The Real Deal New York

David Marx expected to raise $40M on Israeli bond market

Developer is the latest to tap into Tel Aviv for capital

September 04, 2015 04:20PM
By Rey Mashayekhi

From left: Gal Amit, Rafael Lipa and David Marx

From left: Gal Amit, Rafael Lipa and David Marx

David Marx is set to become the latest New York-based real estate developer to tap into Israel’s burgeoning corporate bond market to raise funds. His Flushing-based firm, Marx Development Group, is expected to complete a roughly $40 million debt issuance on the Tel Aviv Stock Exchange early next week.

This week, the firm raised around $24 million from Israeli banks, pensions funds and financial institutions at an interest rate of 8.9 percent, The Real Deal has learned.

The offering expects to raise another $16 million through a public tender when the market reopens in Tel Aviv on Sunday, though the deal could potentially see Marx raise up to $50 million by the time the debt issuance is finalized.

The deal amounts to an initial public offering for Marx’s firm, which would be publicly listed on the Tel Aviv Stock Exchange and become the latest New York-based real estate firm to take advantage of Israel’s unique corporate bond market.

Marx Development Group previously issued a preliminary prospectus for a public debt offering on the exchange late last year. That deal was delayed due to market conditions and did not come to fruition.

But the developer has succeeded in tapping into the Israeli bond market this time, with the debt issuance backed by a portfolio of assets valued at $514 million — including Marx’s planned 399-room Marriott Courtyard Hotel at West 34th Street and 10th Avenue in Hudson Yards. The money raised through the bond offering is expected to fund the development of the hotel and finance future acquisitions.

Victory Consulting, led by Gal Amit and Rafael Lipa, advised Marx Development Group on the deal — with Marx following the likes of the Lightstone Group, Brookland Capital, GFI Capital Resources Group and All Year Management in being taken to market by the Tel Aviv-based firm. Victory declined to comment on the matter.

Israel’s bond market has grown in popularity among U.S. real estate firms in recent years as a platform enabling private firms to access low-cost capital through public issuances of corporate-grade debt. The Moinian Group completed the largest such offering to date earlier this year, closing on a $361 million bond issuance at an interest rate of 4.2 percent – one of the lowest rates ever secured by a U.S. company on the Tel Aviv Stock Exchange.

Marx could not be reached for comment. In addition to the Marriott Courtyard, the developer is also planning another Hudson Yards hotel project — a 39-story, 438-key tower at 450 11th Avenue.