All Year scores interest rate below 4% for William Vale bonds

Yoel Goldman’s All Year Management completed a bond offering on the Israeli bond market, raising $166 million with an uncommonly low interest rate of 3.95 percent. The bonds are backed by the new William Vale hotel, a 183-key hotel-and-retail complex, in Williamsburg.

The $166 million represents a 66 percent loan-to-value ratio on the property at 55 Wythe Avenue, the maximum that All Year was seeking. Demand for the bond exceeded that amount by 300 percent.

This is the first bond by a U.S. company to be guaranteed by a first mortgage on a single asset, and the high demand and low interest rate indicate that investors have confidence in the deal. Goldman entered the Israeli market in 2014 and has around $235 million in bonds currently in circulation.

Goldman and developer Zelig Weiss each own a 50 percent stake in the William Vale project, which includes a hotel and over 100,000 square feet of office and retail space. The hotel opened late last year, and has a projected net operating income of $15 million a year.

While the rate would indicate strong confidence in the deal, it is not without risk, says an industry insider without first-hand knowledge of the deal. “Non-stabilized hotels coming out of construction are very hard to finance,” he said, partially because they don’t have an operating history.

The interest rate for the bond, which will mature in 2024, is just slightly above prime rate of 3.75 percent, and less than 2 percentage points above the 10-year treasury rate.

Victory Consulting, led by Gal Amit and Rafael Lipa, advised Goldman on the deal. They declined to comment.