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Tel Aviv Conglomerate Contracts with Australian Shopping Center in Pending $75 Million Purchase Deal


Dudi-Machluf.jpg

Dudi Machluf

A clear example of how intimate the global real estate scene has evolved is a pending $75 million shopping center deal expected to close in 2011.

Elbit Imaging Ltd., a Tel Aviv-based conglomerate, has contract to buy seven U.S. shopping centers for $75 million from Sydney, Australia-based Charter Hall Retail REIT, formerly known as Macquarie CountryWide Trust, a major international player in the retail investment column.

The deal involves Elbit assuming $22.7 million in Charter Hall mortgages on the properties. They are located in Florida, Georgia and Oregon. They total 650,000 square feet (about 60,000 square meters) with an average occupancy of 91 percent, according to Elbit's news release.

The owner of record will be an Elbit affiliate, EPN Investment Management, LLC.  The seller of record were affiliates of Charter Hall.

The Properties have Net Operating Income (NOI) of approximately US$7.0 million, which reflects an annual yield of approximately 9.2%.

Elbit states the closing of the transaction is contingent upon the receipt of the approval of the applicable lenders to the assignment and assumption of the Assumed Debt, applicable ground lessors' consent to the sale of three Properties which are subject to ground leases, and all other documentation required for closing.

The purchaser of the properties will be a new joint venture entity formed by a subsidiary of Elbit and Plaza Centers N.V. (LSE: PLAZ) (WSE: PLAZ/PLAZACNTR) ("Plaza"), Eastgate Property LLC or its affiliate ("Eastgate") and EPN Real Estate Fund LP (the "Fund"), the U.S-based international fund that was formed by Elbit, Plaza and Eastgate.

This investment constitutes part of Elbit's overall U.S. investment strategy alongside the Fund, according to the company's statement.

Dudi Machluf, Chief Executive Officer (Co-CEO), commented:

"We are proud to announce the entering into the second transaction of the Fund we have established for the objective of investments in the US retail and commercial real estate sectors.

"We identified the assets, which comply with our investment profile, and in cooperation with our US-based team we executed this transaction following an extensive and professional examination.

"We believe that there is great potential for enhancement in the assets acquired.

"We are proud to state that upon the closing of this transaction and following the EDT transaction which was announced in June 2010, at the framework of which we have acquired approximately 48% of EDT Retail Trust, 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. We continue to examine new transactions in the objective that our US operation segment will become a leading and significant operation of the Elbit Group."

The news releases states EPN Investment Management LLC and EPN Fund GP LLC are entities jointly formed by Elbit Imaging Ltd. ("Elbit"), Plaza Centers N.V. ("Plaza") and Eastgate Property LLC and its affiliates ("Eastgate") in order to facilitate U.S. retail real estate investments, including through EPN Real Estate Fund, LP, a real estate investment fund that was jointly established by Elbit, Plaza and Eastgate, focused on investments in the U.S. retail and commercial real estate sectors (the "Fund").

Recently, the Fund secured from Menora Mivtachim Insurance Ltd. ("Menora") and certain of Menora's affiliates, $31 million in capital commitments.

Elbit Imaging Ltd. operates in the fields of commercial and residential real estate and entertainment centers; medical equipment and research; hotel acquisitions; and fashion apparel distribution and marketing.

 

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