Hershey Friedman, the owner of one of Israel’s largest home developers, likes to say he doesn’t actually have a home himself.

“I live on airplanes,” the 75-year-old Montreal-born billionaire said with a dry smile in a recent interview with The Times of Israel in his Tel Aviv office. “I leave every Sunday, and usually get back Thursday night or Friday morning.”

The Orthodox entrepreneur divides his time between Israel, Montreal and Florida. But it is Israel where he has placed one of his biggest bets.

Friedman is the controlling shareholder of Azorim, one of Israel’s largest publicly traded real estate developers. Fifteen years after he acquired the company, which was then near bankruptcy, he is now looking to help shape a housing market defined by soaring prices, urban renewal and growing rental demand.

“I love Israel, but it’s a challenging country to work in,” Friedman said, as he laid out his plans to expand in Jerusalem and in other fields of operation. “I like to think that I’m involved in much more than just real estate.”

Friedman began developing his business instincts as a child in Montreal, when he would offer to fetch construction workers their lunch orders in exchange for tips and deposit refunds on their empty bottles.

Friedman’s parents owned a textile company, but the family was plunged into crisis when he was 10 years old. His father was injured in a serious car accident that confined him to a wheelchair for the rest of his life, leaving his mother to manage all the family’s needs.

When Friedman and his two brothers were old enough, they were sent to learn Torah at yeshivas in New York and Baltimore. The others continued studying after graduating from college, but Friedman dove straight into the business world, running the family business and eventually selling it in 1981.

“I did very well on that sale, so I decided to retire,” Friedman recalled. “But who retires at 31 years old? I lasted two weeks, and then I started looking for companies to buy.”

Friedman acquired a struggling plastics packaging business and implemented a massive rehabilitation plan, the first of the maneuvers that would earn him a reputation as a corporate turnaround specialist. In the years that followed, he would go on to acquire some two dozen more companies in the same industry and develop one of the largest plastics operations in North America.

Friedman began investing in Israeli real estate almost by accident. After his oldest son came to Israel at age 18 to learn in yeshiva, Friedman found himself flying over so frequently that it made sense to invest here. His first real estate venture had some failures, but a garden development he led in Jerusalem’s Motza neighborhood is a “trophy” that he is still proud of today, he said.

Then came Azorim. The company, founded in 1964, had once been Israel’s premier residential developer, but by the time Friedman began looking at it, the company was careening toward bankruptcy after overextending itself with projects in India, Canada, and Latin America.

“They were all over the place,” Friedman recalled. “The company felt out of control.”

With the help of a loan from United Mizrahi Bank, Friedman acquired Azorim on the verge of insolvency, buying 64 percent of the business for NIS 300 million ($96.3 million) from ultra-Orthodox real estate magnate Shaya Boymelgreen. It was 2011, when housing prices had risen 50% over just four years, and just months before hundreds of thousands of Israelis would take to the streets to protest the high cost of living.

Buying a distressed company at such a precarious time wasn’t a smooth proposition, Friedman would soon find.

“The situation in the company was so dire that within less than two years, I had to invest a fortune more,” he recalled. Every time a new capital call was made, he would put in more funds at his full share to avoid getting diluted. Occasionally, he would also buy additional stock from others who chose not to. Today, he holds close to 67% of the firm.

“To turn around a company normally takes three to five years,” he said. “Slowly but surely, we started to make major changes.”

The first step was to refocus on Azorim’s core business in Israel. The company first sold off its overseas assets, often breaking even on investments. Then, it refocused on buying land for new developments in Israel. Later, it would move heavily into large-scale urban renewal projects known as pinui-binui, or evacuation and reconstruction, in which low-rise buildings are demolished and replaced by high-rise towers.

Home prices have risen consistently over the past two decades, making Israel’s housing market among the most expensive in the world. However, the market has sputtered in recent years, due in large part to uncertainties related to the two-year war in Gaza, high interest rates, high prices and a record supply of unsold new housing.

Today, Azorim has over 70 projects and 40,000 residential units constructed or under construction around Israel.

The Dun’s 100 annual ranking for 2024 ranked Azorim third among publicly traded developers in Israel by revenue, trailing only Shikun & Binui and Y.H. Dimri. The company now trades on the Tel Aviv Stock Exchange at a market capitalization of about NIS 5 billion ($1.6 billion), 10 times Friedman’s original purchase valuation.

A strategic bet on Jerusalem

Recently, Friedman made a decision: Jerusalem would become Azorim’s central focus.

“Jerusalem has always been at the center of Jewish life,” he said. “So about five years ago, we decided to put our concentration there.”

Today, Azorim is involved in some 20 projects in the capital, many of them large-scale urban renewal developments. Another 10 or more land parcels are in advanced planning stages, Friedman said.

The most significant of these, he pointed out, is the Melach Ha’aretz (“Salt of the Earth”) complex near Kibbutz Ramat Rachel, an “ultra-exclusive” development overlooking a lush forest preserve and a historic aqueduct. The first phase includes three buildings with 374 units, with plans eventually to approach 1,000 apartments.

That type of luxury project isn’t typical for the company, Friedman stressed.

“We build different types of projects for different kinds of communities,” he said. “You don’t build exclusive properties in Nahariya or Beersheba. You have to pick the places where you’re going to have your crown, and where you build for everybody.”

For him, that means tailoring each project to the community he expects to live there — whether Haredi, traditional or secular Israelis or foreign buyers from North America, France, Britain or Mexico.

Foreign buyers comprise roughly 20% of Azorim’s sales, a share that grew after the company made a strategic decision around 2022 to focus more on international clients.

“We create communities by the way we structure our buildings and the people we bring in,” he said. “We know the type of people that will move into it, and we build the amenities they are looking for.”

That often means including synagogues, kindergartens, schools, playgrounds, walking paths and gyms inside or adjacent to the developments, in cooperation with municipalities that push developers to provide public amenities as part of large-scale projects.

Friedman estimates he has financed the construction of dozens of synagogues and roughly 25 to 30 schools across Israel, sometimes as part of a development and sometimes as standalone philanthropic projects. Municipalities frequently require developers to allocate space for public facilities as density increases, he noted.

“We are not just putting up a building with nothing around it,” Friedman said. “We look at each project and ask what will attract and serve the people who live there.”

Friedman is bullish on the Jerusalem municipality’s ambitious development plans and speaks highly of Mayor Moshe Lion.

“He wants to make Jerusalem a major city, and he will accomplish it,” Friedman said. “He’s working with all the developers to make them successful, and it’s very good for everyone.”

Azorim is also expanding its horizons with forays into several niche markets, including the government’s long-term rental housing initiative.

Designed to create a more secure rental market in the country, the program allows the state to tender land to developers at discounted prices for projects designated for long-term rentals. In a country where the vast majority of rental units are owned by private investors, the idea is to create a market where tenants can easily find long‑term leases and stable rental prices.

Israel’s rental market has grown in recent years as the price of purchasing a home skyrocketed. About 30% of Israeli households currently rent, compared with 24% in 2013, according to data from the Central Bureau of Statistics.

“Israel never had a market for rentals managed by large companies until the last 10 years,” Friedman said. “The idea is that you can get the land for about 25% less than the going rate, but you have to commit to renting out the apartments for 20 or 30 years.”

Through Azorim Living, the company builds high-rises with apartments for rent around the country. It’s a successful and growing venture, the company says, even if Friedman likes to complain about the model’s economics.

“It’s a concept that doesn’t work if your goal is to make the most money possible,” he said. “It makes sense when interest rates are low, and you’re going to have long-term appreciation on the properties. But with higher interest rates, it’s eating us up. The returns are low, and other big companies trying it out have found that the model is not for them. My purpose for getting in was to contribute to the State of Israel and help out people who cannot afford to buy.”

Azorim is also pursuing a model for micro-logistics, where companies can rent manufacturing centers and workshops as small as 200 square meters for small-scale production.

“Most companies are looking at 5,000-10,000 square meter [54,000-108,000 square foot] spaces for institutional use,” said Friedman, who has decades of experience with warehousing and factory properties in North America. “This is about multi-story buildings divided into small sections for people who need their own little factories and spaces.”

It’s a concept that is relatively new in Israel, and Friedman hopes it will help fill an underserved niche for small and mid-sized producers in the country’s industrial market. Azorim is currently in the process of acquiring a company that specializes in these projects, he said.

“We look for things that are exciting for the market, good for the industry, good for the population,” he said. “We keep thinking about what we can expand into and make successful.”

On most topics of discussion, Friedman always seems to return to the idea of giving back to the communities he works with.

A long-time philanthropist, Friedman has supported a wide range of charitable institutions in Israel and abroad over the years, ranging from hospitals to religious institutions. After Hamas attacked Israel on October 7, 2023, he offered fully furnished apartments free of charge to evacuees from southern Israel. And Azorim is a sponsor of next month’s Jerusalem Marathon, he noted.

Even his 2009 acquisition and rehabilitation of North America’s largest kosher meat company, Agriprocessors, after federal authorities arrested some 400 illegal workers, was mainly intended as a public benefit for religious Jews, he claimed.

That highly publicized closure and the arrest of CEO Sholom Rubashkin disrupted the kosher meat market and sent prices soaring at the time. The company has since been renamed Agri Star Meat & Poultry and made profitable, using the government’s E-Verify program to ensure its employees are legal.

“The rabbis came to me asking not to permit such a thing to happen,” Friedman said. “We took it over, invested heavily, and modernized it, and now it works well and supplies good kosher food. But that’s not a typical business. It’s not something I went into by choice.”

It’s an attitude that Friedman has adopted throughout his long career, in his private life and in the world of real estate.

“You can’t only take, take, take,” he said. “You also have to give back.”

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