Montreal, Canada – David Azrieli has turned 88 years of age and just hit his stride with the deal of a lifetime. Last month, he pulled off the biggest IPO in Israeli history by selling 25.1% of his conglomerate, the Azrieli Group, for $700-million. This gives the company a value of $2.8-billion. The listing, also in London, gained immediate entry to the prestigious Tel Aviv 25 index. Azrieli’s life has been a monumental struggle against tragedy. As a young man he escaped Europe, but lost his family in the Holocaust. He fought for Israeli independence and immigrated virtually penniless to Montreal. He has single-handedly built real estate business empires in Canada, the United States and, beginning 27 years ago, in Israel. He pioneered the shopping centre in Israel, even coining the word “canyon” in Hebrew for closed mall, which means “park and shop.” He spoke with Financial Post editor-at-large Diane Francis in his Montreal offices about his latest coup.
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Q Your IPO was made during a difficult time for markets. Why this timing?
A I have always made the biggest leaps forward in bad times. This is because I am not leveraged, don’t like to borrow money and during recessions I can buy and I can build. Even in these bad times, I was confident that because of the quality of my properties and the low level of leverage, the public would want to invest in it and they did. I was told this was the worst possible time to do an IPO, when banks in Germany and Spain, with the crisis in Europe and the United States, were going down. But for me, it wasn’t. I’m also an eternal optimist.
Q Why did you sell and will you eventually sell the rest?
A I retain 74.1% of the equity and won’t sell more stock. Part of the reason was succession planning, my age, a desire for the company to continue, to keep building in Israel and also to share with employees, through phantom stock options. These are not just for key employees, but for anyone who has been with the company for more than 15 years, from secretaries to janitors.
Q You pioneered shopping centres in Israel, and your portfolio includes the best of them. Why did you go there?
A I wanted to do something for Israel because I am a Zionist and I love the country. I went to a conference in 1983 and was introduced to an available location, near a dump, and I decided to build the country’s first closed mall there. If everything had gone wrong, I could have lost $20-million there, which I could afford to lose at the time, but it turned out to be a great property. That centre made $24-million net profit last year.
Q In 27 years you built the 8th biggest company on Israel’s exchange in a difficult place to do business. How?
A I brought Canadian know-how and experience and had the good fortune of having the energy and right people to impose it upon them.”
Q What does Azrieli Group own?
A It is diversified. It is mostly real estate, shopping centres, which give huge cash flows, and Tel Aviv’s Azrieli Center [a complex with office, commercial and hotel space of more than two-million square feet, or bigger than Place Ville Marie in Montreal]. We have 4.8% of Israel’s largest bank, Bank Leumi, which is controlled by the government; 20% of Leumi credit card (VISA and Mastercard); the largest paint manufacturing company, with a building materials plant; a gasoline distribution company with 220 stations; a propane distributor and a global water treatment company, with 75% ownership of the largest desalination plant in Israel [called Palmachim].
It is a really conservative portfolio, as I am. It has small debt [NIS $2.8-billion debt out of and NIS $10.8-billion equity] and I never re-mortgage anything. It is also important to note that most land in Israel belongs to the Land Authority and is leased, but most of my projects are freehold. That’s very important. Mind you, one lease on the Azrieli Center is 200-years long.
Q Are you optimistic about Israel economically?
A Israel is booming. Israel is vibrant and inventing itself anew. Living standards are high, unemployment is low and when you’re there in the summer it’s like being in Paris —you cannot find Israelis there because they are travelling all over the world.
Q What will you do with the $750-million proceeds?
A Approximately 25% to 35% we have allocated for projects under construction in Israel, then we are looking for acquisitions in Canada, the U.S. and Israel. There is lots for sale but not quality, even at a low cap rate. We want quality or Class-A buildings, good location, good construction, good tenants and an area with underlying strength.
Q How do you see the business landscape going forward?
A Canada has weathered better because of its banking system. Israel’s is similar and there’s more supervision. The U.S. will come out later. I believe in Yankee enterprise. It’s the biggest most dynamic economy in the world and that won’t change.
Q Does the Middle East situation concern you? Are you involved in politics in Israel?
A I know all the politicians, but stay away and have never given a dollar for anyone’s campaigns. I give to charities there. I think the settlements is a red herring. If anything, I consider the settlements something Israel could give to get peace. Without settlements, there is nothing to give up. I think the major ones will be exchanged for other land with the Palestinians. The real problem is that the Arab world still has not accepted the idea of a Jewish state within their midst. As soon as they do, peace will come.
Q At 88, your energy level is terrific. How much do you still work?
A I live summers in Canada and winters in Israel, which is the best of both worlds. And I am chairman of the public company in Israel and president of CanPro Investments, my private company in Montreal. I do what I like best. I’m retired inasmuch as I can afford to do what I like to do, which is design, solve architectural problems, examine new ideas on both continents. I used to know where every nail was going into my projects, but not to that extent anymore.
What about his connection to Torah? What about his giving tzedeka? There are tens of thousands of poor Israelis with no food — does he help them?
U bissel Torah, un a bissel hachzokas Hatorah. I’m not saying not just I didn’t hear that yeah. Btw charity usually means ….. well put it this way doesn’t mean giving yeshivas and kollelim, so unless someone can tell me otherwise I’ll continue to wonder that how comes he cannot give tzedokah where it really counts. Again I’ll stand corrected if anyone can tell me otherwise.
It’s his money, he can do as he pleases.
These guys don’t give anything away.
For these type of guys charity is dedicating a park in hertzeliya. (And getting more land from the iriya to build another canyon)
Feh! He thinks tachrichim have pockets.
Go Montreal
Stop with negativity!
He probably gives and will give to yeshivos! The future of klal yisrael!
UNBELIEVABLE. You naysayers are passing judgment while quoting Torah. Talk about hypocrites. Count your OWN money and decided where YOU spend it. “Our” money is never really ours, so before you pass judgment maybe you’ll remember that and keep your mouths shut! TRUE charity is to be given anonymously and not with a big fanfare. Just because he chooses not to stand on a platform and talk about where he gives charity, YOU decide to pass judgment. May Hashem pass the judgment you so eagerly and easily pass out to Mr. Azrieli unto you. Perhaps when YOU are needing of Tzedakah maybe then you’ll have some humility towards your fellow yid. Hashem gives to each of us what He feels we merit.
I can understand his work – I am Canadian!! Go Canada!!