Gary Barnett visited Israel to assuage bond investor fears: report

Extell bonds in Tel Aviv have traded at "alarming" rates on fears of luxury market slowdown: report

TRD New York /
Mar.March 11, 2016 05:16 PM

In today’s global economy, uncertainty in New York City can ripple all the way over to Tel Aviv. Gary Barnett has found this out firsthand — with Israeli press reports noting the Extell Development head ventured to Israel to reassure investors over rising yields on his company’s publicly traded bonds on the Tel Aviv Stock Exchange.

Barnett met with Israeli institutional investors last week, according to Israeli business daily Calcalist, to “restore calm” after yields on two series of bonds issued by Extell in the past two years hit “alarming” rates over 8 percent – nearly twice the coupon rate they were issued at.

Of particular worry to Israeli investors is the widely reported slowdown in the high-end luxury condominium market in New York City, which represents a significant portion of Extell’s business. Calcalist, a Hebrew-language business publication based in Tel Aviv, reported that these investors were particularly concerned about the fate of Barnett’s latest luxury project, the Central Park Tower at 217 West 57th Street. The tower has 182 units and a projected total sellout of $4 billion for the residential portion, according to filings with the New York Attorney General. Extell, however, recently withdrew those filings.

In an interview with Calcalist, Barnett dispelled the notion that the luxury residential market in New York is risky, describing the current slowdown in sales as “temporary” and saying he has “no doubt” about his company’s ability to make a profit on its condo developments.

The Extell chief added that he went to Israel because his relationship with investors there is “very important to me.” Extell raised more than $400 million through its two separate bond issuances on the Tel Aviv Stock Exchange — a fundraising vehicle that has become increasingly popular with New York real estate firms in recent years.

“I definitely see this relationship [with the Israeli market] as long-term and it was important for me to meet with investors and review activities with them,” Barnett told Calcalist, adding that while he has no plans to issue further debt in Israel “at the moment,” the company likely will do so in the future. [Calcalist]Rey Mashayekhi

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