KBS seals Israeli bond offering at $249M

California-based REIT raises extra $33M in second phase of public debt issuance

TRD New York /
Mar.March 07, 2016 02:30 PM

KBS Strategic Opportunity REIT closed its Israeli bond offering Monday after issuing nearly $33 million in debt through a public tender, bringing the first bond issuance by a U.S.-based REIT in Israel to roughly $249 million, sources said.

KBS secured 127.7 million shekels, or more than $32.6 million, through the second phase of its bond offering – a public tender open to a wide array of Israeli investors.

The public tender follows last week’s institutional tender, open only to qualified Israeli investment funds and financial institutions, that saw the REIT raise more than 842 million shekels, or nearly $216 million.

The public, non-traded REIT’s total issuance now stands at nearly $249 million, secured at an interest rate of 4.25 percent, according to sources with knowledge of the matter. This makes KBS the latest American real estate firm to capitalize on affordable Israeli debt deals available through public bond offerings on the Tel Aviv Stock Exchange, as well as the first U.S. REIT to do so.

While KBS – managed by Newport Beach, Calif.-based real estate investment firm KBS Capital Advisors – could have raised up to 1 billion shekels, or $256 million, sources close to the company described the issuance as a “huge success.”

The REIT is understood to have initially targeted a total raise of 600 million shekels, or just over $153 million, but saw the institutional phase of its offering receive more than $300 million in demand from institutional investors, as The Real Deal reported last week.

In addition to being one of the larger bond offerings by a U.S. company in Israel – the record is currently held by the Moinian Group, which closed on a $361 million issuance last May – the deal is also notable for the 4.25 percent interest rate on the debt issued by KBS.

For comparison, Moinian’s 4.2 percent interest rate on its $361 million offering was one of the lowest ever secured by a U.S. company in Israel, with only Joel Wiener’s Pinnacle Group raising debt at a lower cost.

KBS, whose assets include a 32-story, 928,000-square-foot office building at 110 William Street in the Financial District, is expected to use the proceeds from the deal to continue exercising its strategy of buying commercial assets and stabilizing them through increased leasing and occupancy.

The REIT was advised on its offering by Gal Amit and Rafael Lipa of Victory Consulting Group. Israeli financial services firms Poalim IBI and Leumi Partners were the underwriters on the issuance.


Related Articles

arrow_forward_ios
Starwood's Barry Sternlicht and Pacific Retail's Steve Plenge with Parkway Plaza mall in San Diego and the Plaza West Covina mall in Los Angeles (Getty, Starwood, Pacific Retail)

Last bidder standing has big plans for Starwood’s troubled mall portfolio. But first, creditors must sign off

Last bidder standing has big plans for Starwood’s troubled mall portfolio. But first, creditors must sign off
Tel Aviv Stock Exchange bull (Wikimedia Commons)

NYC developers face downgrades on Israeli bond market

NYC developers face downgrades on Israeli bond market
From left: 871 Grand Street, 392 St. Marks Avenue, 607 Franklin Avenue and 600 Park Place in Brooklyn (Google Maps, iStock)

David Werner misses deposit deadline on $300M deal with All Year

David Werner misses deposit deadline on $300M deal with All Year
Silverstein Properties chairman Larry Silverstein (Getty)

Silverstein Properties raises $30M on Israeli bond market

Silverstein Properties raises $30M on Israeli bond market
Related chairman Stephen Ross and Related Companies Portfolio CEO Richard O’Toole withBronx Terminal Market and Time Warner Center (Getty, Google Maps, Wikipedia)

Related lays out $200M debt settlement plan for Tel Aviv bondholders

Related lays out $200M debt settlement plan for Tel Aviv bondholders
Clockwise from top left: 871 Grand Street, 392 St. Marks Avenue, 607 Franklin Avenue and 600 Park Place in Brooklyn (Credit: Google Maps; iStock)

All Year and David Werner renegotiate deal for $300M Brooklyn portfolio sale

All Year and David Werner renegotiate deal for $300M Brooklyn portfolio sale
Alex Sapir and the Tel Aviv Stock Exchange (Sapir by Clint Spaulding/Patrick McMullan via Getty Images, Jack Guez/AFP)

Sapir Corp goes private as shareholders approve buyout

Sapir Corp goes private as shareholders approve buyout
Barry Sternlicht and (from top) Capital Mall in Washington, Franklin Park Mall in Ohio and Plaza West Covina Mall in California (Credit: Capital via Starwood, Franklin via OCP Contractors)

Competing bids for Starwood’s suffering retail

Competing bids for Starwood’s suffering retail
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...