Africa-Israel Investments Ltd. (TASE:AFIL; Pink Sheets:AFIVY) signed a contract with Canit Hashalom Investments Ltd., owned by David Azrieli, to rent 13 floors in the Azrieli Square Tower for $80 million. Africa-Israel will operate a business hotel on the premises.
Africa-Israel will reportedly rent the floors through its Jordan Hotels Ltd. subsidiary in a twelve-year lease, with two options to extend, one for six years and the other for seven years. The contract stipulates annual rent of $2.5 million, with percentage depending on turnover, and an additional $13 million in adjustment costs.
The parties disagreed over the hotel brand. Azrieli wasn’t interested in Holiday Inn, which Africa-Israel operates in Israel, and insisted that Africa-Israel find a more prestigious hotel chain. Marriott International (NSYE: MAR) has been mentioned. Another possibility is Crowne Plaza Hotels and Resorts, for which Africa-Israel owns the Israeli franchise.
Canit Hashalom Investments general director Menachem Einan told “Globes”, “The hotel that will be built will effectively cover the many expenses associated with its operation. The hotel’s guests will be able to enjoy Holmes Place’s spa, pool, and gym on the first floors, as well as the restaurants in the Azrieli Mall.”
Canit Hashalom recently hired El-Har Engineering and Construction Ltd., owned by general manager Benny Harel and Nochi Danker, to build the skeleton for the Square Tower. El-Har beat its competitors with a NIS 40 million bid. El-Har will build 18 floors of office space, topped by the 270-room hotel.
The Square Tower currently has ten floors, including a four-floor underground parking garage. El-Har still has to build 40,000 sq.m., at $212 per sq.m. The company expects to complete construction within a year.
Published by Globes [online], Israel business news - www.globes.co.il - on March 27, 2006
© Copyright of Globes Publisher Itonut (1983) Ltd. 2006