(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
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
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Angeles, which has apparently withdrawn its offer for the company.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