Should a thesis of the author be listed as "related work"?
Write something along the lines of:

A preliminary version of this paper appeared in Segal-Halevi's thesis [1], new results include X, Y, and Z.

That could appear as a footnote on the opening page, in your related work section (perhaps at the end), or maybe even in the acknowledgements. (Placement in the acknowledgements seems like a corner case that isn't relevant to the OP.)
For anonymous submission, replace Segal-Halevi's thesis [1] with one of the author's thesis, optionally adding, (citation omitted for anonymity).