Migdal Insurance Executes Four Major Real Estate Deals Worth NIS 2.5 Billion in One Week
Migdal Insurance has completed four significant real estate transactions within a single week, totaling approximately NIS 2.5 billion. These deals span rental housing complexes, a shopping mall in Rishon Lezion, and a real estate development company. The surge in activity raises questions about whether Migdal, led by Shlomo Eliyahu, is capitalizing on the current challenging market conditions marked by high interest rates and a slowdown in property sales.
Erez Migdaley, Migdal's Deputy CEO and head of investments, emphasized that this flurry of deals is part of a long-term strategic approach rather than opportunistic moves exploiting builders' difficulties. He highlighted the company's diversified real estate portfolio, which now includes logistics and long-term rental housing, a sector seen as defensive with strong demand and suitable for Migdal's long-term liabilities. Migdaley noted that the investment thesis does not rely on aggressive price increases but on inflation-indexed leases that provide steady returns despite market slowdowns.
The transactions include acquiring a 20% stake in Ashtrom's long-term rental housing division for NIS 451 million, representing a portfolio valued at about NIS 2.3 billion with over 3,200 housing units. Migdal also purchased half of three rental housing projects from Pershkovsky for NIS 860 million, totaling over 860 units. Additionally, Migdal acquired a 25% stake in the Golden Mall in Rishon Lezion from the Gindi family for around NIS 840 million, increasing its ownership to 100%. Lastly, Migdal bought 14% of the shares in the real estate company Guy and Doron Levy for NIS 325 million, with options for an additional 4% stake.
Migdal manages an estimated NIS 18 billion in real estate assets, making it one of Israel's largest real estate investors, with a portfolio built over 20 years and diversified in recent years. The company plans to hold rental properties for 15 to 20 years, reflecting a long-term investment horizon rather than short-term cash flow expectations. Migdaley also pointed out that the company entered the rental housing market four years ago amid rising interest rates, underscoring its commitment beyond current market fluctuations.
Recent stock market trends show a slight recovery in the commercial real estate sector, with the TA Real Estate Yield Index rising modestly despite a general market decline. Analysts attribute this to expectations of easing interest rates in the coming years, which could lead to renewed growth in real estate prices. Migdal's recent acquisitions reflect a strategic effort to diversify assets and leverage favorable market valuations amid these conditions.
