Demand for Pinnacle bond offering exceeds $500M in Tel Aviv

Proceeds will refinance first the landlord's two bond series
By Chava Gourarie | November 02, 2017 03:35PM

97-25 64th Avenue

Joel Wiener’s Pinnacle Group raised $271 million in an institutional tender on the Tel Aviv Stock Exchange Wednesday, with appetite for the bond exceeding $500 million.

The initial offer was for $214 million, but demand from institutional investors was more than double that, exceeding $500 million. On Thursday, Wiener upped the ask to a maximum $300 million, which translates to just over 1 billion shekel, for the public tender, with units priced at 1.06 percent of par value.

The majority of the proceeds of the offer, which expands Pinnacle’s third bond series in Tel Aviv, will refinance the first two series, which total $255 million outstanding between them.

Both rating agencies, Midroog and Standard & Poor’s, kept Pinnacle’s rating steady for all three securities.

The Israel Securities Agency found that Pinnacle had failed to report two occasions in which they missed a debt-to-NOI ratio requirement, according to documents filed by Pinnacle on TASE this week. Pinnacle claims it’s a matter of differing methodology, not a failure to disclose, and will adjust their reporting in the future.

Victory Consulting advised Pinnacle on the deal, and it was underwritten by their new venture, Everest Underwriting. Victory’s Rafael Lipa and Gal Amit had previously worked with the underwriting firm IBI Poalim, but recently severed ties with the firm and poached their CEO, who will head up Everest. Victory also completed a private bond offer for Yoel Goldman’s All Year Management this week, which raised $17 million.

Pinnacle’s portfolio of 9,185 units is 97 percent occupied and 97 percent rent-stabilized, according to a presentation to bondholders. Last month, Pinnacle picked up a Queens rental with 131 units for $32 million, and in April, they paid $58 million to Treetop Development to add two Flushing rentals with 181 units between them to their portfolio.