_
Who is the owner of Rehovot Shopping Mall?
Last month, REIT Israel finalized the purchase of the Adumim Mall in Ma'aleh Adumim from its owners, M. Aviv Building Enterprises, for NIS 80 million. Later last month, REIT began the process of buying 25% of Givatayim Mall for NIS 301 million, in partnership with Delek Real Estate (each company will pay NIS 150.3 million).
Neither property is a commercial gold mine: Adumim Mall is not considered exceptional, while Givatayim Mall, currently celebrating one year since opening, is considered a total flop.
Acquisitions of this type are not unusual on the recent commercial real estate landscape. These two malls join a growing list of malls and medium-sized shopping centers being bought up by a small group of investors that includes REIT Israel, Gazit Globe and Alony Hetz.
Judging from the behavior of these three groups, Israel is becoming a market for bargains, and in the past year these companies have been on a shopping mall shopping spree. Here is a partial list: REIT Israel, controlled by British millionaire Leo Noe, has bought half of the Rehovot mall, half of Haifa's Grand Canyon mall, and now the Adumim and Givatayim malls. REIT Israel is also negotiating to purchase the Pisga Mall in Jerusalem's Pisgat Zeev suburb.
Gazit Globe, whose main operations are in the united states, has acquired half of the Emek Power Center in Afula, the Mikado commercial center in Tel Baruch, the Rothschild Mall in Rishon Letzion and commercial land in the Tzamarot compound in Tel Aviv, in addition to the high-end YOO towers residential project in Tel Aviv. Due to a technical mistake in the filing of an offer, Gazit's win in an Israel Lands Administration tender for commercial land in Yokneam was canceled. Alony Hetz, whose operations have been mainly in Britain, has bought Amot Investments and the Orot Mall in Or Akiva.
What has motivated these companies' sudden interest in Israeli commercial centers?
Cheap money
"Cheap money," say Israeli realtors. "Investors who bring money to Israel, at low interest rates, can buy income-producing properties here at reasonable interest rates or better."
This is what prompted REIT Israel and Hetz, which brought capital from England, and Gazit, which operates mainly in the U.S., to begin favoring Israel as a center of operations.
About six months ago Hetz told TheMarker that properties in Israel with a 9-percent yield can be purchased with long-term loans carrying 4.5-5 percent interest, while in Britain and the U.S., yields are much lower and the profit margin between them and the financing costs is just 1 percent. Amir Biram, CEO of REIT Israel, said something similar in a recent interview.
"There's money here - lots of it," says Ofer Shechter, CEO of the Promall management company. "Investors who come here from abroad have plenty of opportunities. A good commercial property in New York might provide a yield of 7-8 percent. In Israel you can get as much as 10 percent or more."
If these opportunities are so attractive, why are local entrepreneurs not jumping at the bargains?
A question of reward
"What makes the difference," says Haim Ariel, a businessman who specializes in income-producing real estate, "is mainly the net return - the return after the deduction of the financing costs - and in this respect, Israel's situation may not be so good. Still, it's not so bad, and I think there are more than a few real estate business opportunities here.
"I don't accept the claim," continues Ariel, referring to private Israeli entrepreneurs, "that Israelis invest sparingly in this market due to the high cost of money here. Today any Israeli who wants can get financing from an Austrian or American bank. The point is that Israeli investors are looking for 'hit and run' opportunities, with unrealistic yields. An Israeli will be disappointed if you speak to him about 10 percent annual yields, while companies that operate mainly abroad are happy to obtain annual returns of 7-8 percent."
Big is the most prominent Israeli real estate company operating intensively in the commercial real estate sector lately. "We were here during the worst days of the intifada, we invested in our centers and continued to believe in the future here, as we do today," says CEO Eitan Bar Zev. "Lately we really have seen a greater flow of capital and demand for commercial centers than this country has witnessed for many years. Still, there are some very big obstacles in this industry, and the playing field is designed only for big players."...
Source: Arik Mirovsky. The secret charm of flopping malls. Haaretz (3 April 2006) [FullText]
Neither property is a commercial gold mine: Adumim Mall is not considered exceptional, while Givatayim Mall, currently celebrating one year since opening, is considered a total flop.
Acquisitions of this type are not unusual on the recent commercial real estate landscape. These two malls join a growing list of malls and medium-sized shopping centers being bought up by a small group of investors that includes REIT Israel, Gazit Globe and Alony Hetz.
Judging from the behavior of these three groups, Israel is becoming a market for bargains, and in the past year these companies have been on a shopping mall shopping spree. Here is a partial list: REIT Israel, controlled by British millionaire Leo Noe, has bought half of the Rehovot mall, half of Haifa's Grand Canyon mall, and now the Adumim and Givatayim malls. REIT Israel is also negotiating to purchase the Pisga Mall in Jerusalem's Pisgat Zeev suburb.
Gazit Globe, whose main operations are in the united states, has acquired half of the Emek Power Center in Afula, the Mikado commercial center in Tel Baruch, the Rothschild Mall in Rishon Letzion and commercial land in the Tzamarot compound in Tel Aviv, in addition to the high-end YOO towers residential project in Tel Aviv. Due to a technical mistake in the filing of an offer, Gazit's win in an Israel Lands Administration tender for commercial land in Yokneam was canceled. Alony Hetz, whose operations have been mainly in Britain, has bought Amot Investments and the Orot Mall in Or Akiva.
What has motivated these companies' sudden interest in Israeli commercial centers?
Cheap money
"Cheap money," say Israeli realtors. "Investors who bring money to Israel, at low interest rates, can buy income-producing properties here at reasonable interest rates or better."
This is what prompted REIT Israel and Hetz, which brought capital from England, and Gazit, which operates mainly in the U.S., to begin favoring Israel as a center of operations.
About six months ago Hetz told TheMarker that properties in Israel with a 9-percent yield can be purchased with long-term loans carrying 4.5-5 percent interest, while in Britain and the U.S., yields are much lower and the profit margin between them and the financing costs is just 1 percent. Amir Biram, CEO of REIT Israel, said something similar in a recent interview.
"There's money here - lots of it," says Ofer Shechter, CEO of the Promall management company. "Investors who come here from abroad have plenty of opportunities. A good commercial property in New York might provide a yield of 7-8 percent. In Israel you can get as much as 10 percent or more."
If these opportunities are so attractive, why are local entrepreneurs not jumping at the bargains?
A question of reward
"What makes the difference," says Haim Ariel, a businessman who specializes in income-producing real estate, "is mainly the net return - the return after the deduction of the financing costs - and in this respect, Israel's situation may not be so good. Still, it's not so bad, and I think there are more than a few real estate business opportunities here.
"I don't accept the claim," continues Ariel, referring to private Israeli entrepreneurs, "that Israelis invest sparingly in this market due to the high cost of money here. Today any Israeli who wants can get financing from an Austrian or American bank. The point is that Israeli investors are looking for 'hit and run' opportunities, with unrealistic yields. An Israeli will be disappointed if you speak to him about 10 percent annual yields, while companies that operate mainly abroad are happy to obtain annual returns of 7-8 percent."
Big is the most prominent Israeli real estate company operating intensively in the commercial real estate sector lately. "We were here during the worst days of the intifada, we invested in our centers and continued to believe in the future here, as we do today," says CEO Eitan Bar Zev. "Lately we really have seen a greater flow of capital and demand for commercial centers than this country has witnessed for many years. Still, there are some very big obstacles in this industry, and the playing field is designed only for big players."...
Source: Arik Mirovsky. The secret charm of flopping malls. Haaretz (3 April 2006) [FullText]
0 Comments:
Post a Comment
<< Home