The large insurance groups continue to flock to the field of eUrban renewal. One week after Menora Mivtachim signed an agreement for strategic cooperation with the settlement training company Urban Renewal (to promote four residential projects), it’s the turn of the real estate company High school buildersWhose stock reacted with a leap to a report on an expected investment by the insurance group The Phoenix In the subsidiary, high school builders urban renewal.
As part of the outline of the deal, the Phoenix will invest NIS 112 million in the company Bonni Hatichon, an urban renewal in exchange for an allotment of 19.9% of its shares. The transaction reflects a value for the subsidiary of NIS 450 million before the money, or NIS 562 million after the money. For comparison, the entire high school builder is now traded at a value of about NIS 760 million (a jump of nearly 2,000% in the last three years).
The Phoenix will receive options for 5% of the parent company’s shares
According to the non-binding memorandum of understanding signed between the parties, it was agreed that the Phoenix Group will be allocated options that can be exercised during the next three years to 5% of the parent company’s shares, the public high school builders. The exercise price of the options is set at NIS 47, a price that reflects a premium of 1.5% on the share price before the transaction is reported.
The memorandum of principles also stipulates that the Phoenix Group will provide an investment framework of NIS 125 million for direct investments in project companies in the field of urban renewal, alongside its subsidiary, Bonni Hatichon Urban Renewal.
As part of the memorandum of principles, it was also agreed that the parties will make the best efforts to issue the shares of the Urban Builders Urban Renewal to the public within a period of up to four years. Higher Builders Urban Renewal coordinates the activities of high school builders in the field of urban renewal, when this activity does not include TMA 38/2 projects (demolition and construction of individual houses) and the “ONO ONE” project in Kiryat Ono.
“This monster is constantly growing”
High school builders , Controlled by Ami Peretz, was established in 1985, and is engaged in initiating, planning and establishing residential projects nationwide in Israel. The company is currently promoting the development and marketing of about 2,000 housing units in eight residential real estate projects, in Kiryat Ono, Modi’in, Ashkelon, Carmei Gat, Beer Yaakov, Tel Aviv, Jerusalem and Netanya, as well as the initiation of urban renewal projects (evacuation-construction) and Tam “A 38/2 in Tel Aviv.
The field of urban renewal is under the subsidiary, Bonni Hatichon Urban Renewal, which currently promotes 31 projects with a total volume of more than 16,000 housing units. These projects are in advanced planning stages in cities such as Holon, Jerusalem, Haifa, Rishon Lezion, Netanya and more.
According to controlling shareholder Ami Peretz, who serves as the company’s CEO, “In recent years, Bonni Hatichon has become one of the largest and leading players in Israel in the field of urban renewal, with more than 16,000 housing units in large-scale projects in demand areas. The collaboration with a quality investment group like Phoenix is an expression of confidence in the company’s capabilities and the quality of the projects and the great potential inherent in them.
“The partnership will help us accelerate our activities and promote in the coming years a significant number of projects that will reach maturity. The deal with Phoenix reflects the great value created by high school builders, both for themselves and the tenants who are partners in the company, The financial flexibility in favor of continuing to implement the company’s growth strategy. “
In a conversation with Globes, Peretz added, “We have thousands more housing units in various conducts in preparation for engagements. This monster is constantly growing at volumes that our country was not used to. Urban renewal is done once every 70 or 80 years.
“To deal with these quantities it is in our interest to connect with a large company like Phoenix to be accessible to sources of money. As part of the agreement with Phoenix we have agreed to promote collaborations in other areas as well, such as rental housing, and other areas related to our industry.
“The deal does not include TMA 38-2 in Tel Aviv, nor the regular entrepreneurial activity, nor the project in Kiryat Ono, of urban renewal. But the collaboration has a good chance of surfing to other areas that we offer. “