Harel Group Chairman Yair Hamburger
Harel, Elco buy US housing unit portfolio
Partners to invest some $35 million in equity capital for acquisition of six housing clusters
Harel Group subsidiaries have concerted with Elco Holdings in a joint agreement with a foreign investor, Brookfield, for the acquisition of real estate in a three-stage deal for $340 million.
The affiliation will invest some $35 million in equity capital for six of the housing clusters of which Harel and Brookfield will invest $14 million each and Elco – $7.8 million. The remainder will be financed through a bank loan. The property is at nearly 93% occupancy.
The deal includes 18 housing clusters with a total of 5,659 units in the Southeastern United States. Last month Harel reported it was holding negotiations over the real estate.
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The acquisition will be carried out by Harel subsidiary corporations which will gain a 39% stake of the property. The remaining stake will be acquired by the Brookfield investment fund (39%) and Elco (22%) which will assume the project's management.
The first stage, completed on September 28, included the acquisition of 1,726 housing units which are included in six of the 18 housing clusters for $106 million. The subsidiaries' share in the equity capital invested in the first stage was $14 million.
Head of real estate Investments at Harel Group, Gadi Ben Haim, noted that "the deal makes for an important addition to Harel's residential earning property portfolio in the US and is a direct continuum to previous investments we had made in New York and New Jersey.
"The financial crisis in the US led to a rise in demand for rentals and, as a whole, the sector is typically stable and low risk. This is a high quality stable portfolio which gives Harel a unique opportunity to hold a substantial property portfolio which has good prospects for future improvement.
"An indication of the project's quality are the two local partners – Brookfield, which manages a global real estate portfolio worth over $150 billion, and Elco Landmark Residential, which manages some 16,000 housing units worth an approximately $1.5 billion and which will manage the current project as well."
Click here to read this report in Hebrew
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