What is happening at the Arena Mall in Herzliya, owned by Israel Financial Levers Ltd. (TASE:LVR)? An examination by "Globes" found that the mall's value fell 23.4% in two years from NIS 569.2 million in 2011 to NIS 436.1 million in 2013. The mall's value fell steadily over three years, during which it declined by 32%; it was valued at NIS 640 million in 2010.
The Arena Mall was supposed to be one of the sources of profits for Financial Levers. The company bought it from Elbit Imaging Ltd. (Nasdaq: EMITF; TASE: EMIT), then controlled by Mordechay Zisser, for NIS 546 million in February 2007. The mall is located in the heart of Herzliya Pituah close to the seashore, and has a unique vista. However, despite the vista, it seems that its remoteness from public transport has affected its value.
Since Financial Levers acquired the mall, it has invested tens of millions of shekels to improve its facade and business mix. Although the facade was renovated, the mall struggled to attract anchor retailers, such as Zara and H&M, and this is reflected in the mall's actual performance.
In the past two years, the Arena Mall's revenue fell 12.8% from NIS 60.7 million to NIS 53 million. The average rent fell sharply, to NIS 124 per square meter in 2013 from NIS 145 per square meter in 2011, and the net operating income (NOI) fell 31.5% to NIS 23.5 million in 2013 from NIS 34.3 million in 2011. Although average sales per square meter rose 3.5% to NIS 1,211, this is considered low.
The CEO of one of the retailers at the mall told "Globes", "The mall does not work well; it's weak. The mall never worked very well. It is not that there has been a sharp fall. Since the renovation, they haven’t been able to fill it. The location is poor, there are no anchors, and not enough interesting things."
The Arena Mall is one of Financial Levers' three malls. It also owns 75% of the Star Center in Ashdod, and the Arena Mall in Nahariya, which is scheduled to open in the third quarter of 2014. The company is traded at a market cap of just NIS 211 million. It posted a loss of NIS 83 million in 2013.
Published by Globes [online], Israel business news - www.globes-online.com - on April 7, 2014
© Copyright of Globes Publisher Itonut (1983) Ltd. 2014