iStar and Blackstone buy Pfd Stk of Multi-family REIT
Elco's US REIT raises $219m
Landmark Apartment Trust of America issued preferred stock to funds affiliated with Blackstone and iStar Financial, ahead of an IPO.
3 July 13 10:21, Aviv Levy
Elco Holdings Ltd. (TASE: ELCO), controlled by chairman Georg Salkind, has taken another step to float its multifamily business in the US. Landmark Apartment Trust of America Inc. (LATA), a REIT in which Elco owns a 32.5% stake, raised $219 million in a private placement of preferred stock to funds affiliated with Blackstone Group LP (NYSE: BX) and iStar Financial Inc. (NYSE: SFI). The investment could rise to $285 million if certain conditions are met.
LATA will use the proceeds to buy more housing blocks and renovate them, and help repay $60 million in liabilities on previous issues of preferred stock.
In a statement to the TASE on Tuesday, Elco said that if LATA holds a public offering in the future, it will repay Blackstone and iStar's investments, plus predetermined interest. The preferred stock will be repaid three years from the issue date, with an option for a two-year postponement at LATA's discretion and under certain conditions.
Elco added that LATA is in the final stages of signing agreements to buy housing blocks with 6,200 apartments for $448 million. The properties have a net operating income (NOI) of $33 million a year, which will boost the REIT's NOT to $100 million.