12 Shopping Centers Selling for $333M

TEL-AVIV-Locally headquartered Elbit Medical Imaging Ltd. has chosen Klepierre Group of France as the purchaser of its wholly owned subsidiary Plaza Center BV, which owns a 12-property portfolio of shopping centers in Hungary. Klepierre Group was one of two proposals being considered. The other proposal was made by a Heitman fund. The agreement calls for Klepierre SA to acquire 100% of the equity and voting rights of the companies owning the centers. In addition, Klepierre subsidiary Segece will acquire 50% of the outstanding share capital of Plaza Centers Management Kft., an indirect Hungarian subsidiary of Plaza Centers that operates the acquired malls. The purchase price is approximately $333 million (Euro 285 million). The sale is expected to close by the end of July.As part of the deal, Segece will have a call option to acquire the remaining 50% of the shares in the management company. The option is exercisable after the fifth anniversary of the closing of the transaction, in consideration for a price to be calculated at the date of the exercise of the option in accordance with an agreed upon methodology. If the call option is not executed, Plaza Centers will have a “put-option” to sell its 50% shareholding in the management company to Segece on the same terms.In addition to the 12 malls in the transaction, the management company will continue to operate four other malls in Hungary that are not part of the transaction, as well as the office section of the Duna Plaza Center, which is also excluded from the transaction. The transaction does include a proposed expansion of the retail portion of Duna Plaza Center, which will be constructed by Plaza Centers under a turn-key agreement in terms of agreed plans, at an agreed yield on the triple net rents to be generated by the extension. In explaining its choice of buyers, Elbit chairman Mordechay Zisser says the Klepierre proposal “offers better terms and conditions.” As well, he says Klepierre is “a dedicated shopping mall group with a long term commitment to ownership, with extensive expertise and experience in management, and with excellent relations with many of the leading retail brands in Europe.”Elbit Medical Imaging is a subsidiary of Europe Israel (MMS) Ltd. Elbit has four main fields of operations: commercial and entertainment malls through its subsidiary Plaza Centers; the Hotel segment through its subsidiary Elscint Ltd.; image guided treatment through InSightec; and venture capital investments in the telecommunications business.