Gary Barnett Speaks for the First Time: "The Tenants of the Properties Will Not Get the Land for Free!"

Gary Barnett speaks for the first time:

"The tenants of the properties in Talbiya will not get the land for free, and some find it hard to accept."
For the first time since he made the big deal to buy the church lands in Jerusalem, the owner of the real estate company Extell reveals his offers to the approximately 1,000 tenant families: "We put a generous offer on the table. NIS 5,000 per square meter for the full ownership."

We have no intention of evicting people from their homes, but that does not mean we will give them the land for free, and some of the tenants we are in contact with find it hard to accept. They can decide not to compromise and want everything, but in my opinion in a few years the fall in the value of their apartments will be so sharp that they will have to cooperate."

A NIS 750 million deal

The American real estate company Extell, owned by Barnett, bought the lands of the Greek Orthodox Patriarchate in central Jerusalem last January from the company Nayot Kommiam Investments, owned by a group of investors led by the Ben David family, for NIS 750 million. Around 1,000 housing units are to be built on the land, along with hotels, public buildings and institutions, open spaces and more than a dozen lots for development. The land is leased to the Jewish National Fund (KKL-JNF) until 2051, with an option to extend under renewed lease terms based on market value.

The church lands owned by Nayot are located in sought-after neighborhoods in the city center, including Talbiya and Nayot. A lease was signed on the site decades ago between KKL and the church, but it ends in 2051, and then the thousands of residents will be forced to negotiate with the owner over renewing the leases. Already today it is very hard to buy apartments in the area, and the apartments that are sold absorb a significant drop in value because of the uncertainty.

Asked whether he has begun negotiating with the tenants, he answered: "We started talks with three groups of tenants and presented our proposals to them. We have no intention of evicting people from their homes, but that does not mean giving them the land for free, and some of the tenants we are in contact with have difficulty accepting this. At the same time, we are looking at options for carrying out evacuate-and-rebuild projects with some of the tenants and KKL-JNF. It may be beneficial for all the parties involved."

Asked whether the tenants are willing to accept his offer, he answered: "We are currently in talks with three groups. There are people we know are happy with the offer. There are tenants who may decide not to compromise and want everything, but in my opinion, in a few years, the fall in the value of their apartments will be so sharp that they will have to cooperate."

Asked whether Extell has started the processes to develop the vacant land in the area, Barnett answered that "it is still at a very early stage. We have started talking with the Jerusalem Municipality. You can't say we have started promoting plans in the field."

In the conversation, Barnett mentioned the sharp fall in value that the tenants of the apartments on the land currently face, in the context of the approaching expiry of KKL's leases with the church in 2051-2052, and the uncertainty regarding the area's future: "The value of the properties has dropped dramatically, already today they are 40%-45% lower than similar properties that are not leased, and with the passing of the years, the value of the apartments goes down. While the market value of apartments in the area is set at NIS 45,000 per square meter, the most recent transactions in the complex indicate a value of NIS 25,000 per square meter. When less than 25 years remain, we will already reach a 60% drop in value."

Finally, Barnett was asked whether he would consider a deal in which he could begin promoting a building plan in the area right now, instead of waiting for the end of KKL's lease period in 2051, in exchange for granting ownership to the tenants on the site, and he answered that "at the moment there is no chance of that happening from a business standpoint." Even if KKL decides to accept such a transaction, it does not determine what can be built on the land, only the government determines that, and until construction begins on the land, it may take a long time.

"In the meantime, we try to be fair to all parties. We offer a fair deal for everyone, where everyone can walk away happy."