Mizrahi Tefahot in talks to sell Ramat Gan HQ

Eldad Fresher Photo: Tamar Matsafi
Eldad Fresher Photo: Tamar Matsafi

The Israeli bank is in advanced talks with Sella Capital to sell its eight floors in the Aviv Tower.

Mizrahi Tefahot Bank (TASE:MZTF) is likely to move its headquarters outside of Ramat Gan. The bank, managed by CEO Eldad Fresher, is in advanced negotiations with the Sella Capital Real Estate Ltd. (TASE: SLARL) fund to sell the space in which its headquarters in the Moshe Aviv Tower in Ramat Gan is currently located. The deal is on the agenda of the bank's upcoming board meeting.

According to the outline for the emerging deal, the bank will sell the eight floors it currently owns in the building, with 11,500 square meters of space, for NIS 278 million. The price is almost double the NIS 152 million paid by the bank for the floors 15 years ago.

As part of the deal, Mizrahi Tefahot will rent the property for a substantial period at NIS 17 million a year. At the same time, it is believed that simultaneously with the completion of the deal, the bank will begin searching for a new building for its headquarters.

The reason is the accounting concessions announced three months ago by Supervisor of Bank Hedva Ber for banks that streamline their real estate. One of the conditions for obtaining the concessions is the transfer of headquarters and management units. If the bank wants to benefit from the concessions, which include full recognition of accounting profit at the time of sale and a concession in the accounting handling of the expenses of the move, it will have to leave Ramat Gan.

Mizrahi Tefahot is not the first bank expected to leave the vicinity of Tel Aviv. Israel Discount Bank (TASE: DSCT) has already purchased an area in Rishon Lezion (the Elef site), to which its headquarters is to move in the coming years. In addition, Bank Leumi (TASE: LUMI), First International Bank of Israel (TASE: FTIN), and Mizrahi-Tefahot have already removed their computer activity from the vicinity of Tel Aviv. Bank Hapoalim (TASE: POLI) has also been considering for some time the possibility of moving its headquarters away from the vicinity of Tel Aviv.

It is likely that the benefits offered by the Bank of Israel will expedite the process of removing the banks' headquarters from the vicinity of Tel Aviv. Last week, "Globes" published a letter sent by Tel Aviv Deputy Mayor Arnon Giladi to Ber, in which he warns that removal of the banks' headquarters from Tel Aviv will be a severe blow to Rothschild Boulevard, where most of the banks' headquarters are located, and will waste the enormous investment made in the area.

As for Mizrahi Tefahot, assuming that the transfer of its headquarters is completed, it will not be the first time. The process of moving the bank's headquarters, then located in Tel Aviv, began in 2000. The bank's management opposed the move to Ramat Gan at the time, preferring that its offices be built in Tel Aviv. The bank's shareholders had differences of opinion on the matter, but the board of directors eventually decided in favor of the move. It was actually the first time that the headquarters of a major bank moved outside of Tel Aviv, and Mizrahi Tefahot's management was anxious about such a measure. In retrospect, however, the move to Ramat Gan did not harm the bank.

Published by Globes [online], Israel Business News - www.globes-online.com - on June 6, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

Eldad Fresher Photo: Tamar Matsafi
Eldad Fresher Photo: Tamar Matsafi
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