The company, which manages private equity funds for investment in housing complexes in the United States, has profited 138 million dollars in the first half of 2022 thanks to a rise in revenues and revaluations. CEO of Electra Real Estate, Amir Yaniv: “The field of housing for lease is less sensitive to changes in interest than other fields of real estate.”
Amir Preger
6AM, August 11th, 2022
Electra Real Estate of the Salkind brothers’ Elco group (60%) finishes another successful quarter and marks an improvement in revenues and profits. At the end of the first half of 2022, the company had a net profit of 138 million dollars, 250% more than the profits of the parallel period last year (40 million dollars) and even more than the profits for all of 2021 (132 million dollars). These results reflect significant growth in the company’s profits, compared to 2019 and 2020 and their annual profits of 28 million dollars and 30 million dollars, respectively.
Electra Real Estate – which is managed from the beginning of the year by Amir Yaniv, while Gil Roshink who until then was the CEO is now Chairman – operates for the establishment and management of private investment funds in the real estate field in the United States. The company has finished the first half of 2022 with 200 million dollars in revenue, a 190% improvement in comparison to the parallel period in 2021. The operating profit soared to 187 million dollars in comparison to the 49 million dollars in the parallel half last year. The NOI from real estate is managed under the housing complexes activity and it has increased by 19% to 144 million dollars, while NOI from the same profits has increased by 24% to 98 million dollars.
Electra Real Estate’s revenues in the second quarter of the year amounted to 86 million dollars – a 73% improvement from the parallel quarter in 2021. From these revenues, 69 million dollars (80%) are success fees – a datum that reflects the company’s part as a partner-manager of the change in housing complexes' worth, which was revaluated or realized during the time, after the minimal returns to the limited partners for their investment in the revalued property. During the second quarter, the company realized seven housing complexes and signed binding agreements to sell seven more, which combined are worth approximately 1.1 billion dollars. In addition, in April the company signed agreements to sell housing complexes in north Carolina in exchange for 140 million dollars and 107 million dollars, and in June it signed an agreement to sell an additional housing complex in North Carolina for 92 million dollars.
The rate of success fees from among the income for the second quarter is higher than their rate in the parallel quarter last year (62%) and even higher than their rate in the first quarter of this year (72%). Out of all revenues, additional 12 million dollars were received as part of the adjustments for the fair worth of the properties managed by the company, in comparison to 5 million dollars received in the parallel quarter in 2021. This sum is added to the 25 million dollars made in the previous quarter.
Electra Real Estate’s operating profit in the second quarter had a 137% surge, reaching 80 million dollars, in comparison to 33 million dollars in the parallel quarter in 2021. The net profit for shareholders soared in the second quarter by 118% to 59 million dollars, compared to 27 million dollars in the parallel period last year.
Electra Real Estate has mentioned the possible influences of inflation and interest in the American market on its operations and profits, and noted that even though, in the long term, there may be consequences related to operation and construction costs, interest rates for loans, capitalization rates, and transaction scopes, so far, these did not have a significant impact on the company. Electra Real Estate’s CEO, Amir Yaniv, commented on this issue in a conversation with Calcalist yesterday and said that “the field of housing for lease is less sensitive to changes in interest than other fields in the real estate world.” In this context, Yaniv has noted that “the housing for lease is a basic consumer product for the American citizen and there is a gap between the supply of apartments and the high demands, which only propels rent costs forward, while, at the same time, the Americans’ available income can support the rise in rent costs.” Yaniv also said that “as a result of inflation, investors choose to invest in the field of housing for lease, which is perceived as more stable than other fields for investment, and simultaneously, due to the rise in interest, mortgages become more expensive, an aspect which also raises the demand for housing for rent.”
The equity capital attributed to Electra Real Estate shareholders has reached 373 million dollars at the end of this June, compared with 247 million dollars at the end of 2021. The company manages investors’ capital of 4.3 billion shekels, which, so far, during 2022, has raised 1.4 billion dollars. The worth of the properties managed by the company has reached at the end of the second quarter to a record of 8.6 billion dollars in comparison with 7.4 billion dollars at the end of the previous quarter and 6.5 billion dollars at the end of 2021.
Today, Electra Real Estate managed four funds for investments in housing complexes, two funds for funding housing complexes, fourteen partnerships for the investment in housing for rent, and American RIT partnerships for opportunities to invest in hotels in the United States. In November 2021, the company began operating for the establishment of a fund for offices in the UK, and as part of this endeavor, the company acquired an office building in London.
The company manages, as of today, approximately 48 thousand housing units in 159 properties in the housing for lease field in the United States – out of which 104 properties are housing complexes with 32 thousand housing units worth 7.6 billion dollars and with a 95% full capacity rate. In addition, the company manages 14 partnerships of private houses with 2,800 housing units worth 805 million dollars and with a 88% full capacity rate. In the hotel field, it holds 5 hotels in the United States worth 365 million dollars. In addition, the company holds a ground unit for the development of housing complexes for rent in south Miami, which the company acquired in April. Electra Real Estate is traded in Ahuzat Bait with a 3.2 billion shekel worth. The company’s share, which soared in the stock market yesterday by 4%, was on an 8% decrease from the beginning of the year – while the Tel Aviv real estate index declined by 9%. Since the Salkind brothers inherited the concern from their father in 2018, the Electra Real Estate share is the star of the companies they own and it has 728% of accumulated returns, compared to 222% for Electra Consumer Products and 146% for Electra. The Supergas company, acquired by the brothers in 2021, had a 9% negative returns.
Electra Real Estate’s Board of Directors has decided this month to widen the scope of the plan to self-purchase company shares by 61 million shekels, amounting to a total sum of 100 million shekels. It also decided to extend the duration of the plan to self-purchase the company’s bonds to March 2025. In the coming September, Electra Real Estate is expected to distribute a 12 million dollar dividend, which joins the dividend of a similar sum from last March.