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(This story, in slightly different form, originally appeared in Incisive Media’s Daily Business Review.)

MIAMI-A nearly $50-million price cut on a seven-acre property in the Park West neighborhood has put an end to a legal battle between developers of the proposed Miami Worldcenter and an Israel-based conglomerate. Africa-Israel Properties, led by Israeli-Russian diamond billionaire Lev Leviev, agreed to sell the parcel to the Worldcenter developers for $39 million, less than half the original $88.7-million contract price.

The deal is expected to close by Sept. 14. The developers, the Falcone Group and Marc Roberts Cos., can extend the closing for another month in exchange of an additional $1 million deposit.

The developers signed a contract to buy the parcel in 2006 and paid a total of $18 million in deposits to Africa-Israel while seeking closing extensions. Early this year, the developers didn’t close on the deal by the extended deadline and sued to recover their deposit.

The latest deal was announced last week by Africa-Israel in a statement to the Tel Aviv Stock Exchange. As part of the settlement, the developers have already paid an additional $1 million in deposits.

Africa-Israel also has agreed to lend the developers $3.5 million, which would have to be paid in two installments within two years of the closing, to finance the purchase. The developers will have to pay Africa-Israel $16.5 million at closing.

A call to the Boca Raton-based Falcone Group was referred to Miami Worldcenter’s project manager Nitin Motwani, who did not return calls by deadline. Africa-Israel executives also did not return messages.

Despite the deeply discounted deal, one land expert said the developers may still be overpaying for the lots. “There is no one in their right mind that would buy seven acres for $39 million right now,” says Ronnie Issenberg, a land broker at Marcus & Millichap. “But they already have $18 million in the deal, so it looks like they are trying to protect their equity.”

Broker Edie Laquer, who represented Africa-Israel and the Miami Worldcenter developers in the original sale, disagrees: “It’s way below market value,” she says of the $39-million sale price.

Laquer, who recently won a $3.4-million lawsuit against Africa-Israel over the commission in the deal, was not involved in the latest agreement. She says she was told by her attorney that Africa-Israel and the developers were close to an agreement last week but was not told details.

“I’m delighted to hear the deal will be consummated,” she says. “This is a very key piece to the Worldcenter assemblage.”

The parcel is an essential piece of the plan for the 25-acre Miami Worldcenter project, which calls for 12 million square feet of restaurants, stores, offices, three hotels, and a movie theater or live-performance venue in Park West, a few blocks west of the American Airlines Arena. The parcel was appraised in December 2008 for $26 million, according to financial statements of Africa-Israel.

Africa-Israel assembled the lots between 2002 and 2003 for a total of about $20 million, according to Miami-Dade County records. Despite the 56% discount in the latest agreement, Africa-Israel will still be able to report a capital gain of $7 million, according to the company’s statement to the Tel Aviv exchange.

“They are probably calculating carrying costs of about $12 million [since they acquired the parcels],” says Andrew Hellinger, who worked on the original deal as president of Leviev Boymelgreen Developers, a joint venture that included New York developer Shaya Boymelgreen and Africa-Israel. The partnership unraveled in 2007 and Africa-Israel kept the properties.

“The price we originally contracted for at the time was market, and now the price has been adjusted to reflect current market conditions,” Hellinger says. The parcel would sell for $287 per square foot under the original contract. Under the new agreement, it will close for about $127 per square foot.

“This is a good acquisition for the Falcone Group, and it helps them continue with their master plan for that area,” Hellinger says. “Their strategy took advantage of the change in market conditions, availability of funds and Africa-Israel’s need for cash.”

The financially troubled conglomerate blames much of its problems on the sharp decline of the value of its US investment properties. Africa-Israel owns several properties in Miami and New York City, including the Manhattan Clock Tower and 49% of the New York Times building. Late last year, Africa-Israel announced it would start to unload assets to raise cash to pay for about $472 million in bonds maturing in 2009 and 2010.

An affiliate of Africa-Israel recently took a big loss in the sale of an office complex at 1101 Brickell Ave. in Miami. It sold the 488,449-square-foot tower in late June for $33.2 million. Africa-Israel bought the property, which covers nearly four acres, for $70 million in 2005.

Last week, Tel Aviv trading in Africa-Israel stock was suspended after the company announced its troubled financial situation. The company said it will report a loss of about $366 million for the second quarter.

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