‘Protesters’ demands for affordable housing are justified’

Azorim controlling shareholder Hershey Friedman: We’re considering lowering prices in some projects here.

By AVI SHAULY, EINAT PAZ-FRENKEL/ GLOBES
September 10, 2011 23:44
3 minute read.
Housing protest candle vigil

housing protest 311. (photo credit: Ben Hartman)

 
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In his first interview since taking over Azorim Investment, Development and Construction Ltd., Canadian tycoon Hershey Friedman told Globes about the company’s strategy for the Israeli housing market in view of what he called “just demands for affordable housing.”

Friedman signed the acquisition of financially troubled Azorim from Shaya Boymelgreen in February and closed the deal in April, under pressure from Azorim’s largest creditor, Mizrahi Tefahot Bank.

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“I regret what happened to him [Boymelgreen],” Friedman said.

“He tried to become the Israeli Donald Trump; that was his goal.”

Friedman paid NIS 300 million for Boymelgreen Capital Ltd’s 64 percent stake in Azorim at NIS 13.46 per share. In June, he injected NIS 64m. into the company through a rights issue at NIS 5.01 per share. Altogether, he has invested NIS 364m. in the company at an average share price of NIS 10.40.

In the past six months, Friedman has lost NIS 213m. on his investment, after Azorim’s share price fell 70% to NIS 4.76, giving a market cap of NIS 261m.

Friedman has been active in the Israeli real-estate market for several years. His company’s projects include the Nehardea-Beeri Tower in north Tel Aviv; the Arza lot in Motza, outside Jerusalem; and projects in Beit Shemesh and Ashdod.



Globes: Given your heavy losses, do you regret acquiring Azorim? Friedman: “We expected this, and I have no regrets. We felt we’d lose half within a short time and that it would take at least three years to get a return on the investment, so there are no surprises.”

What do you think Azorim is really worth? “Stock markets worldwide aren’t realistic at the moment; everything has fallen 30 to 40 percent. Look what happened [last Tuesday]; shares fell even though nothing happened to the companies themselves.

There is no market stability at all; it’s not just Azorim.”

What is your opinion about the housing protest in Israel? “The protesters are right; these are hard times in the world. People want to own homes, which are overpriced now in Israel. But the government is listening to the people and is finding solutions. At Azorim, we’ll set up a think tank to come up with solutions.”

How will you deal with the drop in demand that the conditions have created? “It may take time to sell, but we’re considering making apartments smaller in our projects. We have projects in the periphery that suit what Israelis are seeking in terms of price, and we’re considering lowering prices. We had a meeting [Wednesday] morning to discuss lowering prices in some projects.

One of our goals is to build apartments at affordable prices.”

Which projects? “I can’t tell you that, but we plan that the price of a four-room apartment in certain projects in central Israel will be less than NIS 1.5 million.

That suit’s the current climate.”

What about smaller apartments? “It’s still possible to make a profit on smaller apartments, but less.

We’re waiting for the government to release land so that we can build at affordable prices. We have a good mix of apartments at a range of prices. When the government releases land at affordable prices, we’ll bid in tenders. That’s one of our objectives.”

Do you plan for Azorim to buy your privately owned properties in Israel? “We’ll see if there is a way to integrate them, but the shareholders will have to approve any deals, and only if they fit Azorim’s portfolio.

Some properties are an excellent fit, and we’re examining them now.”

Do you do business in Israel out of Zionist motives? “That depends on how you define Zionism. I’ve always believed in Israel, and it’s our country. I’m a strong believer in Israel. I don’t live here, but the roots of every Jew are in Israel.”

Will you immigrate? “I don‚t really live in a house, but on planes.”

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