Ashtrom in Talks With Clal Insurance for 20% Stake in Rental Housing Unit
Translated & summarized from Calcalist by baba
Ashtrom is in talks with Clal Insurance to sell a 20% stake in its rental housing division for an estimated 2.26 billion shekels. This follows a similar deal with Migdal Insurance, which is facing a 30-day completion delay. These moves reflect a strategic shift towards rental development, driven by market conditions. Ashtrom's rental arm manages 3,200 apartments, with investments from Migdal and potentially Clal aimed at bolstering its equity and easing its debt.
The story in 5 lines · by baba
- Ashtrom is negotiating to sell a 20% stake in its rental housing unit to Clal Insurance.
- The deal values Ashtrom's rental operations at 2.26 billion shekels.
- Migdal Insurance is also acquiring a 20% stake, though its deal completion is delayed.
- The transactions highlight a growing trend towards rental development in Israel.
- Ashtrom's rental division manages 3,200 apartments across various stages of development.
Ashtrom is in negotiations with Clal Insurance to acquire a 20% stake in its rental housing operations, mirroring a similar deal with Migdal. The discussions are based on a valuation of 2.26 billion shekels for the rental activity. These transactions highlight how the housing market downturn has boosted the appeal of rental development over for-sale projects, as Ashtrom seeks to unlock value by selling significant portions of its rental business.
In May, Migdal agreed to purchase 20% of Ashtrom Residential for Rent for 451 million shekels, also at a 2.26 billion shekel pre-money valuation. While the deal was signed, its completion, initially set for yesterday, has been extended by 30 days. Migdal is slated to pay half the amount upon closing and the remainder through installments by the end of 2032. For Migdal, acquiring stakes in rental housing companies or projects aligns with its investment strategy, which includes a 860 million shekel investment in 50% of three large rental projects by Freshkovsky and a 40 million shekel investment in the Rent It REIT.
Migdal's deal with Ashtrom also includes an option to receive 0.7% of Ashtrom's parent company shares at a 35% premium. Migdal Insurance, which holds Israel's largest real estate portfolio among institutional investors, has been expanding its rental housing activities, believing that the industry slowdown and rising interest rates present long-term investment opportunities in quality assets. Clal's entry into rental housing is less common, though it did acquire 49% of Acro's rental housing operations in 2024.
Ashtrom Residential for Rent manages a pipeline of 3,200 apartments in various stages, including projects in Haifa, Or Yehuda, Jerusalem, and Tel Aviv. Approximately 1,000 units are under construction, 1,100 are income-generating, and 1,100 are in planning. Migdal and Clal, if the deal is finalized, along with Ashtrom, will provide the necessary equity for ongoing projects. Ashtrom Residential for Rent reported 115 million shekels in revenue and 230 million shekels in segmental profit for 2025, primarily due to fair value increases in its assets. Its net operating income (NOI) was 91 million shekels in 2025, up from 74 million in 2024. The company's financial debt stands at 2.7 billion shekels against a balance sheet of 5 billion shekels, and the investments from Migdal and Clal are expected to help alleviate this debt burden.
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