Dahari, Adib, Abu Acquire Stake in G City

A significant shift is underway at G City, the established Israeli income-producing real estate firm, as investors Kidan Dahari and Yaron Adib join forces with Tzachi Abu's Ari Real Estate. This strategic alliance is set to acquire a substantial 26% stake in G City from Norstar, controlled by Chaim Katzman, in a transaction valued at approximately 661 million shekels.

Kidan Dahari, who also leads Yeshpro, articulated a clear vision for the acquisition, emphasizing his non-negotiable requirement for full operational control. "Without complete oversight, I do not enter any investment," Dahari stated, underscoring his active management approach. He further expressed confidence that the current acquisition is merely the initial phase, with intentions to expand their stake and secure majority control over time. This move signals a strong conviction in G City's underlying assets and future potential, despite its recent market challenges.

The new partnership aims to revitalize G City, transforming it into a dominant real estate entity. Dahari plans to refocus the company's strategy on its core Israeli operations, divesting non-core international assets and significantly reducing its leverage. This strategic pivot is designed to streamline operations, cut expenses, and restore the company to its former prominence as a leading real estate player. Both Dahari and Abu are expected to be deeply involved in the day-to-day management, taking a hands-on approach to asset oversight.

This acquisition represents a full-circle moment for Dahari and Adib, who previously attempted to acquire Norstar, G City's parent company, four years ago. Their prior bid, alongside a competing offer from Israel Canada, ultimately faltered due to market volatility and rising interest rates that impacted the highly leveraged empire. The current deal, however, is perceived by Dahari as a more advantageous opportunity, acquiring valuable prime real estate at a more favorable valuation.

The real estate sector in Israel, particularly income-producing properties, has seen dynamic activity. While specific market data for G City's sub-sector isn't detailed here, the broader Israeli real estate market has demonstrated resilience, though it faces headwinds from interest rate hikes and global economic uncertainties. Companies like G City, with substantial portfolios, are often targets for strategic investors looking to leverage operational expertise for value creation. The transaction's success hinges on the new management's ability to execute their turnaround plan effectively.

The deal's structure, involving an initial stake purchase with options for further acquisition, aligns with typical private equity strategies aimed at gaining control. The 661 million shekel price tag for a 26% stake suggests a market capitalization for G City in the vicinity of 2.5 billion shekels. This valuation reflects the current market sentiment towards the company, which the new investors aim to improve through operational enhancements and strategic repositioning.