It is a challenging time right now for Danna Azrieli, the official chairperson for the past few weeks of the Azrieli Group Ltd. (TASE: AZRG), one of Israelis biggest economic empires. In addition to her deep grief for her father, David Azrieli, her boss and guide for the past 15 years, she is now being suddenly thrust into the spotlight, after years in his giant shadow. She also knows that people are wondering how she will step into the role of the domineering and extroverted developer, who made his fortune and built his power with his own two hands. In other words, does she have what it takes, and does she even want it, as an acquaintance wondered: "I'm not sure she aspires to lead the group, after her relatively quiet life." Others around her believe she was just patiently waiting: sitting off to one side, learning, taking part in management, leading measures behind the scenes, and waiting her turn, which has now come.
She comes to the job with a lot of professional knowledge and gained experience; that cannot be denied. But does she also have that spark of entrepreneurship that her father had - that hunger that is oh-so-rare in the second generation, whose childhood was pampered and protected? One of those who think she does is Adv. David Hodak, whose law firm has advised the Azrieli group for many years, and who sees in Danna Azrieli "a kind of entrepreneurial and energetic restlessness" waiting to break out when she takes the reins.
Another source close to the group also totally dismisses the idea of her passivity. "I've been experiencing her as chairperson for about a week," he says, "and it's patently obvious that she's not going to be passive. She's a very active chairperson and owner (by herself and as a representative of the other shareholders from the family). Everything is reported to her. In my opinion, she's on the way to duplicating the work method of her father, who was involved in every screw. In contrast to him, who spent half the year in Canada and managed the daily business through long and detailed conference calls, however, she's going to do it all from here, and will go to the office every day."
"The job did not come to her as a total surprise; she's ready for it," Prof. Yuli Tamir, Shenkar College of Engineering and Design and a close friend, believes. She says that she has discerned a change in Danna since her father died. "Even at the shiva (seven-day mourning period), she placed herself in a position of leadership. She spoke differently, and the way she spoke created a very fine continuity between her father's presence and her own."
"We may be pleasantly surprised"
In Danna's close circle, they are convinced that she is in the job to stay, and that she seeks "continuity and stability," as someone close to the group puts it. "She's not somebody who's going to move things and put her own people in place. It makes her very angry that reports are starting to appear trying to portray a new beehive around her and saying that things are going to change." As a result of the very low profile she maintained, however, even after 15 years in the family business, including 10 years here in Israel, even in her own milieu of real estate, especially income-generating real estate, many admit that they have never met her. As a result, it is hard to predict which way she will go.
"I don't know what fate intended when it put Danna in this position," a senior industry source says. "When you boil it down, though, she's not a real estate maven. She doesn't understand real estate, and hasn't lived it. They tried to surround her with an envelope of professionals (long-serving Azrieli group deputy chairman Menachem Einan, Azrieli group CEO Yuval Bronstein, and Azrieli Malls CEO Arnon Toren) to compensate for this lack. One of the reasons why they let Peer Nadir, the previous CEO of Azrieli Malls, go was that he was aggressive, and they were afraid she wouldn't be able to handle him. They surrounded her with pleasant people, rather than forceful ones, so that she would find it easy to get along with them."
Industry sources go even further, perhaps out of wishful thinking, saying that in two or three years, "when the enthusiasm wanes and her emotions about her father's life work aren't so strong," the family will decide to sell the business. Keep in mind that after Azrieli distributed 60% of his holdings to his four children in equal shares in 2010, the company has several owners living in Canada, and they may want "to get their hands on money, or they may be afraid that most of the family capital is invested in a Middle Eastern country in an uneasy state of security."
The people around Danna bristle, and explain that could not possibly happen: "She realizes the weight of what has been entrusted to her. This is a public company with a brand name and substantial value. She's going to stay, period. This business is forever. You also have to keep in mind that a large part of the shares (almost 20%) is held by Azrieli charity funds; almost all the shares that David personally owned went to the funds. There is a symbiosis between contributing to the community, the business, and the family. That's not something you make an exit from."
"Danna brings with her extraordinary entrepreneurial abilities, together with the ability to listen and learn developed during years in the income-producing real estate field," says Noy Fund chairman Pinchas (Pini) Cohen, the former CEO of Africa-Israel Investments Ltd. (TASE:AFIL). He met Danna a few years ago, and they became friends. "I have no doubt that she can continue moving Israel's leading company forward for many years of development and success. She's ready and well suited for the position of chairperson of the Azrieli group, with the ability and understanding of how to lead the group and continue investing in Azrieli's large-scale projects in Israel."
A senior Azrieli group official says that he can see from his acquaintance with her that she's "a smart girl who knows what she wants, with quite a good understanding of business and money. Sometimes talented boys and girls show their talent when their parents stop dominating them. We may be pleasantly surprised."
She didn't take shortcuts
Danna, 47, is the youngest child of Stephanie and David Azrieli, and was probably also the closest to her father. She wrote a biography of his experiences during the Holocaust and up until 1950. Some of the process of writing the book was a joint journey by her, her sister Naomi, and her father to places that were milestones in his life at the time.
In a personal introduction added to the book, she wrote, among other things, "Since he is known for his toughness and sharpness in business, it is surprising to encounter the idealism of his youth, when he spent a lot of time on matters of 'social justice.'" She adds that anyone familiar with the family's great philanthropy will be less surprised.
Confidants say that her place in the family hierarchy enabled her to get her way without arousing opposition from senior company executives. The other children are not involved in the business. Rafi, the oldest son, suffers from congenital problems. Sharon, the eldest daughter, is an opera singer, while the next daughter, Naomi, has a PhD in the history of economics and social sciences, and manages one of the family funds.
Danna studied law, managed her father's business in the US for a while, and immigrated to Israel 10 years ago. In order to practice law in Israel, she had to be trained here also, which she did in the Gornitzky & Co. law firm managed by Pinhas Rubin, who says he remembers "a very serious and thorough girl. She did her work with great seriousness and care, and didn't take shortcuts. It was very entertaining to see how quietly she worked. You never saw her, for example, sitting around and talking in a cafe. She made coffee for herself and took it to her room to work. Although she comes from a very rich family, you couldn't tell it from the way she behaved. If I remember correctly, we wanted her to stay with us as a lawyer, but she envisioned herself in other places. We kept in good touch, though."
At Gornitzky, she met another trainee, Adv. Zohar Lande, now working at the Barnea & Co. law firm. They became close friends, and spoke on the telephone two or three times a week. Lande is also a member of the executive board of Budo for Peace, an organization founded by Danny Hakim, Danna's husband, which uses martial arts to bring boys and girls from different backgrounds together. An Australian by birth, Hakim is described on the organization's website as a martial artist who twice won a silver medal in international competitions. The fund is supported, of course, among others, by the Azrieli fund.
The couple live in Herzliya Pituah, and are close to Jewish values, not in the sense of observing Jewish law, but in holding family Sabbaths and in educating their daughters at schools that impart these values. "She's raising very Israeli girls," Yuli Tamir says. "It's very important for her to that they not be isolated in their own elite. She herself has fitted in very well in Israeli society, and it's not easy to immigrate to Israel as an older person."
"She asked and was involved"
Danna joined the Azrieli group as a vice-president, which was then a private company, not a public one. Two years ago, she was appointed deputy chairperson, together with Menachem Einan, who had been deputy chairman for over 20 years. Someone who knew the situation described the work environment by saying that Einan's room was between David Azrieli's room and Danna's room, and Einan's room became like a kitchen where the company decisions were cooked up, and where they also sometimes ate lunch with CEO Yuval Bronstein.
Real estate sources say that things are tense between her and Einan, and some believe it will not be long before he leaves: "He was number two in the company for 20 years, and she came to the company as a girl wanting to establish herself. It's like a dog who came to a wolf pack as a puppy; the old wolves tell him they have known him since he was a puppy, and he can't tell them he's a wolf."
"Even if there was tension," a source close to Danna says, "it was healthy tension between someone who already wanted to take the helm and someone who says, 'Slow down a little.' Menachem isn't likely to leave; on the contrary, she consults him, but he'll shift into lower gear. He won't work 12 hours a day. He's not young anymore (76), and he wants other things." Sources close to the group say that Einan pushed for Danna's appointment as chairperson, which was accepted unanimously.
"She's suitable for leading the group; I wouldn't have voted for her otherwise," explains Azrieli group director Yossi Ciechanover. "Her business philosophy is quite similar to her father's. She's a very pleasant girl, and has already managed one difficult meeting, and did it well."
After 10 years in the group, it is difficult to point to one initiative or measure within the group bearing Danna's signature, and the question of how involved she is must be asked. Lande claims that she was "a key part of the decision-making process over the past 10 years, and was a full partner in the decision to make a public offering of the group's shares" in 2010. The company's announcement at the time of the offering, however, quoted only David Azrieli and Menachem Einan.
In order to highlight her involvement, Hodak tells a story that sheds light on the difference between her and her father. "She was always in the room when a significant project was afoot, asking questions and being involved. I remember she, Menachem, Yuval, and I were in the room when David was in Canada and was with us on the speaker. We were talking about buying Bank Leumi shares (the group acquired a little less than 5% of Bank Leumi in 2009). We could have bought either 5% or 10%, and we thought about 5%, because it seemed to us a big package to swallow financially, but David said, 'Why not 10%?' It was a matter of character."
"Globes": Did Danna take issue with this daring?
Hodak: "I don't know whether entrepreneurship is hereditary, it could be, but at least she has the part that she got by watching her father. It's clear that if she ignored those surrounding her (the existing management team), it would be regrettable. But I think that she's too wise to do that, and I very much trust her ability to continue leading the group."
Sources close to Danna say that the absence of a significant signature was more a result of the way the group acted and her father's character. "The Azrieli group has a very dominant management team, in which no one is individually responsible for anything," informed sources say. "As long as David Azrieli was alive, everything done in the group was attributed to him. He wasn't inclined to give other people credit. Danna played a major role in shaping the group over the past 10 years, however, and it's a fact that David chose Danna to lead the group. Many expected Einan to get the job of chairman for two or three years. That was the original plan, but David and Menachem felt that Danna was ready to take this on her shoulders. This was the stage at which she was appointed deputy chairperson, and it slowly became clear that were David to be taken from us, Danna would be the leader. David decided this question in his last months, and he wouldn't have done it had he not had confidence in her. He was not sentimental in business."
A good friend of Danna explains, "Her father gave her a free hand in some things. The reason why she didn't get a lot of authority was not because he didn't trust her, but because of his character. He had a different style of management than Michael and Ofra Strauss, for example. Danna was aware of that, and that's why she did the project in Herzliya Pituah. She wanted to work by herself, because you never know unless you do it. She insisted on doing things alone so that she would have her personal signature on something. She wanted to develop her muscles."
Focusing on core business
The Herzliya Pituah project was Galei Yam, a luxury 35- apartment project in which the most expensive apartment sold was for NIS 19.5 million, as of now. Danna is putting up the project through a private company, Kanden Homes, unrelated to the Azrieli group. Many in the industry were taken aback that someone who knew she would "inherit" management of Israel's biggest income-producing real estate empire would fool around with "a few apartments," especially since her father said more than once that he didn't believe in residential real estate. This, however, was where she could express herself. "She was next to her father for all of her life, and here she was on her own," a confidant says. She did it in consultation with friends. Pini Cohen advised her along the way, such as in buying the land, getting financing, and selecting contractors.
Lea Rubanenko, the architect for the project, was completely charmed, and describes Danna as "an exciting, modest, smart, and wise person. She's not overbearing. She's a deep thinker. She dreamed of a project that would be decorative. When we met, she told me that she had a dream, but it wasn't clear. Give me ideas, and when I see it, I'll know that's it. I liked that; it's a relationship I don't have with other developers. We sat in a cafe with the sketches I prepared, I flipped through them for her, and she suddenly pointed to one page and said, 'That's what I want.' We presented it to her father, and he really liked it."
Another place she could express her capabilities away from her father's presence was the Shenkar College, where she served as chairperson of the international board of governors for six years. Chairperson of the Israeli Committee Orit Efrati, a friend of many years standing, says that at Shenkar, "It was important for her to guide and raise a new generation of designers. She was very introverted, but she quietly made it possible to do wonderful things; that's her way."
Danna brought Yuli Tamir to Shenkar, after bringing about the ousting of the former president Amotz Weinberg, following a severely critical report by the State Comptroller. "She served two difficult terms as chairperson of Shenkar." Tamir says, "She advised Shenkar during the crisis, and afterwards in a period of growth and emergence from crisis."
Will Danna be able to spread the wings that were restrained for such a long time in the shadow of her father? Will she perhaps bring to the group a more relaxed atmosphere than that of the one-man rule of her father, some of whose decisions, at least in recent years, industry sources say, were motivated by the ego satisfaction of remaining the largest shopping malls group, rather than cold business considerations, such as in the construction of shopping centers in Kiryat Ata and Acre and the construction of two new centers in Ramle and Rishon Lezion, whose chances of success the group's competitors do not rate as terribly great.
There are also some problems in Beersheva, but all in all, the group is in excellent position. It is deeply engaged in large scale development of offices, both in the 125,000-sq.m. Sharona compound and in Holon, and recently bought the "Yediot Ahronot" building and the Clalit Health Services building. The group is so strong, however, that even some lack of success or leasing offices at a lower price will not undermine its soundness.
It can be assumed that the trend begun by Azrieli senior of selling off all business not part of the group's core income-producing real estate business will continue. Sources close to Danna say that while it is premature to say what her plans will be, growth will focus on the group's core business and the development of that business.
"Time will tell whether she's able to lead"
Meanwhile, and perhaps also because intensified competition is giving renters many options and reducing their dependence on Azrieli, a new spirit has already been permeating the group in recent years. While the group was known in the past for its extremely tough, uncompromising, and inconsiderate attitude towards its tenants, things have now changed.
Avi Malka, former owner of the Jump and Matim Li chains and currently an advisor to Global Retail, the company that acquired the two chains from him, says, "Something amazing has happened. Azrieli today is a much more considerate company and a very understanding company, although they're nobody's dupes. The big change is that now they are willing to talk to people. During the father's period, it was absolute rule. He made the decisions, and the answer was always no. Today, it’s a completely different way of doing things. For example, we have a standing payment order that is deducted on a certain day of the month, and in recent days we got call from them saying that if we needed anything (due to the security situation, which caused a drop in proceeds), they would postpone the payment. I believe that the change in policy is a result of things introduced by Danna. She really defined her own new strategy, in which the tenants are her partners."
Some say that managing a group like Azrieli, with its strength and excellent market position, is no great problem, and Danna can lean back and let the team do the work. A source close to the group says, however, that all the real estate groups, including Azrieli, are in a much more challenging period than when David Azrieli was consolidating his empire. There are more players, Melisron Ltd. (TASE: MLSR) is giving the Azrieli group a run for its money, and the regulator is stepping in and preventing the major companies from getting any bigger. "Danna is in for a tough time," he says. "This isn't a ship cruising in calm waters. The sea is stormy, and she's going to be a captain during a tempest."
A source close to Danna says, "Time will tell whether she's able to lead like her father. As of now, it's just predictions. Her father was a very smart and dominant man, and Danna was by his side in thousands of meetings, discussions, and trips. There's no doubt that she's at the heart of all the decisions and processes. The question is whether she'll be able to lead like him, and any answer given now is only a prediction. We'll know in another year or two."
Published by Globes [online], Israel business news - www.globes-online.com - on August 12, 2014
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