Two and a half years after selling land in the Kfar Shalem neighborhood in southeastern Tel Aviv to the Gabbay group, Azorim Investment, Development and Construction Ltd. (TASE: AZRM) is buying rights in other land in the neighborhood in cooperation with the Gabbay group. The two companies have signed a combination deal with the Matalon family involving 45 dunam (11.25 acres) of land owned by the family in Kfar Shalem. The land, located near Mafilei Egoz Street, is bordered by Alankave Street on the West, Epstein Yakov Street on the south, and Snapir Street on the east.
Under the agreement, Azorim and Gabbay will build a residential and commercial project on the land, and will give the seller 30% of the proceeds from the apartments to be constructed in the project and 38% of the proceeds from the sale of its commercial space. The companies will pay the seller a NIS 60 million advance.
According to the valid urban building plan, 480 housing units can be built, but the new Tel Aviv outline plan , which has been made valid, allows increasing construction rights in land, and the companies believe that they will be able to increase construction to 1,500 housing units in 15 buildings with an estimated value of NIS 3 billion. The land is currently occupied by squatters, and Azorim and Gabbay will be responsible for removing them and planning for the land, which is expected to take many years.
The two companies have shared business in Kfar Shalem: in August 2015, the Gabbay group bought 22 dunam (4.5 acres) of land on the Yefet farm site on Sheshet Hayamim Street in Kfar Shalem from Azorim for NIS 85 million. Gabbay is planning to build 700 apartments on this land, which is also occupied by squatters. It is believed that Azorim sold the land because of difficulties in removing the squatters. In addition, Gabbay is constructing a project with 179 apartments and 1,100 square meters of commercial space at the corner of Mahal Street and Alankeve Street.
The Yigal Arnon & Co. law firm represented Azorim and the Gabbay group in the deal through Advocate Amalia Meshi, and the Haim Kossowsky-Shachor law firm represented the landowners through Advocate Aminadav Kossowsky and Advocate Adi Kolirin.
Explaining to "Globes" why Azorim sold its land in the neighborhood and is now buying new land two years later, Azorim said, "We judge every deal on its own merits. The return and profit from selling the land were right for that particular time, compared with the situation in the present deal, in which the potential profit is large. Given the shortage of land created by the buyer fixed price plan, a deal that is largely combination matches the company's strategy of building neighborhoods and communities."
Published by Globes [online], Israel Business News - www.globes-online.com - on February 19, 2018
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