Jacob Etrakchi.
Looking forward to a strong year (photo: official website, photo: Robbie Castro)
Aora Investments, which deals with the initiation of residential construction in Israel and the planning and construction of urban renewal complexes, reports a strategic investment agreement with the insurance company 'The Phoenix'.
As part of the agreement, 'The Phoenix' will make a capital commitment to invest in projects in the amount of up to NIS 350 million which are intended to provide the equity capital in 4 Aura projects at a rate of 65% (in each of the projects).
In exchange for this commitment, the Phoenix is entitled to 30% of the profits of each of the projects after returning the equity capital of the Phoenix and Aura invested in the projects, with the remaining 70% of the profits remaining in favor of Aura.
According to Aora, in two projects for which the company has already provided equity, in the coming month approximately NIS 130 million will be poured into the company's coffers for the purpose of providing Phoenix's share of the equity in accordance with the agreement.
Also, in two additional projects that are expected to mature in the middle of 2024, Phoenix is expected to invest, according to the company's estimates, an additional NIS 220 million.
In addition, Phoenix will receive a right of first refusal to provide a capital commitment framework for an additional fifth project, as long as certain conditions are met in connection with the completion of this project (which is expected by the end of 2024), and this under similar conditions.
For the fifth project, the Phoenix is expected to provide a framework of approximately 250 million additional shekels, so that upon full implementation of the agreement, the Phoenix will provide Aura with a total of 600 million shekels of equity in the projects.
"An expression of confidence and a solution to a rising interest rate environment"
The company 'Aora Renew Israel' is one of the largest companies in the real estate industry in Israel, and the leading company in the field of urban renewal in Israel. Aora is a public company traded on the stock exchange in the Tel Aviv Stock Exchange 90. The company owns about 90 urban renewal
projects throughout the country with about 40,000 housing units.
The company is ranked first in the field of urban renewal on the Madeleine website, City Square ranking of the Haaretz group, and first place in the field of evacuation and construction by the Dan & Bradstreet index.
The agreement expresses the insurance company's confidence in the company, the business activity and the management.
At the same time, after the ninth increase in the interest rate until it reached a rate of 4.5%, it seems that the real estate companies are working creatively to raise capital, among other things by introducing new partnerships to their real estate projects.
The company's announcement stated that, "The agreement guarantees it economic resilience, financial strength and flexibility, speeding up construction and marketing activities while reducing leverage, reducing financing costs and reducing the need to raise debt for operations and provides notable advantages to the company in light of the interest rate environment and macro conditions. Aora Company anticipates that the agreement and its implementation will help it In promoting and expanding its activity while improving the financial relations and strengthening the financial strength of the company, as well as reducing the scope of debt collection required for the needs of its activity."
Yaakov Etrakchi, CEO and owner of Aura responded that, "In the past two years, we have significantly increased the scope of our activities and presented record results in 2022 - now, with Phoenix's investment in our projects, we will accelerate our business plans, without the need to provide equity or raise debt in the environment the current interest rate.
Against the background of this move and alongside the advanced construction and marketing of a large number of projects, we look forward to another strong year."
Aora was represented by attorney Assaf Englerd and Gilad Goni from the office of Englerd & Co. and the Phoenix was represented by attorney Limor Hudir from the Herzog Fox Naman office.
The new partners
As we have already reported, the real estate companies in Israel are in a significant upheaval. The interest rate in the economy is rising, the prices are on a stabilization trend with a fear or expectation of a decrease, and the real estate companies, who have leveraged themselves in recent years with unprecedented amounts of financing, are groaning under the situation and starting to react.
For example, the owners of the Maccabi Haifa football club, businessman Yaakov Shahar and the heirs of his former business partner Israel Kaz, announced last week that they will be among the controlling owners of the Beit Vagg urban renewal company.
Earlier it was reported that the real estate company ICR, a subsidiary of Israel Canada, is realizing the residential project in Ramat Hasharon for about half a billion shekels; a similar step is also taken by the real estate company, Hanan Mor, which offers for sale three properties in Harish with a total value of about half a billion shekels.
Real estate
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the phoenix
Aura renews Israel
aura
Jacob Etrakchi
