Elbit Snaps Up U.S. Retail Properties

The $75 million deal will invest the Israeli firm's strategy of increasing real estate holdings in the U.S.

December 29, 2010
By Barbra Murray, Contributing Editor

Courtesy Flickr Creative Commons user House of Sims

EPN Investment Management L.L.C., a division of Israel-based real estate and entrepreneurial investments company Elbit Imaging Ltd., has signed a deal that will advance its strategy of increasing its real estate holdings in the U.S. The company will acquire seven shopping centers in three states from Australia’s Charter Hall Retail REIT for $75 million, including the assumption of $22.7 million in existing property-level debt.

EPN Investment entered into the agreement with Charter Hall on behalf of a joint venture consisting of an Elbit and Plaza Centers N.V. subsidiary, Eastgate Property L.L.C. and EPN Real Estate Fund L.P., the U.S.-based international fund that was created by Elbit, Plaza and Eastgate. The partnership will walk away from the transaction with a 650,000 square-foot portfolio of seven shopping centers located in Florida, Georgia and Oregon and featuring an average occupancy level of approximately 91 percent.

“We believe that there is great potential for enhancement in the assets acquired,” Dudi Machluf, Co-CEO of Elbit Imaging, said. “Upon the closing of this transaction and following the EDT Retail Trust transaction, which was announced in June 2010, we are proceeding in implementing our strategic decision to establish a yielding real-estate segment in the US. This segment generates impressive ongoing yield and has a promising growth potential.”

The aforementioned EDT Retail Trust transaction involved EPN Real Estate Fund’s investment of $116 million in Macquarie DDR Trust. The investment resulted in Macquarie DDR being renamed EDT Retail and increased EPN’s Real Estate Fund’s U.S. presence with interests in a 78-property retail portfolio encompassing 13.2 million square feet with a value of $1.5 billion at the close of 2009.

Foreign investors, after having retreated from U.S. real estate a couple of years ago, have renewed their interest in the county’s commercial property market. Foreign acquisitions jumped from $1.5 billion in the first quarter of 2010 to $2.5 billion in the second quarter, according to a report by global commercial real estate research firm Real Capital Analytics. Additionally, from the end of the second quarter of 2009 to the close of the second quarter of 2010, investments skyrocketed 210 percent.

Elbit is still mining the U.S. market for additional opportunities. “We continue to examine new transactions in the objective that our U.S. operation segment will become a leading and significant operation of the Elbit Group,” Machluf added.