Vitania's Deal with Benni Landay Faces Negative Rating Review

Real estate company Vitania has announced that the credit rating agency Midroog is examining potential negative implications of its proposed deal with businessman Benni Landay. Vitania aims to acquire Landay's full stake in the first phase of a project where they currently hold equal shares. If the deal is finalized, Vitania would own 100% of the first phase, while other phases would remain jointly owned.

The transaction involves Vitania assuming Landay's bank debt of approximately NIS 247 million and waiving a NIS 50 million debt Landay owes Vitania. The company anticipates paying about NIS 18 million in acquisition taxes and incurring an accounting loss of roughly NIS 50 million. While Vitania will gain full ownership and revenue from the asset, it will also bear the entire associated debt.

Midroog's report indicates that the deal could increase Vitania's net financial debt to equity and debt ratio to around 65%, up from a previous estimate of 58%-62%. The net financial debt to FFO ratio, reflecting how long it would take to repay debts, is projected to be 45-55 years between 2026-2027, compared to the earlier forecast of 38-45 years. Midroog also noted that the transaction will raise Vitania's financing expenses, although the company is expected to benefit from increased net operating income (NOI) and property revenues after the asset is adapted for its tenant and becomes operational.

Following these concerns, Midroog has placed Vitania's rating at il2.A, along with its bond and commercial paper series, signaling a review with negative implications. However, Midroog acknowledged mitigating factors, including the quality of the tenant, Elbit Systems, and a long-term lease agreement. The acquisition is also expected to diversify Vitania's assets and boost its NOI.

Vitania initially acquired a 50% stake in the Science Park in Ness Ziona from Landay in April 2021 for approximately NIS 35 million. The project, spanning about 35 dunams, includes industrial buildings, laboratories, offices, and an underground parking lot. A subsequent agreement stipulated that Landay Digital Print would lease about 29,000 square meters for up to 25 years. This plan changed drastically when Landay's printing company faced financial difficulties and entered insolvency proceedings. In August 2025, Vitania wrote down the asset's value by NIS 80 million after the lease agreement with Landay's printing firm became irrelevant. However, a year later, Vitania secured Elbit Systems as a major tenant, leasing approximately 40,000 square meters and 617 parking spaces, which led Vitania to proceed with the acquisition without Landay.