Property developer Elbit Imaging Ltd. (EMITF) and its indirect Dutch subsidiary Plaza Centers N.V. (PLAZ.L) announced Wednesday that their US subsidiary EPN Group has agreed to sell 47 of its 49 US based shopping centers in a deal totaling $1.428 billion, subject to certain closing conditions.
Australia-based property trust EDT Retail Trust, which was acquired by EPN last August, holds the selling properties. The centers, located across 20 US states, are to be acquired by BRE DDR Retail Holdings LLC, a joint venture between real estate investors Blackstone Group LP (BX) and DDR Corp. (DDR).
Elbit noted that Elbit Plaza USA L.P., a joint venture entity held by the company and Plaza Centers, holds an approximate 45.4 percent ownership interest in the properties through EPN Group.
EPN was jointly formed by Elbit, Plaza Centers and Eastgate Property LLC to pursue real estate investments in the United States.
Of the total transaction value, $934 million will be paid by the way of assumption of the property level debt unless repaid by EPN. In addition, all excess cash within EDT Retail Trust, which currently amounts to $30 million, will be retained by the sellers.
Following the sale of the 47 properties, EPN Group will continue to hold two properties located in the United States valued at approximately $43 million with total non-recourse secured debt of approximately $14 million.
The transaction is expected to close in June 2012, subject to the completion of a limited due diligence investigation, and certain other closing conditions. The purchaser will complete the due diligence investigation by the end of January.
The companies said the proceeds from the sale will be subject to deduction of transaction expenses and applicable taxes. Elbit said it has already recognized the profit realized for the Properties in its previous financial statements.
Ran Shtarkman, President and CEO, Plaza Centers said, "Plaza in conjunction with our joint venture partners acquired a portfolio of high yielding properties at a time when market values were clearly depressed. By utilizing our specialist retail property expertise, we were able to enhance capital and income value through the redevelopment and repositioning of the portfolio."
Plaza Centers shares are currently trading at 42.50 pence, up 4.63 pence or 12.21 percent in London.
Elbit Imaging shares closed Tuesday's trading at $2.60, down $0.22 or 7.66 percent in the U.S.
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