Elbit Imaging Ltd. rallied the most in more than a month after an affiliate of the investor in real estate and medical companies sold shopping centers in the U.S. for $1.43 billion.
The shares jumped 20 percent, the biggest gain since Nov. 28, to 12.44 shekels, at the 4:30 p.m. close in Tel Aviv. The yield on the company’s 5 percent bond due April 2020 dropped 3.48 percentage points to 32.27 percent.
“The deal will generate a high cash flow, which will enable the company to meet the payments to bondholders at least for the coming year,” Shay Lipman, an analyst at I.B.I.-Israel Brokerage and Investments Ltd. in Tel Aviv said by phone. “This buys time for the company.”
Tel Aviv-based Elbit has about 5.2 billion shekels ($1.4 billion) of debt outstanding, according to data compiled by Bloomberg. Moody’s Midroog Ltd. on Nov. 3 lowered the ratings on the company’s Series A through G and Series 1 bonds to Baa1 from A3, citing “challenges in improving its cash flow situation.”
Blackstone Real Estate Partners VII, a fund managed by the New York-based private-equity firm Blackstone Group LP, will own 95 percent of a venture formed to buy the properties, with the rest owned by an affiliate of DDR Corp., a Beachwood, Ohio-based real estate investment trust, according to a statement yesterday.
The retail centers are being sold by EPN Group, an affiliate of Tel Aviv-based Elbit. The purchase price includes assumed debt of $640 million and at least $305 million of new financing, according to the statement. DDR also will invest $150 million in preferred equity in the venture and provide leasing and management services.
Plaza Centers NV, the Elbit unit that owns the malls that are being sold in the U.S., surged 24 percent at 3:15 p.m. in London, headed for the biggest gain since at least October 2006, when Bloomberg started tracking the shares. Following the transaction, Plaza will own two malls in the U.S. valued at about $43 million, the company said in a separate statement.
“We intend to continue our operations in the U.S. together with our existing partners, using our experience to attract new investors, so that the U.S. continues to be an important part of our operations in the coming years,” Elbit’s Co-Chief Executive Officer Dudi Machluf said in a separate statement today.