Commercial Magazine

International Investments: Israel

By Neil Pierson

Despite some recent discontent among members of Congress — much of it surrounding last year’s armed conflict in Gaza — the U.S. and Israel have been longtime allies. The two nations have become prolific business partners since the signing of the Free Trade Agreement in 1985. According to the International Trade Administration, the U.S. imports about $19.5 billion in Israeli goods and receives about $38.5 billion in foreign direct investment from Israel each year.

The Middle Eastern nation of about 9 million people has largely recovered from the depths of the COVID-19 pandemic as its gross domestic product grew by 8.2% in 2021, according to the International Monetary Fund. And Israeli investors continue to place their money in U.S. commercial real estate assets. Israeli investors have charted a fairly steady course in recent years, according to Real Capital Analytics (RCA). Israel placed between eighth and 10th each year from 2019 to 2021 in RCA’s rankings of the top cross-border capital sources into the U.S. Last year, Israeli investment companies upped their game, placing $1.6 billion into 122 U.S. properties for a 79% year-over-year increase in volume.
Alony Hetz, an investment company headquartered near Tel Aviv, sold four of its U.S. properties last year, according to RCA. But it still owns dozens of commercial buildings in the United Kingdom and the U.S. Alony Hetz owns a 44% stake in Carr Properties, an American real estate investment trust. Carr is a partner in the construction of a new 43-story building in downtown Boston that is set for completion in 2023. The tower will include nearly 1 million square feet of office and retail space, a boutique hotel and 800 housing units.
RCA’s most recent rankings of the top 10 buyers of U.S. industrial real estate includes Faropoint, jointly headquartered in Israel and Hoboken, New Jersey. Faropoint gobbled up $662 million in U.S. industrial properties last year, per RCA. The Real Deal reported that the company’s industrial acquisition volume was actually in the neighborhood of $750 million as it nabbed 144 last-mile warehouses across the country. Faropoint is active in many East Coast and Midwest markets, including Philadelphia, Atlanta, Miami, Cincinnati and Chicago.
Yet another Israeli investment company with a U.S. presence is Klirmark Capital, which ranked sixth on RCA’s 2021 list of the top cross-border hotel buyers. Klirmark announced a major deal this past November when it partnered with two U.S.-based investment groups to acquire three branded hotels in Brooklyn, New York; Rockville, Maryland; and Norwalk, Connecticut. The purchase price was not disclosed.
Migdal Insurance (Israel’s largest insurance company with $90 billion in assets) has been active in U.S. commercial real estate investments in recent years, although it pulled back in 2021. In an outside-the-box transaction, Migdal now owns a 22.5% stake in a Midwest solar farm. This past February, Migdal placed another $75 million in the Mammoth Solar project, which spans 13,000 acres in northwest Indiana. That brought the company’s total project outlay to $175 million. Upon completion of the third and final phase of development, which is slated for 2024, Mammoth Solar will be the largest U.S. solar farm with the ability to power some 230,000 homes.
Israeli investors were noteworthy contributors to the $70.8 billion in foreign capital placed in U.S. commercial properties last year — nearly double the volume of 2020, RCA reported. But with formerly big spenders such as Migdal, Delek Group and Global Holdings Management Group staying on the sidelines of late, Israel may be considered more of a fringe player when forecasting the near-term investment climate. ●


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