The Real Deal New York

Klein Group closes first Israeli bond issuance, while Joel Gluck taps market again

Retail landlord and Brooklyn developer targeting over $115M in funds from Tel Aviv debt offerings

November 27, 2015 03:00PM
By Rey Mashayekhi

Tel Aviv Stock Exchange

The Tel Aviv Stock Exchange

Two more New York-based real estate players successfully issued bonds on the Tel Aviv Stock Exchange, with retail landlord the Klein Group securing roughly $55 million in its first bond offering and Joel Gluck’s Spencer Equity Group tapping the market once again for more than $50 million.

Israeli institutional investors responded enthusiastically to both debt offerings, leading both companies to up their respective issuances, according to sources with knowledge of both deals.

Florham Park, N.J.-based Klein Group, led by Jacob Klein, accepted $53 million through an institutional tender targeting Israeli banks, pension funds and other financial institutions, exceeding initial expectations. While hoping to raise up to $65 million once it finalized the debt offering with a public tender to a wider array of investors — which would have surpassed the deal’s previous goal of around $60 million — the offering closed at around $55 million upon its completion this week, sources said.

The company’s issuance, backed by a retail portfolio of more than 20 New York-area properties, was closed at an interest rate of 6.4 percent, with the landlord benefiting from a A-rating from Israeli ratings agency Midroog. It was advised on the deal by Yehonatan Cohen and Yossi Levi of financial consultancy InFin.

Spencer Equity Group, meanwhile, followed up its initial $100 million bond issuance on the Tel Aviv Stock Exchange last year with another series of bonds this week — raising roughly $50 million through the institutional tender phase and hoping to seal around $62 million once the public tender is completed next week, sources said.

Gluck’s firm also increased its targeted total issuance, from $50 million to $62 million, and closed the institutional tender at an interest rate of 4.9 percent on the strength of an A rating. The developer, whose issuance was backed by a rental portfolio, was advised by Gal Amit and Rafael Lipa of Victory Consulting.

The news is likely to encourage other New York real estate players weighing debt offerings in Israel, after a period of heightened skepticism from some following Jeff Sutton’s delayed $500 million bond deal — what would have been the largest such offering by a U.S. real estate firm to date — earlier this fall. That skepticism has worked both ways, however, with suggestions that Israeli investors had also cooled down on U.S. firms looking to tap Tel Aviv as a source of cheap, affordable capital.