Bezeq this morning (Sunday) confirmed Calcalist’s exposure and reported that it entered into an agreement last week for the sale of the land on Harkavat Street in Tel Aviv on which Avraham Hostel is built for the Azrieli Group, in exchange for NIS 180 million plus VAT.
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Bezeq stated that the property was jointly owned by it and the Israel Postal Company. The sale transaction includes the purchase of part of the Israel Postal Company by Bezeq and the sale of this part together with the company’s share to Azrieli. The entire consideration, with the exception of VAT, was deposited in trust by Azrieli at the time of signing the agreement, to secure various obligations of Bezeq, when theloyal Will transfer the trust funds to Bezeq in accordance with the provisions of the agreement. Azrieli financed the deal from its own sources.
Bezeq is expected to record in its financial statements for the first quarter of 2021 Capital gain Of NIS 125 million before tax in respect of the sale of the property, after deducting the cost of purchasing the share of the Israel Postal Company, purchase tax of NIS 10.8 million, expenses and reduced cost value to the company.
The property covers a total of 2.4 dunams on which a 5-story building is built on a total built area of about 9,500 square meters. The property used to be Bezeq’s old center until it ceased operations. For a hotel which under the current lease terms, under certain conditions can be completed in about nine years.Some of the building is currently in use and will continue to be leased to additional companies for periods ending before the said date.
Azrieli estimates that the average annual operating income from the property at full occupancy will be about NIS 7 million. Azrieli intends to design and build a residential building on the property that will include apartments for rent, which will be built after the tenants’ lease of the property is completed. In Azrieli’s estimation, the transaction is not expected to materially affect the company’s assets and profits.