Surprising development in the struggle for ownership of the Yishparo Center shopping center in the city of Modi’in. After last week the Tel Aviv District Court rejected the request of Big Shopping Centers to oblige the owners of the shopping center to sell it to Lydia, today (Sunday) the company Reit 1 surprisingly announced that it had decided to exercise the option to purchase it.
According to Reit 1, it notified Yishparo of the option to purchase 75% of the Yishparo Modiin Shopping Center, in accordance with an agreement signed between the parties in March 2021. “According to the provisions of the option agreement, the company will pay NIS 281 million for the sale. “Deducting the FFO (net cash flow income, p. 20) that will result from the property in the period between January 1, 2021 and the date of completion of the transaction, and deducting 75% of the balance of the secured loan on the property,” Reit 1 said in a statement to the stock exchange.
Reit 1 further noted that the completion of the transaction is subject to the approval of the Competition Commissioner, as required. The Yishparo company did not respond to the announcement of the exercise of the option, but Yishparo intends to examine the issue, with the aim of keeping the commercial center owned by it.
Yishparo Modiin Center is the largest entertainment and shopping center in the Modiin area and the surrounding area. The commercial center includes rental areas of approximately 25,000 square meters, and is owned by the Yishparo company.
Agreement with Big to assist in completing the transaction
In April 2020, businessmen like Yadan Dahari and Yaron Adiv signed an agreement to purchase Yishparo from a real estate and construction company, in exchange for NIS 800 million in cash, subject to adjustments. At the time of signing, Adiv and Dahari paid a sum of NIS 50 million, with the balance committed to be paid by the end of 2020.
The two were given the option to pay only NIS 100 million out of the balance by that date, thus postponing the completion date of the transaction to the end of March 2021. Two days before the end of 2020, Dahari and Adiv signed an agreement with Big, which was intended to assist them in completing the transaction.
Big Committed To provide the two with an immediate loan for one year in the amount of NIS 100 million (for the second payment for properties and a building). In return, Dahari and Adiv agreed that after completing the acquisition of Ishparo, Ishparo would sell its large shopping center in Modi’in to Big, for NIS 425 million.
At the end of March 2021, Dahari and Adiv paid the balance of the amount for the properties and building, and completed the acquisition of Yishparo with NIS 818 million. However, due to opposition from the Competition Authority to the sale of the property in Modi’in to Big, the two could not rely on the expected funds from Big, and were required to find other, more expensive sources of funding.
Among other things, on March 24, 2021, Kadan and Adiv received bank guarantees from Reit 1, amounting to NIS 213 million, as part of an option agreement signed between Reit 1 and Yishparo. In the same agreement, Yishparo gave Reit 1 an option until the end of 2021 to acquire 75% of Mishparo Center Modiin, in the event that the deal with Big does not materialize.
But Big, for its part, did not give up the property, and after a long process with the competition authority, received the approval of the competition commissioner to purchase Yishparo Modiin subject to the conditions. The same terms mainly included the sale of another property in Modi’in – jointly owned by Big and Mega Or – to a third-party buyer who would be approved by the competition commissioner.
Reit 1 announces that the option will not take effect
Following receipt of the approval, Reit 1 reported on July 4 this year that “it has learned that the competition commissioner has given its consent to the merger between the companies Yishparu and Big, and therefore the option will not take effect.
After receiving the approval, Big approached Yishparo with a request to complete the transaction. However, demands for changes in terms of employment and delays in signing a sale agreement eventually led to an explosion between Big executives and Dahari and Adiv.
Big accused Dahari and Adiv of deliberately delaying the deal, and in response informed them at the end of August this year that benefits she had agreed to give them were null and void, and that she was demanding to sign the sale agreement and realize it in accordance with the original terms of the deal. In response to Big’s notice, Dahari and Adiv informed her that the cancellation of the agreements with them constitutes a fundamental breach of the agreement between them, and that in view of the fundamental breach of the agreement, they give notice of cancellation of the agreement.
Following the announcement, Big filed her lawsuit in court with applications for interim relief. Last week, the Tel Aviv District Court rejected all the temporary remedies that Big sought, and even ruled that the chances of the main lawsuit do not seem particularly high.
Following the decision, the directors of Reit 1 came to the conclusion that the transaction between Dahari and Adiv and Big will not be implemented, and as a result, Reit 1 announced today the exercise of the option granted to it, before this option expires at the end of 2021.
According to market estimates, the value of the shopping center has risen, and it currently stands at about NIS 600 million, so Bishpro will probably not be in a hurry to respond to the announcement. The realization will try to continue to hold the property, at least as long as the court does not determine otherwise.