Bank Leumi sells Tel Aviv head office for NIS 623m

Bank Leumi (TASE:LUMI) announced today that it is selling Its Tel Aviv head office buildings including Beit Mani, for NIS 623 million to Shmuel Slavin’s Sella Capital Real Estate (TASE: SLARL). After the sale Bank Leumi will report a pre-tax profit of NIS 524 million.

Bank Leumi is selling two adjoining buildings at 30-36 Yehuda Halevi Street; a 13-floor office tower built in the early 2000s as well as historic Beit Mani, which was built in 1910 and is subject to a preservation order and was one of the first buildings to be put up in Tel Aviv’s initial Ahuzat Bayit neighborhood.

The deal comprises 13,000 square meters of office space and an underground car park for more than 200 cars in one of Tel Aviv’s most expensive and sought after areas in the city center, which houses many financial and tech companies.

Sella Capital said that the property will be transferred to the company when it is vacant, and the building will be leased to tech companies at full occupancy.

Sella Capital added that the rent will be about NIS 175-185 per square meter, fully finished, so that net income should be about NIS 32 million annually, with return on equity of about 10%.

Selling Beit Mani and the adjoining office building is part of a broad strategic move that Leumi has been implementing in recent years in which all management offices will be transferred to a new headquarters in Lod. This move should be completed by the end of 2023 and the bank will record a profit on the entire sale. Leumi finance division head Omer Ziv is leading the transaction.

Sela Capital Real Estate was founded in 2008 as a REIT (real estate investment trust). The company owns 41 income producing properties in Israel with overall space of 480,000 square meters, which are leased to 530 tenants. At the end of 2021 these income producing properties were worth about NIS 5 billion, with occupancy of 98%.

Leumi has sold several major properties in recent years including its 6,800 square meter Tel Aviv main branch to Akro Real Estate for NIS 277 million in 2017. Eighteen months ago Akro sold the building to Israel Canada for NIS 440 million.

Last year, Leumi sold a 1,640 square meter building at 31 Lillienblum Street in Tel Aviv for NIS 66 million plus VAT to Sela Construction. The building, put up in the 1950s, has major potential for enhancement and rezoning including demolition and reconstruction for mixed-purpose use.

Published by Globes, Israel business news – en.globes.co.il – on April 26, 2022.

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