Starwood Retail Division Raises Nearly $290M on Israeli Bond Market
By Rey Mashayekhi February 27, 2018 8:41 pmreprints
Mall owner Starwood Retail Partners, a subsidiary of Starwood Capital Group, has become the latest American real estate firm to raise money on the Israeli bond market after issuing nearly $290 million in debt on the Tel Aviv Stock Exchange today, sources told Commercial Observer.
The company successfully raised roughly 1 billion shekels, or around $288 million, through an institutional tender that made its bonds available for purchase by Israeli investment funds, financial institutions and high-net-worth individuals, according to sources with knowledge of the deal.
The offering was met by robust demand from those investors that could have supported an issuance closer to $355 million, sources said. Starwood Retail Partners is hoping to raise up to $320 million upon completion of a public tender open to a wider array of Israeli investors early next week.
The unsecured bonds were issued at a coupon of 5.95 percent—keeping in line with the low borrowing costs that have made the Israeli debt market an increasingly popular avenue through which U.S.-based real estate firms can raise capital. Should the Starwood bonds receive over-demand from Israeli investors in the public tender next week, that interest rate could move further down still.
Starwood Retail Partners—the fifth-largest owner of malls and shopping centers in the U.S.—intends to use the proceeds from the debt issuance as part of a larger refinancing of its portfolio of 30 properties across the country, the sources said. The bond offering is backed by a slice of that portfolio, consisting of seven properties located in Ohio, California, Indiana and Washington State that Starwood co-owns through a joint venture with minority partner Westfield Corp.
The bonds are due to mature in August 2023, sources said. Israeli investment banks Poalim IBI and Bank Leumi served as underwriters on the deal, with Starwood advised by financial consultancy Barzell Global.
Representatives for Starwood Retail Partners could not immediately be reached for comment.