Tsahi Abu Acquires Controlling Stake in G City, Ending Chaim Katzman's Four-Decade Leadership

In a major shift in Israel's real estate market, Tsahi Abu, owner and CEO of Ari Real Estate, is acquiring a 26% controlling stake in G City from Norstar, owned by Chaim Katzman, for 661 million shekels. This deal values G City at 2.55 billion shekels, a premium of over 30% above its current stock market valuation. Ari Real Estate also secured an option to purchase an additional 7% of G City shares for 192-204 million shekels, potentially raising its ownership to 33%, while Norstar's stake would decrease to 21%. The transaction includes a joint commitment to raise approximately 1 billion shekels in capital to support G City's operations, with Ari Real Estate and Norstar expected to contribute around 540 million shekels.

The deal marks the end of Katzman's 35-year control over G City, a company he founded and developed despite heavy leverage and aggressive asset sales worldwide. Katzman expressed optimism about the partnership, stating it would strengthen both G City and Norstar and drive growth initiatives. Abu, who plans to become G City's chairman, intends to focus the company's activities on the local market to reduce leverage by divesting overseas assets. He also announced plans to cut G City's annual management expenses by about 50%, including reductions affecting Katzman.

Abu's acquisition represents a significant advancement in his business career, having risen from a relatively unknown local real estate investor to a major player. Since acquiring Ari Real Estate in 2021, he has expanded its portfolio with new malls and land purchases, and holds controlling stakes in two other public companies, Gefen Residences and Abu Family REIT. Abu is also negotiating to list the defense tech company Elbitak on the stock exchange.

Norstar had previously indicated its intention to reduce its controlling stake in G City and seek a strategic buyer to strengthen the company's capital structure and simplify its corporate layers. G City has struggled with high debt exceeding 20 billion shekels and underperformed the Tel Aviv 125 index significantly over the past decade, leading to its removal from major stock indices. The capital infusion and new leadership under Abu aim to restore G City's position as a leading real estate group in Israel.