeles, which has apparently withdrawn its offer for the company. It is clear, however, that no one will invest in Delek Real Estate without a massive discount on the company’s NIS 2.1 billion debt to its bondholders or a massive capital injection by Tshuva.
Last week, the bondholders approved a deal in which Tshuva will inject NIS 63 million into Delek Real Estate if the parties fail to reach a debt settlement by the end of January.
Delek Real Estate’s share price rose 3.5% to NIS 0.177 by mid-afternoon, giving a market cap of NIS 67 million.