Israeli debt in NYC: The “flip side” of the Tel Aviv Stock Exchange

Asset manager’s role in $1.4B MetLife Building refi an example of a growing trend: panel

New York /
Jun.June 16, 2016 10:31 AM

If you haven’t heard by now, New York’s developers have discovered Israel as a sort of financing promise-land where they can raise money on the country’s stock exchange at attractive terms. But at the same time, Israeli investors are increasingly crossing the Atlantic, and they’re finding more innovative ways to get into deals in the United States.

“People are going not just to equity. More recently we see a trend of proliferation of product – people going to not just equity but debt deals,” Gal Yadin, director of the restructuring and finance group at the accounting firm EY Israel, told those who gathered at the Dream Downtown hotel Wednesday for the Nadlan in the City real estate conference.

“So these are growing, and to me, this trend of investment in debt, sometimes private debt, is the flip side of what we see on the public debt side in Israel,” he added.

While firms like Extell Development, the Related Companies and KBS Strategic Opportunity REIT have navigated the ins and outs of the Tel Aviv Stock Exchange to raise a combined $1 billion in recent years, Israeli investors are increasingly looking to invest in the U.S.

Thanks to the country’s high-contribution pension system, Israeli pension funds are swelling, and for some years now they’ve been diversifying away from securities into alternative investments.

In 2014, for instance, Alto Real Estate Fund raised a $140 million dedicated U.S. real estate fund backed in large part by Israeli insurers and pension funds. And the insurance firm Menora Mivtachim Holdings last year invested alongside Thor Equities in its $136 million acquisition of the 257,000-square-foot office building at 180 Livingston Street in downtown Brooklyn.

But the country’s investors are also getting into the debt game here in New York. The asset management firm Altshuler Shaham took part of the senior debt position in the $1.4 billion refinancing of the MetLife Building last year, and a senior mezzanine position in the refi of the Standard High Line hotel, Yadin said.

And they’ve got more and more to spend.

“Monetary assets of the Israel public today [are] nearing a trillion dollars. About 40 percent of that is managed by Israeli institutional investors,” Yadin explained. “If you look back to 2005, only 5 percent of that money was invested offshore. In 2010 it was 15 percent and last year it reached 25 percent, which means that in the last five years alone, over $35 billion was invested by Israeli institutions offshore. Now a lot of this money goes into the U.S., and a large chunk of it ends up in real estate.”


Related Articles

arrow_forward_ios
One Manhattan Square Extell Development CEO Gary Barnett (Credit: Curbed NY)
Extell lands $690M refinancing package for One Manhattan Square
Extell lands $690M refinancing package for One Manhattan Square
Extell sells One57 sponsor unit for $17M
Extell sells One57 sponsor unit for $17M
Extell sells One57 sponsor unit for $17M
The soft market for luxury units has some developers hard up. (Getty)
Buyers taking advantage of New York City’s condo glut
Buyers taking advantage of New York City’s condo glut
By some counts, applications from Americans to move to Tel Aviv more than doubled year-over-year in 2020. (Getty)
More Americans are buying homes in Tel Aviv
More Americans are buying homes in Tel Aviv
Central Park Tower at 217 West 57th Street and Extell president Gary Barnett
Closings kick off at Central Park Tower
Closings kick off at Central Park Tower
Silverstein Properties' Larry Silverstein and Phase I of the Denizen Bushwick at 54 Noll Street (Getty, Google Maps/Illustration by Kevin Rebong for The Real Deal)
Silverstein offers to buy half of All Year’s Bushwick rental complex
Silverstein offers to buy half of All Year’s Bushwick rental complex
Dov Hertz (Photo by Studio Scrivo)
The Closing: Dov Hertz
The Closing: Dov Hertz
Gary Barnett’s Extell Development with the $26.7M building he sold. (500w57 via Twitter)
Extell sells West 57th Street office to CBS
Extell sells West 57th Street office to CBS
arrow_forward_ios

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

Loading...