Israeli software company JFrog has signed a major lease for 20,000 square meters (215,278 square feet) in the EastEnd Tower, owned by Blue Square Real Estate, on Totzeret HaAretz Street in Tel Aviv, in a deal potentially worth 650 million shekels ($172 million) over 13 years.
The lease covers 60% of the tower’s 32,000 square meters (344,445 square feet) of office space, enabling Blue Square Real Estate to achieve full office occupancy. JFrog will use 15,000 square meters (161,459 square feet) for its Israel headquarters across 12 floors, each 1,270 square meters (13,670 square feet), with an option to expand by 5,000 square meters (53,820 square feet) over four additional floors.
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JFrog founder Shlomi Ben Haim, EastEnd Tower
(Photo: JFrog, Blue Square Real Estate)
The agreement spans 6.5 years, with options to extend for 3.5 and 3 years, totaling 13 years. Blue Square Real Estate expects 500 million shekels ($132 million) in revenue, with an additional 150 million shekels ($40 million) if the expansion option is exercised.
The deal boosts Blue Square Real Estate’s projected net operating income from the project to 60 million shekels ($16 million) annually, up from 25-30 million shekels ($6.6-$7.9 million) previously. JFrog, founded in 2008 by Shlomi Ben Haim, Yoav Landman, and Fred Simon, specializes in continuous software updates and trades on NASDAQ with a $5.6 billion valuation, its stock up 63% this year.
Currently operating from three floors in Tel Aviv’s Recital Tower and a Netanya center, JFrog will likely vacate the latter. The company’s recent growth, including its $230 million acquisition of Israeli firm Qwak last year, drove its search for larger office space, according to Calcalist.
The EastEnd project, located near Ayalon Highway and Tel Aviv’s Shalom train station, comprises two mixed-use towers. Blue Square Real Estate owns 100% of the 32,000 square meters (344,445 square feet) of office and commercial space and holds a 50% stake in the residential component, which includes 390 housing units.
The project received occupancy permits in July. The south tower, where JFrog leased space, has 33 floors, with 25 for offices and eight for 42 residential units. The north tower, with 40 floors, includes 390 residential units, 60 of which will be long-term rentals to meet Tel Aviv’s public housing requirements.
Initially planned for a group purchase, the residential units shifted to a developer-led model, with 271 of 330 units sold. Blue Square Real Estate, controlled by Moti Ben Moshe’s Alon Blue Square, trades on the Tel Aviv Stock Exchange at a valuation just over 4 billion shekels ($1.06 billion), with its stock up 5% this year.