Shaul Elovitz is selling his 25% stake in the White City project and a nearby planned project in the Neve Tzedek neighborhood of Tel Aviv. The buyers, Elovitz partners ZMH Hammerman Ltd. (TASE:ZMH) (25%) and the Bruner Brothers (50%), will pay NIS 50 million, mainly for repaying bank loans.
ZMH Hammerman today reported that together with its partner, Bruner Brothers-controlled Neve Tzedek on the Sea, it had signed agreements to buy the rights in the existing project owned by Eurocom Group for NIS 38 million, and rights in the adjacent site for NIS 12 million more.
ZMH Hammerman and Bruner Brothers will repay Eurocom's bank NIS 40 million bank debt in respect of the two projects, with Eurocom pocketing most of the remaining NIS 8 million. The agreement between the parties states that if profits in the projects "exceed the amount stipulated in the agreement, the buyers will pay Eurocom an additional 12.5%," or can alternatively pay Eurocom NIS 2.5 million more within a year.
ZMH Hammerman will own 37.5% of the project following the deal, while Bruner Brothers' share will be 62.5%.
The agreement is subject to several conditions, including financing for the purchase of the rights and an announcement from the bank releasing Eurocom from any obligations in the project.
Sources recently reported that Elovitz, who is also the controlling shareholder in Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) and Spacecom Satellite Communications Ltd. (TASE:SCC), had reached understandings for rescheduling Eurocom Real Estate's NIS 100 million debt to a lenders group headed by Mizrahi Tefahot Bank (TASE:MZTF) and several investment institutions. An NIS 800 million loan was granted to the company two years ago by the bank, Psagot Investment House Ltd., Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS), and Menorah Mivtachim Holdings Ltd. (TASE: MORA).
These creditors demanded that Elovitz pay them NIS 20 million immediately, NIS 45 million at the end of February, and NIS 45 million more at the end of June. It was also reported that Eurocom Real Estate had repaid NIS 450 million by selling some of its properties, and the estimated NIS 350 million remainder of the loan would be paid by selling off more properties.
"The deal is suitable for both sides"
ZMH Hammerman CEO Haim Feiglin, one of the company's controlling shareholders, said today, "We had an excellent partnership with Shaul Elovitz for many years, starting in 2008, and we've been through many crises that accompanied the project over the years. The current deal is suitable for both sides, and we're parting as friends. We saw an opportunity for an acquisition, and it was appropriate for them to leave the partnership now."
ZMH Hammerman's market cap is NIS 240 million, following a 70% surge over the past year. The company focuses on real estate in Israel. As of the end of the third quarter of 2016, it had planned and carried out 14 projects around Israel with a total of 2,700 housing units and 27,500 sq.m. of commercial space.
The White City project in Neve Tzedek, located on Yitzhak Elhanan Street near Rothschild Boulevard in Tel Aviv, originally included 165 apartments (some of them were combined into one). About 10 unsold luxury apartments are left on the upper floors with prices ranging from NIS 40 million to NIS 100 million for the most expensive penthouse in the project on the 29th floor, which has 360 sq.m., plus 120 sq.m. of balconies facing the sea.
Published by Globes [online], Israel Business News - www.globes-online.com - on January 31, 2017
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