Elco to Invest at Least NIS 95 Million in Electra Real Estate After Stock Plunge
Translated & summarized from Calcalist by baba
Elco will invest at least 95 million shekels in Electra Real Estate's rights offering, aiming to boost investor confidence after the subsidiary's stock dropped 67% this year. The offering, priced at a discount, could raise up to 200 million shekels. Electra Real Estate's performance has been impacted by high U.S. interest rates and concerns over its real estate funds. This is the company's second capital raise since July.
The story in 5 lines · by baba
- Elco will invest at least 95 million shekels in Electra Real Estate's rights offering.
- Electra Real Estate's stock has fallen 67% since the beginning of the year.
- The rights offering is priced at a 15% discount to the last trading price.
- High U.S. interest rates are cited as a primary reason for Electra Real Estate's struggles.
- This is Electra Real Estate's second capital raise since July.
Elco, controlled by brothers Dani and Mikey Zalkind, announced it will invest at least 95 million shekels in a rights offering by its subsidiary, Electra Real Estate. This investment represents Elco's share of 48.7% in the offering, which aims to raise a total of 200 million shekels if fully subscribed by other shareholders. The rights offering is priced at 183.3 shekels per unit, with each unit containing 14 company shares, and will be conducted at a 15% discount to Electra Real Estate's last trading price of 15.4 shekels per share. This move follows Elco's recent 20 million shekel investment in Electra Real Estate shares and aims to bolster investor confidence after the subsidiary's stock has fallen 67% since the start of the year.
Electra Real Estate's struggles are attributed to the impact of high U.S. interest rates on its real estate funds, leading to lower performance fees and negative asset revaluations. Concerns about the funds' ability to raise capital, coupled with a 10-year U.S. Treasury yield exceeding 5%, have further burdened its leveraged real estate operations. Despite these challenges, the company sees an opportunity to acquire distressed assets and plans to use the capital raised to participate as a limited partner in its funds' acquisitions.
This is Electra Real Estate's second capital raise since July, when it secured 150 million shekels, primarily from Menora Insurance. Previously, the company had to adjust its offering terms after an initial negative market reaction caused a 12% stock drop. The company manages U.S. real estate funds, mainly in multi-family housing, with four active funds holding 99 properties and approximately 30,000 units. The current capital raise is intended to support its investment strategy amidst a challenging market environment.
