Electra and Developers in Billion Shekel Legal Battle Over Luxury Tel Aviv Tower
Electra Ltd. has reported a major business and legal dispute concerning the "Bereishit" tower, a high-profile and delayed luxury project in Tel Aviv's Bavli neighborhood. Electra B.G. Ltd., a wholly-owned subsidiary of Electra Group, and "Migdalei Bereishit Daniel Ltd.," the project's developer owned by the Kozenoff family, have filed massive mutual claims as part of an arbitration process. Electra B.G. is suing for approximately NIS 270 million, seeking payment for work performed, compensation for changes in execution plans, delays caused by the developer, and damages for alternative returns and lost profits. Electra also cited external factors that hindered the project, including the fire that broke out in the building during construction.
The developer, the Kozenoff family, has countersued for NIS 900 million to NIS 1 billion. This claim focuses on alleged delays by the construction company in meeting work schedules, which they argue impacted apartment sales and Electra's contractual obligations. Electra noted that some of the financial figures claimed by the developer are identical to those in a separate lawsuit the developer is pursuing against the insurance company Migdal for NIS 480 million. Electra stated that it is too early to assess the prospects of these mutual claims.
The "Bereishit" tower, standing 156 meters tall with 43 floors and 174 apartments, has faced significant challenges since its inception. The project, built on the Givat Amal Bet lands, involved the controversial eviction of residents. Excavation began in 2018, with initial occupancy planned for the summer of 2023. However, a series of events led to delays, including a major fire in January 2023, which the developer attributes to an electrical short circuit. These delays have resulted in lawsuits from apartment buyers, with four buyers filing a NIS 46 million suit in March 2024 for significant delivery delays, and another buyer filing a suit in February over a two-year delay from the contractual date.
Despite the setbacks and disputes, demand for apartments in the tower appears strong, with prices significantly increasing since initial estimates. The Kozenoff family carefully marketed the project, and actual prices have surpassed earlier projections.
