Elco Commits 95 Million Shekels to Electra Real Estate Rights Offering

Elco is stepping up its efforts to bolster investor confidence following a sharp drop in the share price of Electra Real Estate. The holding company, controlled by brothers Dani and Mikey Zalkind, will invest at least 95 million shekels in a rights offering by its subsidiary, which manages real estate investment funds in the United States. This corresponds to its 48.7% stake, while full participation by other shareholders would bring the total capital raise to 200 million shekels.

The offering will be executed at a price of 183.3 shekels per unit, comprising 14 company shares, representing a 15% discount on the stock's closing price of 15.4 shekels. Elco, which recently poured 20 million shekels into purchasing company shares to signal strong backing, may acquire additional rights from other eligible investors, potentially increasing its overall investment.

Second Capital Raise Since July

This marks the company's second capital raise since late July, when it secured 150 million shekels through an allocation of 6% of its shares, primarily backed by the Menora insurance company. The stock has plummeted 67% since the beginning of the year, driven by high U.S. interest rates that weighed on fund yields, lower performance fees, and negative asset revaluations.

Despite pressures from rising U.S. Treasury yields and leveraged real estate conditions, Electra Real Estate views the market downturn as an opportunity to acquire assets from distressed sellers struggling with high financing costs.

Strategy and Portfolio Overview

Electra Real Estate manages U.S. real estate funds focusing primarily on multi-family housing, currently operating four funds holding 99 properties encompassing approximately 30,000 residential units. In January, the firm reached a first close for its fifth fund, securing 480 million dollars toward a one-billion-dollar target.