Elbit Imaging Subsidiary Concludes Purchase of Remaining Units in EDT Retail Trust

A subsidiary of Israel-based Elbit Imaging Ltd. has wrapped up the off-market takeover bid for all remaining units in EDT Retail Trust, a retail REIT. The all-cash transaction increases EPN and its affiliates' stake in the REIT to 96.4 percent.

July 19, 2011
By Barbra Murray, Contributing Editor

EPN EDT Holdings II L.L.C., a subsidiary of Israel-based Elbit Imaging Ltd., has wrapped up the off-market takeover bid for all remaining units in EDT Retail Trust, a retail REIT that targets investments in quality U.S. shopping centers. The all-cash transaction increases EPN and its affiliates’ ownership stake in the REIT from 47.8 percent to 96.4 percent.

EPN’s original bid, made March 10 and based on the last closing price of EDT Retail shares on March 8, offered $0.078 for each share. However, in May, EPN increased the offer to $0.09 per unit, marking a 29 percent premium over the last closing price in March.

EDT Retail has a portfolio encompassing an aggregate 10.9 million square feet of space at 48 properties valued at a total of $1.4 billion. The average occupancy level for the REIT’s shopping centers is 89 percent, a figure that is in line with the national average, which, according to a report by Marcus & Millichap Real Estate Investment Services, is 90 percent.

The 48.6 increase in EPN’s stake in EDT Retail to 96.4 percent does not mark the end of EPN’s interest in the REIT, as the company plans to grab the remaining 3.6 percent stake in EDT Retail through a compulsory acquisition. In the end, EPN will have paid a total of $242 million for the 52.2 percent interest that will leave it with full ownership.

EPN is just one of a hoard of investment entities from beyond U.S. borders that are combing the country for commercial real estate opportunities. “Direct property acquisitions of U.S. commercial property by cross-border investors accounted for over $10.1 billion of transactions over the past year, representing 7 percent of all U.S. volume,” commercial real estate research firm Real Capital Analytics notes in report released in May. “Cross-border investment had dropped to an insignificant level in 2009, but foreign investors are now reporting a strong appe¬tite for U.S. real estate, and that is becoming evident in transaction activity.” Of the top 25 cross-border buyers of commercial real estate for the five-quarter period ending at the close of March this year, five are based in Israel. Tel Aviv-headquartered IDB Group ranked sixth, with $447 million in acquisitions, including the $330 million purchase of HSBC Bank’s New York City headquarters building at 452 Fifth Ave. in a sale-leaseback transaction during the second quarter of 2010.

While EPN is not on the top-25 list, it definitely has big plans for additional investments in the U.S. The company is in the process of raising money for a fund that would allow it to snap up more than $1 billion of retail assets.