Melisron buys control of Kenyon Hazahav mall

Melisron (TASE: MLSR) reported at the end of last week that it had signed an agreement to buy 51% of the rights in Kenyon Hzahav (Golden Mall) in Rishon LeZion for NIS 818 million from Migdal (TASE: MGDL) and other owners, with the possibility of expanding the acquisition to up to 70% in the future.

At present, the mall is owned by Migdal (75%) and Gindi (25%). After the current deal is completed, Kenyon Hazahav will be owned by Melisron and Migdal, with Melisron managing it. Completion is subject to approval by the competition commissioner.

Two months ago, Aspen Group offered to buy Gindi’s share in the mall for NIS 665 million (TASE: ASGR), and on September 3 the offer was extended for 30 days, so that it is still valid, but following the agreement between Melisron and Migdal it is unlikely to result in a deal, particularly since Migdal could buy Gindi’s holding and then Melisron’s holding will also grow from 51% to 70%.

In Melisron’s notification to the Tel Aviv Stock Exchange it was stated that Migdal will have a five-year option to buy a further 9% of the land rights from Migdal, at a price to be set by an appraiser’s valuation at the time that the option is exercised. “Alternatively, if at the time of the completion of the deal the acquisition of rights is from Migdal only, the company and Migdal will act to purchase additional rights in the land such that after the purchase the company’s holding in the land will be 70%,” the notification states.

Kenyon Hazahav is one of the oldest and best-known shopping malls in Israel, and one of the largest. It covers 27 dunams with 34,700 square meters of built space above ground and 1,850 parking places around it. The mall is currently in the process of adding a further 7,000 square meters of commercial space. It value is estimated at NIS 1.6 billion. After the addition of an underground floor, its value is expected to rise to NIS 2 billion.

20,000 to 25,000 people visit the mall daily, and during holiday periods the number can rise to 40,000. It contains about 400 stores of both local and international chains.

Melisron has not bought a mall or land for constructing a mall on this scale for over a decade. In recent years the company has focuses on its strategic plan to form an additional arm for the group: residential real estate, through the acquisition of Aviv Development and additional land, in the Sde Dov site in Tel Aviv and in Netanya, among other places, and also through urban renewal projects, alongside the company’s offices arm.