The Phoenix acquires up to 12.3% of the Hajaj Brothers Group for NIS 210 million, having already acquired shares in Macro Real Estate and the White City buildings. Direct investments in real estate companies were also made by Harel Investments and Clal Insurance
Israeli insurance companies are increasing their direct exposure to local real estate companies, amid the boom in the real estate market and estimates of continued price increases.
This is after insurance companies have focused in recent years mainly on investments in real estate clusters in the US and some European countries.
The Phoenix Group will purchase through two entities it owns up to 12.3% of the Hajjaj Construction Group with an investment of up to NIS 210 million, through a private allotment. 8.6% of the shares will be purchased directly at a market price of NIS 27 per share.
In addition, the company will receive an option to purchase an additional 3.7% for NIS 80 million, reflecting a value of 30% above the share price. Control of the company (62%) is held by the brothers Yitzhak and Ido Hajaj. Completion of the transaction will result in a decrease of 48% in their holdings (ie a loss of material control). For that matter they will have to get the creditors’ approval. An interested party in the Hajaj Group is also the Nokd hedge fund.
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This is not the first transaction that insurance companies in general and Phoenix make directly with real estate companies. Three years ago, Phoenix acquired 25% of Acro Real Estate for NIS 260 million. At the end of October, it completed the acquisition of 25% of the group of White City buildings owned by Itzik Ben Shoham, for a cash consideration of NIS 420 million.
Phoenix’s investment moves are led by the chairman of the investment committee on the board of directors, Eldad Fresher, who previously served as CEO of Mizrahi Tefahot Bank and is deeply familiar with the Israeli real estate market.
The direct investments are made in light of the estimates that the investment prices in direct projects of income-producing real estate are quite high.
As mentioned the Phoenix is not alone. In recent weeks, Harel Investments acquired 20% of the Tree Almond real estate project for NIS 60 million. It also entered into a partnership with the Hanan Moore Real Estate Group in urban renewal projects. In May 2021, Clal Insurance purchased 10% of the Tzemach Hamerman construction group for NIS 50 million.
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