Melisron buys Lahav's Beersheva Grand Canyon stake

Grand Kanyon Beersheva
Grand Kanyon Beersheva

Eli Lahav, who is receiving NIS 500 million for his share, originally bought the land for NIS 70 million.

A decade after buying the land on which Ofer Grand Canyon Beersheva was built for NIS 70 million, businessman Eli Lahav is selling his share of the property to his partner, Melisron Ltd. (TASE: MLSR), at a value of nearly NIS 1 billion. Lahav and Melisron are equal partners in the property, meaning that Lahav's share in the proceeds is almost NIS 500 million. He is expected to pocket NIS 150 million of this amount, while the remainder will be used to cover his share of the liabilities.

Shopping malls corporation Melisron, controlled by Liora Ofer, today announced that it had reached agreements with Lahav to acquire his 50% stake in the joint company holding the property, which will make it the sole owner. Completion of the deal is subject to fulfillment of a number of contingent conditions. Ofer Grand Canyon Beersheva has 145,000 sq.m., 50,000 sq.m. of which is income-producing commercial space with 250 shops and an occupancy rate of 93% as of the end of 2015, yielding NIS 6.7 million in monthly revenue (an average of NIS 144 per sq.m.)

Lahav bought Neot Midbar, an old hotel in the heart of Beersheva, in 2006 for NIS 70 million. Demolishing the hotel and the process of changing the urban building plan increased his investment to nearly NIS 100 million, but Lahav was able to bring in a strong partner shortly afterwards, which took most of the investment on its shoulders. In 2007, he sold 50% of the rights in the project to the British Israel Investments Ltd. (TASE: BRTS) company (controlled by Leo Noe at the time, and currently by Melisron) at a value of NIS 125 million for the entire project.

The deal gave Lahav, who covered most of his initial investment, an option to sell his remaining holdings in the project to British Israel (and gave the latter an option to buy out Lahav's share) six years after the opening date of the shopping mall built on the site, in other words, starting in 2019. The parties decided, however, to bring the deal forward. The agreement states that the exercise price for the options will be determined by the operating performance of the mall, among other things.

The current deal is taking place at a value about NIS 100 million less than the NIS 1.08 billion value of the shopping mall in Melisron's financial statements published in March.

Lahav said today, "I'm selling my share of the Grand Canyon with mixed feelings. With hard and determined work, we accomplished the unbelievable we made the mall a significant factor that changed the commercial rules in Beer Sheva and the south."

Melisron CEO Avi Levy said, "Ofer Grand Canyon Beersheva is the result of Eli Lahav's vision, initiative, and execution. Melisron regards Beersheva as one of the growth engines of the economy and the company, and this measure is therefore an important step for us in increasing the company's business, as part of its aim to continue its expansion and development."

Published by Globes [online], Israel business news - www.globes-online.com - on May 4, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

Grand Kanyon Beersheva
Grand Kanyon Beersheva
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