Multifamily residential developer Copperline Partners raised roughly $75 million through a bond offering on the Tel Aviv Stock Exchange this week—the second such deal completed by the New York- and Florida-based company on the Israeli bond market.
Copperline raised around 280 million shekel in total upon closing the issuance Thursday on TASE, which has emerged in recent years as an increasingly viable means by which U.S.-based real estate investors can raise capital.
The company—a private firm owned by the Schlesinger family that operates roughly 40 residential and hotel properties in New York, Connecticut and Florida—initially targeted an offering of around $25 million but raised roughly three times that amount due to high demand from Israeli institutional investors, according to sources with knowledge of the deal.
Copperline secured the bond issuance, backed by a portfolio of assets selected from its U.S. holdings, at an interest rate of 5.1 percent—indicative of the low-cost, corporate-grade debt space available to mid-sized American real estate players in Israel. The series is due to mature in 2025.
The firm will use part of the proceeds from the deal to help service the debt on its first Israeli bond offering in October 2015, in which Copperline raised more than $85 million at an interest rate of around 6 percent. The company’s bonds have performed well since, currently trading at yields just north of 3.2 percent and due to mature in 2020. Copperline was also able to successfully issue another $20 million of Series A debt last September—pushing that offering to roughly $105 million total.
Copperline did not return requests for comment. The company was advised on the deal by Tel Aviv-based financial consultancy InFin, which also served as the underwriter. InFin vice president Yossi Levi told Commercial Observer that Copperline’s performance on the Tel Aviv Stock Exchange and its Series B issuance “symbolizes that the market is getting more comfortable with U.S. issuers.”
“After the bond starts to trade, the market gets familiar with the company and it enables them to issue at a more attractive interest rate,” Levi said. “There’s still a gap [with the interest rates secured by Israeli issuers], but it is getting minimized day by day.”
Retail mogul Jeff Sutton was able to successfully raise $233 million on the Israeli bond market this week through an institutional tender to Israeli banks, mutual funds and institutional investors, as The Real Deal reported. The institutional tender comprises the first phase of a TASE bond offering; Sutton can raise up to an additional $30 million through a second, public tender open to a wider array of investors.
Other U.S. real estate landlords and developers to have tapped the Israeli bond market include The Moinian Group, Related Companies, Extell Development Company and Lightstone Group—with the market thus far favoring New York-focused firms with income-producing, rental and retail properties.