Electra Real-Estate’s First Fund Has Terminated with a 27% Annual Return

The property that was most recently sold by Electra’s first real-estate fund, San Antonio, Texas (Photography: courtesy of the company)

The fund that invests in real estate in the United States and that was established in 2017 while fundraising 215 million dollars has completed the sale of its last property – a housing complex in Texas; Thus, it achieved a return of 561 million dollars for the investors.

Amir Preger

October 26th, 2022, 5:10 PM

Electra Real Estate has completed the closing of the first fund it established and its liquidation. The company reported today (Wednesday) that the fund has sold its last owned property- a housing complex in San Antonio, Texas in the United States – and has closed down.

Five years ago, Electra Real-Estate, managed by Amir Yaniv and under the control of Salkind’s brothers’ Elco Group (60%), decided to make a big change in its model: transitioning from an income-yielding real-estate company to a private equity funds company which raises funds from private and institutional investors in order to invest in income yielding real-estate; it appears now that it was the right choice.

The fund, established in 2017, closed down (i.e., terminated its fundraising) a year later and has raised a sum of 360 million dollars, 215 million dollars of which are from various investors, including several Israeli institutions – e.g., Hacshara Insurance, IBI, Leumi Partners, and the rewards fund of the Leumi Bank employees- and 145 million dollars were co-invested by several institutions in the United States (investments from entities that are not fund-members but are partners in investments; such investments enable increasing the funds invested in purchasing properties).

Since it closed in 2018, the fund has invested an overall sum of approximately one billion dollars in purchasing 22 housing complexes that include 7,636 housing units in Texas, Florida, Georgia, and North Carolina in the United States.

The average holding period of properties in the fund until it was sold was three years and ten months, and last month, as mentioned, the last property was sold. During this time, the average NOI of the properties has increased by 41%. Due to the selling of all of the properties, the fund’s investors have received returns of 561 million dollars.

This reflects a gross IRR (internal rate of return) of 26.8%.

The return for Electra Real-Estate itself (which serves as the general partner of the fund and therefore receives management and success fees), and after it had invested in the fund a sum of 30 million dollars, has reached 45.6%. It has received a total sum of 152.5 million dollars; more than half of this sum (79 million dollars) was received as success fees. This datum expresses the company’s part as partner-manager in the change in the housing complexes’ worth, which was estimated or realized during the period, after returning the minimum returns to the limited partners for their investment in the property. 6 million dollars were received as management fees and 68 million dollars for its part in the investment.

Since the establishment of the first fund in 2017 and until the end of the first half of 2022, Electra Real-Estate has raised 4.3 billion dollars for five investment funds it had established. Out of which, 3.2 billion dollars are investors’ funds and the additional 1.1 billion dollars were raised as co-investments.

While in 2017 the net profit attributed to shareholders was 60 million shekels, in 2021, it has already reached 400 million shekels and in the first half of the current year, it has reached 458 million shekels: more than the overall profits in 2021.

In addition, Electra Real-Estate’s share, which is traded today with a worth of 2.6 billion shekels, has yielded the highest return of all of Elco companies’ shares from 2017. It has increased during this time by 697%, while Electra has increased by 361% and Electra Consumer Products has increased by 236%. From the beginning of this year, the share has suffered from negative sentiments at the stock markets and the share has decreased by 24%, while the Tel-Aviv Real-Estate Index and Tel-Aviv Yielding Income- Abroad, in which it is included, have decreased by 23% and 30% respectively.