Elbit to lease 6 floors in Rehovot Science Park

Elbit Systems

The lease from Netanel Group is for four years with two three years extension options at NIS 5 million a year.

Netanel Group Ltd. (TASE:NTGR), which develops, designs, and constructs residential, commercial, and office projects in the central region, has signed an agreement with Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT). Elbit Systems will rent six floors with 4,900 square meters in total space in a new eight-storey office building (77% of all the office space in the building) built by Netanel in the Rehovot Science Park. The lease is for four years with two three years extension options at NIS 5 million a year, plus VAT.

Elbit Systems, which has had offices in the adjacent Ness Ziona Science Park for a long time, was given a two-month option to rent an additional floor on the site. If the option is exercised, the annual rent will rise to NIS 6 million a year. Netanel will make internal adjustments in the property in the near future, and is slated to deliver the offices for occupancy in the second quarter of 2018.

Netanel adds that the property is valued at NIS 67 million in its books, and is classed as real estate for investment. The company adds, "The lease is expected to have a positive effect on the property's value, and the company therefore intends to consult an external appraiser to assess the value of the property in its books."

Netanel's share price fell 30% over the past year, reducing the company's market cap to NIS 140 million. The company, which was founded 50 years ago, is controlled by brothers Arie (chairperson), Danni (CEO), Meir, and Avner Netanel. The company posted a NIS 12 million net loss on NIS 15 million in revenue in the first nine months of 2017, mainly due to NIS 15 million in financing expenses. Netanel Group had NIS 48 million in cash and NIS 182 million in equity as of the end of the third quarter.

Netanel Group is currently involved in 17 projects involved a total of over 1,200 housing units, and is also building commercial space and office buildings projected to generate NIS 15 million in annual rent after they are completed.

The company believes that if its projects are completed according to plan, its gross profit and revenue will reach NIS 320 million and NIS 1.3 billion, respectively, in the coming years. Netanel Group is also involved in urban renewal projects, and is building 26 private homes on Refidim Street in the Tel Baruch neighborhood of Tel Aviv. The construction of this project is scheduled for completion within two years, with a NIS 60 million gross profit and NIS 180 million in revenue expected from it.

Published by Globes [online], Israel Business News - www.globes-online.com - on January 2, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

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