Moinian Raises Around $170M With Latest Israeli Bond Offering

New York-based firm has now issued more than $530M in debt on Tel Aviv Stock Exchange

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Moinian Limited, an Israel-based affiliate of The Moinian Group, raised nearly $170 million this week through a bond issuance on the Tel Aviv Stock Exchange—the second time the New York development firm has succeeded in raising funds in Israel to finance its U.S. real estate activities.

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Moinian, which is among a wave of American real estate companies to have tapped the Israeli debt market in recent years, sealed the bonds at an interest rate of 3.05 percent—among the lowest coupons ever secured by a U.S. developer via a bond offering in Tel Aviv, according to sources with knowledge of the transaction.

The deal represents the company’s second Series B issuance of bonds on the Israeli bond market, after it raised more than $360 million in May 2015—at that time the largest debt offering by a U.S. real estate firm in Tel Aviv.

Combined, Moinian has now issued more than $530 million in bonds on the Tel Aviv Stock Exchange, according to sources, though the company pegged that amount at “approximately $550 million” in a statement announcing the deal. Moinian said it will use the funds raised to “provide greater flexibility in regards to acquisitions and financings.”

The firm issued approximately 520 million shekels, or more than $152 million, on Monday through an institutional tender open to Israeli banks, funds and institutional investors, and raised north of 51 million shekels, or roughly $15 million, through a public tender yesterday that was open to the wider market in Tel Aviv.

The bonds—backed by a portfolio of Moinian commercial properties including 3 Columbus Circle, 535-545 Fifth Avenue and the W New York Downtown hotel—carry a duration of just under five years and maturity date of December 2024. Moinian was advised on the issuance by financial consultancy Barzell Global, which specializes in advising firms on Israeli debt offerings.

Tel Aviv market sources said the deal—and the exceptionally low coupon Moinian was able to secure on the issuance—speaks to the Israeli market’s comfort with the firm and its profile, as well as the overall positive state of capital markets globally and the success of a recently launched exchange-traded fund (ETF) designed to track U.S. real estate companies trading on the Tel Aviv Stock Exchange.

“The [Israeli bond] market is booming for two main reasons: overall, capital markets around the world are in a very, very good position, and the new ETF founded to invest in American bonds,” said Yossi Levi of InFin, a Tel Aviv-based financial consultancy that has advised New York landlords including Delshah Capital and the Klein Group on their Israel bond offerings.

Levi noted that while the Moinian deal does feature a low initial coupon for an issuance by a U.S. firm, it has not been unusual for American real estate companies trading in Tel Aviv to see their bond yields drop below 3 percent on the open market—with Israeli investors continuing to drive strong demand for securities backed by U.S. real estate assets.

“This is the new benchmark for U.S.-related bonds—even though it seems to be very low. All of the market has gone to those kinds of [numbers],” Levi said. “I think you’ll continue to see [U.S.] companies raise more, and it’ll bring more companies to [the market].”

Other New York-based real estate firms to have tapped the Tel Aviv debt market include Related Companies, Extell Development Company, retail magnate Jeff SuttonWharton Properties, All Year Management and Pinnacle Group. Additionally, companies from outside of New York—such as Dallas-based Encore Enterprises—have been increasingly drawn to the Israeli market, and its relatively low borrowing costs, in recent years.