Elbit Real Est (EMITF) Risk Analysis

On February 7, 2019, the Company announced that NASDAQ had informed the Company that the Hearings Panel has determined to delist the Company's ordinary shares. Nasdaq subsequently suspended Company from trading shares on Nasdaq effective at the open of business on February 11, 2019 and filed a Form 25 (Notification of Removal from Listing) with the SEC after applicable appeal periods lapsed to notify the SEC of the delisting of the Company's ordinary shares, effective at the opening of the trading session on May 13, 2019. Nasdaq had previously informed the Company that it did not meet Nasdaq Listing Rule 5450(b)(3)(C) (under which the Company must maintain a minimum market value of its publicly held shares of $15,000,000 for 30 consecutive business days), and that the Company would be subject to delisting if such requirements were not met within a certain time period. The Company's ordinary shares continue to be listed on the Tel Aviv Stock Exchange, and its ordinary shares are currently quoted on the OTC Markets. As a result of the delisting from Nasdaq, an investor may find it significantly more difficult to dispose of, or to obtain accurate quotations as to the value of, our shares, and our ability to raise future capital through the sale of our shares will be adversely affected. Moreover, we are unable to use the SEC's "short form" Form F-3 to register the offering and sale of securities, even for limited primary offerings. In addition, we are required to comply with enhanced reporting obligations under the Israeli securities laws, in addition to the reporting obligations under the U.S. securities laws, which could require additional management attention, increase our legal and accounting expenses and raise our exposure to sanctions for possible violations of Israeli securities laws.

On December 19, 2017, we announced that we completed the sale of our holdings in a SPV that held the Radisson Hotel Complex in Bucharest, Romania. As part of the transaction we granted the purchaser an €8 million vendor loan for a term of three years, bearing interest at a rate of 5% per annum. The loan was given as collateral for customary post-closing liabilities of the SPV, whereby the purchaser may offset adjudicated losses which may be incurred by it as a result of a breach of warranties or in respect of certain indemnities given under the agreement. On April 2, 2018 we announced that we received a notice from the purchaser claiming that it is entitled to indemnification in the amount of approximately €3 million, due to the alleged breach of certain warranties made by the Subsidiary in the Agreement (the "Notice"). In the Notice the purchaser has informed the Company that it has submitted claims under the policies of Warranty & Indemnity Insurance and Title Insurance taken out in terms of the agreement, which provides that where loss arising from a warranty claim may reasonably be anticipated to be covered by such insurance policies, the purchaser will firstly attempt to recover such loss out of the proceeds paid out under such policies. The Company is currently examining the Notice with its legal advisors. After a preliminary review of the Notice, the Company believes that the warranty claims are without merit and intends to vigorously contest same. See–"Item 4 - Information on the Company – History and Development of the Company – Recent Events Sale of our holdings in the Radisson complex in Bucharest, Romania" If the SPV fails to pay the loan under any circumstances (such as a result of a breach of warranties or certain indemnities given under the agreement), it may be a material adverse effect on our projected cash flow.

Our strategy with respect to our plots in India is to dispose of such assets under the most optimal market conditions. Due to regulatory, physical and other limitations to develop our project in Bangalore, India, on December 2, 2015, we announced that EPI signed an agreement to sell 100% of its interest in a special purpose vehicle which holds a plot in Bangalore, India to a local Investor (the "Purchaser") which should had been closed on September 30, 2016. The Purchaser has failed to close the transaction in the agreed time line. As a result of this breach, the Purchaser was required to carry out an agreed upon separation mechanism in such manner that EPI will have full title over the plot. Such mechanism include mainly the execution of certain title documents transferring and duly registering the 10% undivided interest in the plot that are being held by the Purchaser in EPI's favor. Since the separation mechanism has not been executed by the Purchaser, EPI has received from the escrow agent, the sale deeds and transfer documents for land plots covering approximately 8.7 acres which had been mortgaged by the Purchaser under the agreement. On June 19, 2017, we announced that EPI has signed a revised agreement for the sale of the plot in Bangalore to the Purchaser. As part of the agreement, part of the consideration will be paid by the Purchaser in installments until the final closing that was set to take place on September 1, 2018. All other existing securities granted to EPI under the previous agreement will remain in place until the final closing. In January 2018, the Purchaser has notified EPI that due to a proposed zoning change (initiated by the Indian authorities) which could potentially impact the development of the land, all remaining payments under the Agreement will be stopped until a mutually acceptable solution is reached on this matter. EPI has rejected the Purchaser's claims, having no relevance to the existing Agreement, and started to evaluate its legal options. INR 46 Crores (approximately EUR 6.06 million) were paid till March 2018. In March 2018, an amended revised agreement was signed, and the Purchaser and EPI have agreed that the total purchase price shall be increased to INR 350 Crores (approximately €44.5 million). The Final Closing will take place on 31 August 2019 when the final installment of circa INR 212 Crores (approximately EUR 26.9 million) will be paid to EPI against the transfer of the outstanding share capital of the SPV. On February 4, 2019, the Company announced that the Purchaser defaulted on payments and EPI is considering all legal measures available to it to protect its interest. During March 2019, the Company announced that the Purchaser has further paid INR 9.25 Crores (approximately €1.15 million). During April 2019 EPI has reached an understanding with the Purchaser according to which: (i) the closing date for the transaction will be extended to November 2019 (instead of August 2019) (the "Closing Date"); and (ii) the consideration will be increased to approximately €45.64 (INR 356 crores) (instead of INR 350 crores) (the "Consideration"). The Closing Date can be further extended to August 2020, subject to mutually agreed payment terms. On May 13, 2019, the Company announced that the Purchaser defaulted on payments of INR 10 crores (approximately €1.27 million) according to the new understandings signed on April 2019. EPI has initiated legal process to protect its interest while it continues to negotiate with the Purchaser for payment of the amount due. As of the date of this report, the Purchaser paid in total INR 80 crores (approximately EUR 10.26 million) as against INR 90 crores (approximately EUR 11.5 million) that was supposed to be paid by end of April 2019 according to the mutual understating. If the Purchaser defaults before the final closing, EPI is entitled to forfeit the amounts paid by the Purchaser until this date (approximately €10.26 million) as stipulated in the revised agreement. All other existing securities granted to EPI under the previous agreements will remain in place until the final closing. However, it should be noted that, in case of a breach by the Purchaser of the new agreement, we will still should achieve full separation from the Purchaser, which might be a long and tedious process and we are not certain that we will be able to achieve it. In case such separation would not be achieved it may cause a significant impairment to the value of the property and may cause significant difficulties to find another third-party buyer to this plot taking into account that there is no clean title on the property. This may have a material adverse effect on our operations, cash flow and in turn, our ability to repay our debts in timely manner. Even if we are able to properly execute the separation mechanism (in particular with respect to the transfer of the Purchaser's 10% undivided interest in our favor) and/or exercise the guarantees placed by the Purchaser, there is no guarantee that we will be able to dispose of the land in the Bangalore project to a third party on efficient economic terms due to proprietary claims to certain parts of the Bangalore project, and other third party holdings on parts of the land within the Bangalore project thus making the holdings in the land a non-contiguous property. In addition, legal and regulatory restrictions placed by local authorities can materially impede our ability to dispose of the land on optimal commercial terms which may materially adversely affect our ability to dispose of the land to third parties which may jeopardize our business strategy, planning and operations, and could cause severe delays in disposition of the plots and could have a material adverse effect on our operations, cash flow and in turn, our ability to repay our debts in timely manner.