Ramat Rachel set for property windfall as it sells two Ashkelon buildings for NIS 105 million

Kibbutz Ramat Rachel is moving toward completing a real estate windfall in Ashkelon. Pentagon House, controlled by Shlomo Dehuki, reported signing a nonbinding memorandum of understanding with the kibbutz to buy two eight-story buildings containing 170 apartments. The deal is worth NIS 105 million.

That is NIS 45 million more than the price Ramat Rachel paid for the buildings in January 2016 from Lev HaAgam, owned by Oded Dasao, which was in liquidation proceedings at the time of the sale. The apartments are currently rented to Amidar, the national housing company, under a lease agreement valid through 2028. Amidar has the right to extend the agreement for up to five additional years.

When the kibbutz bought the buildings, it examined the possibility of turning them into a nursing home complex or student housing. The goal was to increase the return on the asset, which stood at 5% from the lease to Amidar, to 8%.

On Pentagon House’s side, the deal was led by Lior Savir, the deputy CEO and head of business development at the company, who was responsible for identifying the opportunity, conducting the negotiations and shaping the transaction structure. Pentagon House was represented by attorney Avraham Abramzon of S. Friedman, Abramzon & Co. Ramat Rachel was represented by attorney Eli Balkind.

Pentagon House raised a NIS 150 million bond series in August. Alongside advancing the deal, the company is working to expand its financing sources and is expected to launch a Series B bond offering of about NIS 200 million, with Giza and Orion serving as underwriters.