Extell, Brookland tap Israeli bond markets to fund NYC projects

Debt issuance on Tel Aviv exchange thought to be a first for US developers
By Hiten Samtani | June 03, 2014 09:30AM

Extell Development and Brookland Capital have raised money through a bond offering on the Tel Aviv stock exchange. The capital-raising marks the first time U.S.-based developers have tapped Israel’s bond market to get funding for domestic projects, Brookland co-founder Boaz Gilad told The Real Deal.

Gary Barnett’s Extell raised about 945 million shekels, roughly $271 million, while Brookland borrowed 120 million shekels, about $34.5 million.

Extell will pay 4.9 percent interest on the bonds, roughly half the rate in the U.S. Brookland’s debt carries a 6.4 percent interest rate.

“There’s a huge appetite for bonds in Israel,” Gilad continued, saying that a company of Brookland’s size would be unlikely to stir up the same investor interest in New York. Brookland will use the cash to fund acquisitions in Brooklyn, he added, in neighborhoods such as Crown Heights, Bedford-Stuyvesant and Bushwick.

Representatives for Extell could not be reached, but Israeli business news website Globes reported last month that Barnett was only planning to raise about 700 million shekels, or $201.5 million. Extell will use the bulk of the money to fund real estate investments in New York. Last month, the developer closed on a $410 million refinancing of the Ring portfolio.