Israeli real-estate investors see the Southeast U.S. as a prime location, but developers looking to close deals need to be willing to cross the Atlantic Ocean and a yawning cultural gap.
As in most international negotiations, trust is paramount with Israelis, who are looking for properties with a good story that can generate double-digit returns, experts said at a seminar hosted by Arnall Golden Gregory LLP March 13.
Marvin Banks, a director at Cortland Partners, which last year attracted $24.5 million from Israel’s Phoenix Insurance for a $154 million apartment deal, said face-to-face interaction has been key in winning repeat business with institutional investors in Israel.
“I do not believe that Phoenix would have invested with us had we not been [to Israel],” Mr. Banks said. “There’s no substitute for making the effort to go spend time with them in Tel Aviv.”
The same is true for courting individual investors, said Norman Radow, president and CEO of RADCO Cos., which has purchased multiple properties with backing from Israeli investors, usually distressed multifamily properties where it’s easy to show the path to profit.
Many Israelis are self-made, having cashed out of software or defense companies purchased by foreign giants. As entrepreneurs, they tend to be hands-on about their cash, especially since many of them already own apartments in Israel, said Mr. Radow, who started going to Israeli to visit his son and soon began setting up business meetings in his downtime.
“There’s a lot of capital there and it’s growing, and they don’t have a mechanism to deploy it because it’s all new,” he said. Of the 45-or-so investors Mr. Radow is working with, only one inherited the wealth.
Building trust requires an investment in understanding, said Uzi Ziv, an Israel native and president of Sage Equities (Canada) Ltd. who has placed millions of dollars worth of Israeli capital in U.S.-based projects in the last few years.
He said U.S. developers should have an intermediary who can handle the vast cultural chasm that both sides often miss, perhaps because of the fact that they can speak to each other easily.
“In Israel, most people speak English, but they don’t speak the business language,” Mr. Ziv said.
Though not a part of the panel, Israeli Consul General Opher Aviran stood up to express his agreement. The fact that Israelis often think they understand American culture from television means that they have to do some cultural homework of their own. Mr. Aviran bars his staff from using Hebrew during meetings with Americans.
Abe Schear, a partner in the real estate practice of Arnall Golden Gregory and the panel’s moderator, believes Atlanta is ripe for more Israeli investment if it continues to brand itself in the country. He commended efforts on that front by service providers as well as the American-Israel Chamber of Commerce and the state of Georgia.
“We don’t have a fundamental core product. Our product is industry, and our industry needs offices and shopping centers, and it needs houses and warehouses,” Mr. Schear told Global Atlanta. “I think ultimately we’re a real-estate city and we embrace that.”
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