The Real Deal New York

GFI and Marx raise north of $60M apiece in Tel Aviv bond offerings

MDG bond is secured by a first mortgage on two properties
By Chava Gourarie | March 30, 2017 04:30PM

566 Louisiana Avenue, 71-61 159th Street (credit: Google Maps), Allen Gross and David Marx

In two separate bond offerings on the Tel Aviv Stock Exchange on Thursday, David Marx’s Marx Development Group and Allen Gross’s GFI Real Estate Limited raised $61 million and $69 million respectively in an institutional tender.

MDG raised the bonds at an interest rate of 3.75 percent, the lowest of any American real estate company on the bond market thus far. The bond is secured by a first mortgage on two assisted-living properties with a combined value of $117.5 million. MDG is seeking to complete the bond raise with $74 million in the public tender, which translates to 63 percent of the properties’ value.

The funds will first pay down the $53 million in debt on the properties, a 184-bed assisted living center at 71-61 159th Street in Flushing and a 240-bed assisted living center at 566 Louisiana Avenue in East New York.

The structure of offering bonds that serve as first position is a new method for American companies on the Israeli market. Yoel Goldman’s All Year Management raised $166 million in February in first position bonds for the William-Vale hotel at 3.95 percent.

GFI’s bond is a traditional corporate bond and the firm is seeking to raise up to $83 million in the public tender, which will take place next week. The interest rate, at 5.75 percent, is an improvement over GFI’s first series of bonds, issued in 2015, which carried a 7.75 percent interest rate.

Victory Consulting, led by Gal Amit and Rafael Lipa​, advised on the offerings. The firm declined to comment.

GFI recently secured $181 million in financing for their hotel-and-condo project at 5 Beekman Street. The 287-key Beekman Hotel, in the newly restored Temple Court, opened in August and the 51-story condo tower is under construction. GFI also recently purchased the Crowne Plaza hotel near JFK airport for $60 million, adding to its growing portolio of New York hotels.

Both bonds are Series B bonds and both firms are rated A- by the rating agency Midroog.