Yochananof prepares to spin off $333 million real estate portfolio
The supermarket chain is considering creating a dedicated subsidiary for its growing property holdings, a move that could eventually pave the way for an IPO of the business.
After three major real estate transactions in the first quarter of the year, supermarket chain Yochananof is preparing for a significant strategic move: separating its real estate holdings into a dedicated subsidiary. Calcalist has learned that the idea has been discussed by the company’s management in recent weeks, although it has not yet been approved by the board of directors. A board decision could come soon. If approved, the move could eventually pave the way for an IPO of the real estate business, although such a process could take many months or even years.
The three transactions have significantly expanded Yochananof’s real estate portfolio, bringing its investment property to a value of about NIS 1 billion ($333 million).
In January, Yochananof purchased 19 dunams of land in Dimona for NIS 30 million ($10 million). The land is designated for a commercial center that will also include office space. A month later, the company acquired a 30% stake in 17 dunams of land in Binyamina together with Shai-Hai, with plans to develop a commercial center containing 14,000 square meters of commercial space and parking. At the same time, Yochananof acquired a 50% stake in a 10-dunam property in Beersheba together with the JTLV fund.
The company had already taken a major step into real estate through a partnership in Or Yehuda to develop a 69,000-square-meter commercial and logistics center on 31.5 dunams. Under the agreement, the private partner is responsible for the NIS 280 million ($93.3 million) construction costs, after which the rights to the completed project will be divided between the two partners.
The Or Yehuda property is currently the largest asset in Yochananof’s real estate portfolio, with a reported value of NIS 411 million ($137 million). The pace of these transactions reflects the company’s growing ambitions in real estate and its interest in creating a separate structure for the activity.
Yochananof has also acquired 107 dunams of agricultural land, with the aim of growing fruits and vegetables for sale through its supermarket chain. The move could allow the company to reduce some of the supply costs associated with those products.
The proposed restructuring would bring Yochananof closer to the model used by other major Israeli supermarket chains, which have separated their retail and real estate activities.
Rami Levy operates its real estate activity through a separate company that is a sister company to the retail chain, Hashikma Marketing. Shufersal, controlled by brothers Shlomi and Yossi Amir, operates its real estate holdings through a subsidiary. Hatzi Hinam also has a separate real estate company, a structure that has contributed to tensions between its partners.
Yochananof currently operates differently, with its real estate assets incorporated into the retail company. The proposed subsidiary would concentrate those assets under a separate management structure, similar to Shufersal’s model.
Shufersal established its real estate subsidiary in 2013 to concentrate most of the chain’s branches and income-generating properties under a dedicated management arm. The intention was eventually to take the subsidiary public, while using it to improve properties, manage commercial centers and offices, and develop real estate as a separate growth engine.
That plan was abandoned after Shlomi and Yossi Amir took control of Shufersal in 2024. They canceled the plans of former chairman Itzik Abercohen to spin off and list the real estate activity.
For Yochananof, however, separating the assets into a subsidiary could provide greater flexibility in the future, including the option of an IPO.
The Yochananof chain, managed by Eitan Yochananof, has 46 branches nationwide covering 193,000 square meters, including 98,000 square meters of sales space. The company plans to open another 19 branches, six of them over the coming year.
Only five of the existing branches are owned by Yochananof rather than leased. This could reduce the scale of related-party transactions between the proposed real estate subsidiary and the retail company, since most of the chain's branches would continue to be rented from outside landlords.
The proposed real estate company would own the five Yochananof branches and lease them back to the retail business. It would also hold land designated for future commercial centers, existing income-generating properties, the company’s logistics center and its headquarters in Rehovot.
The portfolio includes a five-story building and a two-story building in Modi'in, 26 dunams across two plots in Kiryat Ekron, 14 dunams in Yavne, and a 25% stake in the Centro complex in Rehovot, where Yochananof’s headquarters is located.
Yochananof has also entered residential development. It is one of the developers of the Residence Tech Valley project in Afula, which is planned to include three residential towers with 730 apartments, three office towers ranging from 14 to 22 floors, and three commercial buildings.
It remains unclear whether Yochananof’s board will approve the proposed subsidiary, when such a decision might be made, or whether the real estate activity would receive a separate management team. But if the restructuring goes ahead, it would create a distinct corporate vehicle for a rapidly expanding part of the group’s business, and potentially give Eitan Yochananof the option of taking that business public at a later stage.
