A draft agreement obtained by Calcalist reveals that the Jewish National Fund (JNF–Keren Kayemet LeIsrael) may relinquish its rights to approx. 125 acres of prime land in central Jerusalem to Extell Israel, a company owned by American real estate tycoon Gary Barnett. In exchange, JNF would receive ownership of plots currently housing major public institutions—such as the Great Synagogue and the Israel Museum—and Barnett would extend the sublease contracts of around 900 families living on the land by an additional 50 years.
The sweetener for Barnett: an immediate opportunity to promote construction plans for 12 development-ready plots within those 125 acres, where thousands of apartments could potentially be built. However, many of the families currently living on the land are alarmed. They see the deal as a state abandonment, leaving them to face an aggressive developer alone in what could become a massive demolition and rebuilding project.
“Barnett’s goals are clear. But why would JNF give up land worth billions?” representatives of the residents asked Calcalist.
According to JNF’s board, led by Ifat Ovadia-Luski, the deal would resolve one of Jerusalem’s biggest real estate disputes. In 2023, Barnett bought the land for $215 million from the descendants of Ben David, who had previously acquired it from the Greek Orthodox Church. The land, located in Rehavia and Talbiya, includes key public and iconic properties like the Israel Museum and the King David Hotel.
Historical context and the current dispute
The JNF has held lease rights to these lands since 1951, under 100-year contracts with the church. Some include options for a further 100-year extension; one, covering the Nayot neighborhood, allows only a 50-year extension. Exercising those options may require court intervention if terms can’t be agreed upon.
Since obtaining the land, the JNF has subleased portions to private citizens who built homes there. While this model has worked across Israel, in this case the citizens are sub-lessees, not full landowners—making their position more vulnerable.
Barnett paid hundreds of millions with two goals in mind: develop the 12 available plots and advance a massive urban renewal (evacuation-and-reconstruction) project on the existing homes. To gain resident cooperation, Barnett offered them the chance to buy their units from him at a heavily discounted $573–$1,431 per square meter, thus becoming eligible for new apartments in the renewed complexes.
But many residents rejected the offer, claiming they are already de facto owners and shouldn’t have to pay these sums—discounted or not—to take part in the project. At least some had placed their trust in the JNF to either protect their rights or join them in legal resistance against Barnett, especially since the leases—both with them and with JNF—expire in 2050.
Behind closed doors: A confidential agreement emerges
In recent months, intense negotiations have taken place between the JNF board and Barnett’s representatives at Extell Israel. These discussions produced a confidential memorandum of understanding, now leaked to Calcalist. The document outlines that to “secure the status of sub-lessees and redeem significant plots of public value,” the JNF would terminate its three main land leases, including forgoing its option to renew them beyond 2050. Effectively, the JNF would stop acting as the land’s landlord.
In doing so, the JNF would step aside, allowing Barnett to move forward with developing the 12 designated plots. In return, Extell would transfer ownership of notable sites—including parts of Emek HaMatzleva (excluding its development edges), Charles Clore Park, the Menachem Begin Heritage Center, the Khan Theater, the Israel Museum, the Great Synagogue, and part of Heichal Shlomo—back to the JNF, and extend subleases for the 900 families until 2100.
However, the agreement does not prevent Barnett from advancing his redevelopment plans. It merely requires that he reach agreements with the residents, setting the stage for potential conflict. Under the terms, residents who want to join the renewal project must pay 5.5% of the land value to extend their leases.
Residents sound the alarm
The draft deal shocked many resident representatives. They argue the JNF is abandoning them and trading away billions in public assets for national heritage sites, which they believe is being done to preempt potential legislation currently under debate. In the past year, both coalition and opposition lawmakers have pushed for a bill that would formalize sub-lessees’ property rights—legislation the residents fear may be undermined by this deal.
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A petition is reportedly in the works, demanding the JNF publicly disclose its position. Even if this draft doesn’t become a binding contract, residents fear it sets a precedent—delineating power lines between Extell, the JNF, and themselves. This despite Barnett’s past statements that “we didn’t come to Jerusalem to evict people from their homes.”
Who is Gary Barnett?
Barnett is a high-profile figure in international real estate, known for his luxury and ultra-luxury developments in the U.S. His company, Extell, built the world’s tallest residential tower, ONE57 in New York City, where penthouses sold for $100 million. Another project, Central Park Tower, averages $28 million per unit.
In Israel, Barnett has raised significant funds on the Tel Aviv Stock Exchange through his BVI-registered company, Extell Ltd. In 2014, he raised 1.4 billion shekels in bonds, followed by another 600 million in 2015. Both series were fully repaid. In 2021, two more bond series were launched, eventually totaling 1 billion shekels. These bonds currently yield 6–7%, reflecting market confidence in his ability to meet obligations.
Statements from the parties
The JNF responded: “The Jewish National Fund does not conduct such complex matters through the media. We are investing significant resources to address the issue and achieve the best possible outcome, with the well-being of residents as our top priority.”
Extell Israel stated: “We are engaged in ongoing dialogue with all relevant parties to find an agreed solution. As landowner, Extell is uniquely positioned to offer a secure and lasting solution—one that would save the JNF billions in public money needed to extend leases, while allowing residents to remain in their homes beyond 2050 and immediately boost property values. Many residents have already accepted our highly attractive offer. Unlike other interest groups trying to provoke unnecessary conflict, Extell is focused on achieving the best outcome for everyone involved.”