Elbit Imaging Ltd. (Nasdaq: EMITF; TASE: EMIT) president Mordechai (Motti) Zisser is making the plunge into the US real estate market. Elbit Imaging and a US partner will invest $200 million in equal shares in a property investment fund, four years after the real estate bubble began to burst, precipitating the worst global economic crisis since the 1930s.
For the purpose of the fund, Elbit Imaging set up a joint venture, Elbit Plaza USA LP, with subsidiary Plaza Centers NV (LSE:PLAZWSE:WLZ). Elbit Imaging and Plaza Centers will each invest $50 million for Elbit Plaza's share in the fund.
Elbit Plaza signed the framework agreement for the investment fund with NCH Capital Inc. affiliate Eastgate Property LLC. Elbit Plaza and Eastgate will each invest $100 million in the fund, which will invest in retail and commercial property. The parties will bring in $200 million from other investors.
Elbit Plaza and Eastgate are seeking to raise $400 million for the fund. This amount can be then leveraged to make up to $1 billion in investments.
Zisser said, "The capital commitment in the amount of $100 million by Eastgate, a sophisticated real estate investor with an impressive track record, clearly demonstrates its confidence in Elbit Plaza USA's ability to create value with respect to the proposed real estate transactions in the US. We plan to raise additional capital commitments from Israeli and foreign investors, some of which have already expressed an interest to join the fund."
Elbit Plaza and Eastgate will identify and locate potential investments over two years, during which the fund will buy properties or enter into joint ventures with owners of relevant assets or portfolios. The companies plan to sell the fund's assets or holdings and dissolve it within 5-7 years after the initial closing of the fund.
Elbit Imaging's share closed at $23.01 on Nasdaq yesterday, giving a market cap of $1.24 billion. The share rose 2.3% in early trading on the TASE today to NIS 87.30.
Published by Globes [online], Israel business news - www.globes-online.com - on February 9, 2010
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