New York real estate mogul Gary Barnett is nearing a major property deal in Jerusalem through his company, Extell, which is in advanced talks with the Jewish National Fund (KKL-KKL-JNF) over lands leased from the Greek Orthodox Church.
Under the emerging agreement, Extell would allow tenants to extend their sublease agreements for 99 years for 5.5% of the land’s value, transfer ownership of national institutions on the land to the KKL-KKL-JNF and secure rights to develop vacant plots and pursue a large-scale urban renewal project with tenants. The deal could involve thousands of apartments, generating billions of shekels in revenue.
Initial terms between the KKL-JNF and Barnett in June sparked outrage among existing tenants, who felt the agreement ignored their interests and left them to negotiate alone with Barnett. The revised deal now addresses tenant concerns, offering better terms than earlier proposals.
In January 2024, Extell acquired 520 dunams (128 acres) of Jerusalem land from a group led by Noam Ben David for NIS 750 million ($200 million). The investors had purchased the land in 2016 from the Greek Orthodox Church for NIS 114 million, but failed to develop residential projects.
Leased to the KKL-JNF since the 1950s, the land’s lease was extended in the early 2000s until 2051, with options for a further 50 or 100 years, pending a court-appointed third party to determine the cost.
Tenants, who see themselves as homeowners despite being sublessees, live in central Jerusalem alongside assets like the Inbal, Prima, and Dan Panorama hotels, the Great Synagogue and the Israel Museum, which will transfer to state ownership.
Before finalizing the purchase, Barnett began discussions with tenants for an urban renewal project, initially offering to sell them property rights at discounted rates but significantly higher than the current 5.5% of land value, now costing tens of thousands of shekels per apartment compared to hundreds of thousands previously.
Tenants can opt into the renewal project if the deal is signed. A KKL-JNF source told Ynet’s sister outlet Calcalist the organization aims to ensure tenants face no future legal issues and avoid direct confrontations with Barnett.
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However, some tenant representatives demand better terms, arguing they already own the land as sublessees and should pay nothing and that Barnett commit 20% of development profits to the KKL-JNF.
Others oppose the deal entirely, with one critic noting Barnett’s gain of open land worth billions and suggesting tenants receive full ownership while granting Extell first rights in any renewal project, allowing them to match competing offers.
Commercial property owners face separate negotiations with Extell, potentially leading to years of legal battles, prompting Extell and the KKL-JNF to seek a preemptive resolution. A petition filed last week with Israel’s High Court by hundreds of tenants and sublessees demands that the KKL-JNF clarify its stance, spurred by the draft agreement.
The KKL-JNF agreed to cede leasehold rights in exchange for Extell transferring ownership of public institutions like the Great Synagogue and Israel Museum, while extending sublessee leases by only 50 years and granting Extell open land for development.
As tenant issues near resolution, the allocation of open spaces could become the next flashpoint, with environmental groups pressuring the KKL-JNF to prevent development. A KKL-JNF source said the draft’s publication triggered intense public and activist concern over potential harm to central Jerusalem’s open spaces.