The Real Deal New York

Barnett to host Israeli investors concerned about NYC’s luxe market slowdown

Extell bondholders concerned about developer's underwhelming performance in Tel Aviv

March 22, 2016 04:03PM

Extell Israel Bond Market

The Tel Aviv Stock Exchange (inset: Gary Barnett)

After traveling to Israel to assuage bond investor’s fears regarding the lackluster performance of his company’s publicly traded bonds, Extell Development head Gary Barnett will host Israeli investors next month in New York, in a bid to downplay concerns regarding a softening market for high-end condominiums in New York City.

Barnett, whose company raised more than $400 million through two separate public bond issuances on the Tel Aviv Stock Exchange since 2014, has seen Extell bonds trade underwhelming in Israel as of late – prompting a trip to the country earlier this month to meet with investors.

Now he is set to play host to many of those same investors in New York, telling Bloomberg that the meeting “was not at [Extell’s] invitation” but that the company is “happy to have them here, and to take them through our properties and to show them the quality and the strength of the assets.”

While more than a dozen U.S. real estate firms – most of which are based in New York – have issued debt in Israel since 2008, the market in Tel Aviv is generally more receptive toward investors specializing in cash-generating assets like multifamily housing or retail.

Condo developers like Extell, meanwhile, have generally performed less strongly – a situation exacerbated recently by reports of a supply glut in high-priced luxury apartments and slowdown in demand for such properties.

Barnett himself has acknowledged that slowdown, but claims creditors are insulated because Extell’s portfolio backing its bonds consists of a diverse pool of properties including hotels and rental apartments.

“One of the things we’ve tried to make clear to the bond investors is that Extell Ltd. Is not dependent on getting these super-high luxury prices,” Barnett said. “There are many ways of repaying the debt and we don’t anticipate we’ll have a problem.” [Bloomberg]Rey Mashayekhi