In collaboration with Radco Urban Renewal
In an unrestrained period where the government is changing, inflation is soaring, interest rates are threatening and the prices of land and raw materials are breaking record highs - in the real estate industry we are beginning to see new phenomena of joining forces and players from a wide range of activities in the market are beginning to cooperate.
The goal: dispersion and distribution of risks.
In this way, each company can increase its portfolio status and geographic distribution and establish a high-quality, bigger and better project.
This is what Tsemach Marmaran did, for example, which is a partner with Electra Magorim in Achziv and with ICR Israel Canada in Ramat Hasharon.
The same was done by the companies Shikun and Binui, Afrika Israel Residential and Kell Industries, when they joined together to establish the Carmel Lakes project in Nasher for the construction of approximately 4,000 housing units.
Similar conduct also occurs in the field of financing.
The increase in interest rates in the economy along with the tightening of credit requirements on the part of the banks are pushing many real estate companies to the limits of their ability. According to estimates, the credit crunch may result in a situation where about a third of the real estate projects will not have financial support.
While many real estate companies are keeping their heads above water and looking for financing channels, the Radco Urban Renewal Company, controlled by the Refali Group founded by Yitzhak Refali, has made a successful strategic move that guarantees peace of mind in the projects it promotes.
In October 2021, the financial division at Mizrahi Bank Tefahot announced a first investment in the field of urban renewal to the extent of approximately NIS 60 million in the urban renewal company of 'Radco Urban Renewal'.
As part of the agreement signed between the parties, the bank will receive in return for the investment about 20% of the company's shares, according to a value of NIS 300 million.
The chairman of the board and the owner, Rafi Rafali: "The contract with Bank Mizrahi Tefahot took place in October of last year, when the bank established its own internal division for real investments.
The bank looked at investing in a number of urban renewal companies and chose to invest in Radco Urban Renewal.
For us, as a boutique company, this means a great expression of confidence, that the bank enters as a shareholder and invests in equity.
This move is very important to us, and affects, in addition, the financial strength of the company, especially the visibility and image of the company in front of our colleagues in the market, and the tenants in the various projects."
How significant is this collaboration for the company?
Rafi Refali: "Thank God our company was financially stable and economically resilient. At the same time, we must remember that there is a financing problem in the market today, especially in light of the fact that many banks have reached the financing quota for real estate and the interest rates have become more expensive.
Hence there is no doubt that the move gave us strong feedback.
It's a kind of "kosher certificate" and an expression of confidence that the bank invests in the company, after it has done proper checks on it from every possible side."
Yitzhak Refali, photo: Reuven Kapuchinsky
The Radco company, founded by Yitzhak Rafali, a businessman with extensive experience in the field of commerce and real estate, began operating in the mid-1990s as an entrepreneurial company when it purchased land in the Ramat Karim neighborhood in Barnea, Ashkelon, with an area of 440 dunams. The company was joined by his son Rafi Rafali, who currently manages the group and serves As the chairman of the board of Radco Urban Renewal.
The company promoted a city building plan for the construction of about 3,700 housing units, the plan was approved at the end of '99 and from then until today about 2,900 housing units have been built in the neighborhood.
These days the company is promoting the construction of a shopping, recreation and sports center in the heart of the neighborhood as well as a residential building.
In 2013, the company entered the field of urban renewal, initially starting with projects of strengthening TMA 38/1 and TMA 38/2 buildings, demolition and construction, mainly in demand areas such as Hod Hasharon, Ra'anana, Ramat Gan and Tel Aviv and gradually developed to other areas so that today it promotes projects Removal of construction and waste disposal all over the country in cities such as: Mabe'er Sheva, Haifa, Ashkelon, Bat Yam, Ramat Gan, Netanya, Holon, Or Yehuda, Petah Tikva, Kiryat Gat and Jerusalem. In total, the company promotes urban renewal projects to the extent of approximately 12,000 housing units, in addition to thousands of square meters of commercial space.
Nana Chen is the CEO of Radco Urban Renewal.
Kiryat Rafaeli.
Photo: Radko,
Why did you decide to expand the activities of the company from TMA to evacuation and construction?
Yitzhak Rafali, the company's president: "Everyone understands that in the coming years projects of evacuation-construction complexes will only continue and gain momentum in the local construction market, today most municipalities demand that we advance an entire neighborhood / complex and renew it, and this from an overall spatial vision of creating large residential complexes that include suitable public infrastructures for the future The state and the solution to the housing crisis lies in urban renewal, which allows us to give perspective to the owners of old apartments who live in buildings without protection, an elevator, old infrastructures that in the future will receive a new, safe and protected building at no cost on their part. This is a real possibility to improve the quality of life of the tenants in these apartments."
Does the company's strategy include competing in RMI tenders?
Rafi Refali: "In light of the high land prices recently won by developers in the RMI tenders, we chose not to enter the tenders at this stage.
Today we all have to be more careful, and we as a society have acted this way all along.
This is one of the reasons we entered urban renewal projects, they are the future of the country.
In addition, the extent of the company's exposure and the risks we take are small, compared to a commitment to purchase land for hundreds of millions of shekels that we have to pay for from day one.
There is a huge shortage of apartments on the market and every year we increase the scope of the company's execution of urban renewal projects.
In the balance of normal entrepreneurship versus urban renewal projects, we notice that the share of renewal will continue to grow, which will increase the demand for financing.
The Radco company prefers combination transactions over purchasing an activity, which also reduces the company's exposure and gives us an advantage."
In what other fields is Radco active?
Until the end of the 1990s, the Radco company was active mainly abroad, and since then the owners of the company have put emphasis on increasing the activity in Israel, as mentioned. As of today, the company has several projects remaining overseas and they include a huge complex of hotels and recreation with an area of about 160 dunams in nha trang in Vietnam, one of the country's tourist centers. The project includes a hotel with about 260 rooms and about 500 holiday apartments and will be managed by the French company Acor. The company is also active in London in the field of converting office buildings into residences and carries out residential projects in District 7 in Budapest, Hungary. Yes, the company built and operates a robotic parking lot that includes 170 parking spaces in the center of Athens, Greece.
Sofitel Vietnam.
Imaging: Radco,
Why did you reduce your activities abroad and put emphasis on Israel?
Rafi Rafaeli: We made a strategic decision to reduce the scope of our activities abroad because we believe in the enormous potential of real estate in Israel with an emphasis on urban renewal, when in this field the company has gained a lot of experience during its years of activity, we believe in the Israeli economy and in the future of the State of Israel and want to be part of building Haaretz, the move stems from both Zionist reasons and business reasons.
Our very ability to control things is better in Israel than abroad, as Israelis, as locals, as people who live here and are here. It's a matter of ideology and strategy. We've always believed in real estate in Israel and construction in Israel."
In collaboration with Radco Urban Renewal
