NYC Landlord Joel Wiener Raises Another $120M on Israeli Bond Market
By Rey Mashayekhi April 26, 2017 9:37 am
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Multifamily landlord Joel Wiener’s Pinnacle Group has raised $120 million in its latest Israeli bond issuance on the Tel Aviv Stock Exchange, Commercial Observer has learned—with Wiener sealing the debt offering at an interest rate under 3.7 percent, among the lowest ever secured by a U.S. issuer on Israel’s bond market.
Pinnacle, which trades in Israel under the name Zarasai Group, raised around 430 million shekels this week through an “institutional tender” open to Israeli banks, funds, institutional investors and high-net worth individuals, according to sources with knowledge of the deal.
The offering represents the third series of bonds issued by the Penn Plaza-based landlord on the Tel Aviv Stock Exchange. Wiener’s firm has now raised roughly $500 million via debt issuances in Israel since becoming one of the first U.S.-based real estate companies to tap the market in 2012—with that total making Wiener one of, if not the largest American borrower on the Israeli bond market.
The issuance was met with a “huge amount of demand” from Israeli investors, according to Rafael Lipa of Victory Consulting Group, who advised Pinnacle on the transaction alongside colleague Gal Amit.
Lipa said the deal received demand for an offering over 1 billion shekels ($275 million), with the market attracted to Wiener’s track record as a repeat issuer, as well as a well-rated portfolio comprised of 9,000 rental units—virtually all rent-stabilized and located exclusively in New York City—valued at around $2 billion.
Pinnacle is expected to raise up to 500 million shekels, or just under $140 million, in total through the Series C issuance upon completion of a “public tender” open to a broader range of investors. The bonds have a duration of 5.4 years and are due to mature in 2027, Lipa said. Israeli investment bank Poalim IBI underwrote the deal.
The Israeli bond market has emerged in recent years as a vehicle for American landlords and developers to raise corporate-grade debt at low borrowing costs; The Moinian Group, for instance, raised $361 million at a 4.2 percent coupon in a 2015 issuance.
The exceptionally low interest rate on Wiener’s latest offering is a testament not only to the landlord’s relationship with the Israeli market but also how institutional investors there have increasingly warmed to U.S. firms seeking to raise money in Tel Aviv.
“It took us a couple of years, but now American bonds in Israel are a well-accepted asset class,” Lipa said. “I think the biggest change in the past six months is that Israeli pension funds are now participating the bond issuances; that is driving the interest rates down.”
According to Lipa, four of the five largest Israeli pension funds are among the investors in Pinnacle’s latest debt offering. “Pension funds that weren’t big players [in U.S. bond deals in Israel] a couple of years ago are now buying, and buying big.”
Pinnacle Group could not immediately be reached for comment.
American developers and landlords whose bonds are mostly backed by rent-producing, multifamily and retail holdings have found the most success on the Tel Aviv Stock Exchange, while condominium developers whose portfolios feature more speculative, “for-sale” assets—like Gary Barnett’s Extell Development Company—have seen their bonds underperform in trading.
New York- and Florida-based multifamily developer Copperline Partners raised around $75 million in its most recent offering in February, as CO first reported, while New Jersey-based retail landlord The Klein Group successfully issued roughly $25 million in debt last month.
