Calcalist, True Gazit, 27.04.2020

"This year we will find ourselves in a 35% reduction in the financial volume of our projects, from NIS 700 million to NIS 450 million," said Shalom Sheetrit, owner and CEO of Initiative and Construction Partnership, in light of the Corona crisis. “It hits me in the bumper, but some have their vehicle in Total Los. Lots of companies will go bankrupt by the end of the year. Behind every company that falls there are many people. When you count the number of employees, suppliers and customers who may be hurt, it always comes to hundreds. "

Can you elaborate a little on what activities were affected?

“We are engaged in entrepreneurship but also serve as a contractor for several projects. Africa Israel Residents have asked us to stop currently building 200 housing units in the plow because of the situation and the uncertainty. These are projects we have already built foundations on, because according to Africa's agreement with the Israel Lands Authority, if they do not complete the foundations within a short period of time, they decide the guarantees. I have five projects where I can get a building permit, but I dare not start building today, because of the fear that if we start now we will not be able to sell apartments, and if we sell we will not be able to meet deadlines.

“In Acre, I have a project to build 220 apartments, 100 of them at a cost to the buyer. Because we do not know when we will have buyers, we stopped the construction work on the tenth floor. We will not continue them until there is certainty. I have no buyers and no contracts to show to the bank, and to get financing I have to show 50 signed contracts. Usually to finance a project banks require equity of 25%, and 75% receive from the bank. In addition, the banking escort will only open after selling 25% of the apartments. ”

No buyers at all?

“The market just stopped. In January, our 18 buyers, in several projects around the country, paid a registration fee of NIS 15,000 each. Apartments in Haifa, Yeruham, Acre, Atlit and Rishon Lezion. Of all the 18, we managed to sign only one tenant in Yeruham. We got him home, the lawyer recognized him and we completed the process. Others stopped the process. Some explained that they went to the USSR and were not ready to sign now, others said that because of the Corona crisis, they did not leave the house and did not want to promote a signature.

Price reduction

Do you refund the cancellation fee?

“Since the establishment of the company, we always return the registration fee to the regretted buyers. Moreover, in the last month we have canceled two signed contracts, and we also refunded them. ”

How much money is this?

“In one apartment in Haifa, we returned NIS 2 million. The second apartment, also in Haifa, was bought by an event producer who paid a first payment of NIS 320,000, but said she did not know if she would have revenue this year and asked to cancel the contract. We also returned all the money to her. "

It's nice when there are two or three cancellations, but what would you do if 20 buyers asked to cancel a sales contract?

“You're right, that will be a problem. There is chaos and uncertainty in the country, which has come to light in the construction industry. If someone is debating whether to buy a pair of shoes, he will probably consider buying a home. The situation is complicated and people are waiting with such decisions. Today, we all understand beyond a doubt that this is not a month's adventure, but an insatiable process that can define when it will be completed.

What about project house prices?

"Last month, I had to reduce prices by 5% on all projects. I have apartments in Kiryat Motzkin that I previously refused to sell for NIS 1.6 million, today I would love to sell them for NIS 1.4 million."

Are you anticipating a cash flow problem?

“My company has free equity of over NIS 200 million. Although I have fixed expenses of millions of shekels a month, but because of my dissemination of activities and the fact that we carry out projects in several sectors, including the public sector, I can hold this situation for a few more months. But at the moment I will not start new projects because of the uncertainty that I can sell them. My situation is good, but there are quite a few contractors in Israel who are unable to sell apartments, they have obligations and consequently flow problems. ”

Is this an opportunity to buy projects?

“Every day, five managers of different companies approach me and try to sell me their projects because they contacted the banks and did not receive credit. I look at things like that, but even though I'm very optimistic, it's hard. We bought in Ramat Hasharon a project of 20 apartments at 15% lower than the prices of apartments in Ramat Hasharon. ”

The Accountant General has been furious when he refused to acknowledge the Corona crisis as a supreme power that eliminates fines for delays in the delivery of public construction projects. He argued that the emergency regulations did not apply to the construction industry considered essential, and the government allowed it to take action. Was the contractors' union wrong when it struggled to continue the industry?

“The association acted naively, with the intention of continuing to work, but it did not expect the CFO to come and determine that there was no supreme power causing delays. In public construction, the state did the contractors an exercise in announcing that the industry was vital and the work was continuing. When there is a delay in completing a project and the state is guilty of delay, it compensates the contractor and pays for the extra time. Now, because of the declaration that the works are continuing in order, the state will not pay for the elongation of schedules, and not only that, but it will charge us with fines for arrears. "

Apartments without kitchens

Are you anticipating similar difficulties due to delays in delivering apartments?

“In the area of ​​residential construction, very many apartments will not be delivered on time, and claims will be filed against contractors demanding that they pay rent to customers, even though it is the most supreme power. There will be a legal problem. When a tenant comes and sues me, the judge will push for a compromise on the grounds that we are deep-pocketed contractors. This payment is very significant to the construction companies. "

“They said the residential construction industry was essential, but on the other hand, they did not provide tools that would allow the industry to exist - factories of closed suppliers, such as a closed multi-bolt factory, as well as a factory that produces kitchens for us. Planners I work with release all their employees.

“We have a project in Haifa of 20 apartments, the project is complete, only that apartments do not have kitchens. In such a situation, I can't call people to get the apartment. I do not hand over the apartments, and soon the tenants will argue that I did not meet the delivery dates written in the contract and demand compensation, even though I am not guilty. It's a superpower. There are also all kinds of bureaucratic definitions that make it difficult, for example, to allow contractors to drive up to two employees in a vehicle, but there is no point in driving the vehicle if it is not full of workers. That's why there are a lot of sites stopping.

“The employees are not interested right now because the industry is essential and many of them are not working. Our output today is only 30% compared to routine. My construction sites in Tel Aviv and Jerusalem do not move cranes. Only about 12 out of 100 area residents have left me, and next week when Ramadan begins, they too will return home. "

The restrictions on the industry and the economy were born to curb an epidemic.

“If we continue to manage the Corona crisis in a panic, within six months the country will create a pit of NIS 160 billion. In February 2021, when companies publish reports and see losses, the state will suddenly see that it is able to collect only 10% of the corporate tax it was used to receive. "