Kidan Dahari and Yaron Adiv Join Tzachi Abu in G City Real Estate Deal

The joint control model is gaining momentum as Kidan Dahari and Yaron Adiv unexpectedly join Tzachi Abu in the G City real estate transaction. Although Abu did not initially mention bringing partners into the deal signed on July 5 with Haim Katzman, Dahari and Adiv had originally competed with Abu for the same acquisition. Abu cited two main reasons for including them, neither financial: first, operational management of a portfolio spanning eight countries requires experienced real estate professionals. Dahari and Adiv, credited with revitalizing Ispro and Tenofort into profitable real estate companies, bring valuable local expertise, though their experience is mainly in Israel rather than G City's international markets in Brazil, Scandinavia, the US, and Poland. Abu believes real estate management is largely a global profession with similar processes worldwide.

Second, the move has regulatory advantages. By establishing a joint control structure, Abu avoids consolidating G City's significant liabilities into Ari Real Estate's financial reports, which would heavily burden Ari's balance sheet. This model follows a precedent set by the Zelkind brothers and Tzachi Nahmias in the Delek Group, where balanced partnerships were accepted by the Antitrust Committee as lacking a controlling shareholder.

Ari Real Estate initially agreed to acquire 26% of G City from Norstar, controlled by Katzman, for 661 million shekels, with an option for an additional 7%. Since the deal, Ari's stock value has dropped significantly, prompting Abu to seek risk diversification by bringing in Dahari and Adiv. Ari is concurrently raising 500 million shekels in capital, with a recent private placement raising 255 million shekels from institutional investors at a 25% discount to pre-deal prices. The public phase of the fundraising is expected to raise about 220 million shekels. Despite the partnership announcement boosting G City's shares by 9%, Ari's shares fell slightly by 0.7%.

G City plans a capital raise of one billion shekels within six months, requiring Dahari, Adiv, and Norstar to each contribute 270 million shekels. Ari will fund its share through bond proceeds. The newly formed special-purpose company will be equally owned by the partners, with joint decision-making and equal board representation. Under the revised structure, the partners can collectively hold 35% of G City by acquiring an additional 2% from the public, up from the original 33% potential stake.

Abu emphasized that his motivation was seeking operational support rather than capital, praising Dahari and Adiv's hands-on approach and regulatory suitability. He also noted buying more Ari shares amid the price decline, confident in the company's growth and future inclusion in leading stock indices. For Dahari and Adiv, the deal represents a strategic and emotional milestone, marking their first major international real estate venture and partnership in one of Israel's largest and most prestigious real estate firms, despite recent challenges under Katzman's management.