Lodzia Rotex Investments is on the way to a second major historic deal for its land, this time in the Holon industrial zone. After "Globes" reported exclusively that the company had signed an option for the sale of building rights in land in Bnei Brak for construction of an office tower with Sufrin Group at a value of NIS 64 million, the company today reported that it was in advanced negotiations with Azrieli Group Ltd. (TASE: AZRG) for the sale of land in Holon for NIS 280 million (not including VAT).
The lot in Holon covers 53 dunam (13.25 acres), with construction rights for 193,000 sq.m. above ground and underground parking lots, with an approved urban plan for offices, commerce, and other possible uses, such as protected housing.
The urban building plan does not allow ordinary residential construction. As of now, the site contains an active building with 14,300 sq.m. in use as an income producing property by Lodzia Rotex Investments, which earns NIS 10 million annually in rent on the property.
According to the negotiations between the two companies, if the deal goes through, NIS 10 million will be added to the purchase price for the land, constituting an additional year's rent from the space leased in the existing building.
The building, built in the 1960s, is currently fully occupied. The tenants include electronics retail chain Makhsanei Hashmal, Home Center, and small businesses.
The sellers are likely to make a NIS 100 million pre-tax profit on the sale to Azrieli Group. Lodzia Rotex Investments lists the property in its books at a NIS 185 million value.
The property in question is adjacent to another, mostly occupied, Azrieli Group project with four offices buildings, a commercial floor and a joint underground parking lot. This project contains 120,000 sq.m., 100,000 sq.m. of which is already leased to companies such as Sapiens International NV (Nasdaq: SPNS; TASE: SPNS), Perion Networks Inc. (Nasdaq:PERI: TASE:PERI) and Taldor Computer Systems (1986) Ltd. (TASE: TALD).
Azrieli Group bought the land for this project from the Holon municipality in 2010 in a combination deal (Azrieli Group's share is 83%). As of now, three 14-storey buildings are occupied, and a fourth is scheduled for occupancy in the second quarter of 2016.
Azrieli Group has additional land in the same industrial zone also zoned for business and commerce located near the land owned by Lodzia Rotex Investments. This land was marketed by Israel Land Authority a year ago, and Azrieli won it with a NIS 64 million bid.
This 12-dunam (3-acre) lot contains rights for construction of an additional 50,000 sq.m. If the Azrieli-Lodzia deal goes through, the supply of rights available for building by the group in the Holon industrial zone will total 363,000 sq.m.
Azrieli Group's announcement to the Tel Aviv Stock Exchange (TASE) of its negotiations with Lodzia Rotex Investments said, "The deal in question is subject to completion of the negotiations and signing of a detailed agreement and to various approvals, including approval by the Antitrust Authority director general."
Lodzia Rotex Investments is the real estate arm of veteran textile company Lodzia Rotex. Following its separation from the parent company a few years ago, it retained two properties with major building rights in Bnei Brak and the Holon industrial zone, both of which are currently in the process of being sold.
Lodzia Rotex Investments is currently managed by CEO Zorik Rotlevy and CFO Tal Taragan.
Published by Globes [online], Israel business news - www.globes-online.com - on February 2, 2016
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