All Year Management, the Brooklyn developer behind the William Vale hotel and the Rheingold Brewery site in Bushwick, has raised over $500 million in Israel this year alone, to finance a slew of projects throughout the borough.
Yoel Goldman’s firm is viewed as the breakout heavyweight in Brooklyn development, and Goldman’s frenetic development timeline has been accompanied by a consistent stream of financing activity in Tel Aviv.
The firm has issued bonds in Tel Aviv more than five times since January, including three new bond issuances; several expansions and private tenders; as well as an early bond repayment, according to an analysis of documents by The Real Deal. All Year has raised just over $510 million this year, the most of any American company on the Israeli bond market. Gary Barnett’s Extell Development, by contrast, has raised $470 million in total. Both companies have about $25 million in bond interest payment due in the upcoming year.
All Year reported a $130 million working capital deficit on its third quarter report to the Tel Aviv Stock Exchange in early December, with $183 million in debt coming due, and $53 million in current assets to cover it. The majority is made up of $112 million in short-term debt, backed by $217 million worth of property, the report states, and the company raised $17 million in October to help cover the shortfall.
This kind of deficit is not new for the company. At the close of 2016, All Year had a $212 million gap between current assets and liabilities, partially due to the imminent maturity of a loan on the 23-story William Vale at 55 Wythe Street. In February, the company raised $166 million through a secured bond to refinance the hotel debt.
Sources at the firm said the company was “totally not concerned” about the debt deadlines and insisted that the short-term debt can be refinanced.
“It’s not necessarily a significant problem,” said Ziv Adato, formerly of Ayalim Mutual Funds, who recently left to start his own investment firm Marom Capital. “It means they’re under pressure.”
In early December, All Year was required to raise the interest on its series B bond by .5 percent because it violated of the bond terms, which requires the company to maintain a debt to EBITDA ratio of 17 percent or lower. All Year’s ratio had exceeded that amount and stands at 18.85 percent, as of the third quarter report. In August, All Year avoided another failed covenant of its series A bond—which the company disputed—by paying down the bond early.
A source familiar with the company’s finances said the debt to EBITDA ratio will be remedied soon, when two projects nearing completion — in Long Island City and Downtown Brooklyn — begin generating income.
The frenzied financing activity in Tel Aviv has been accompanied by movement on the development side in Brooklyn.
In the last nine months, the company’s 1 million-square-foot project in Bushwick at the former Rheingold Brewery site, progressed significantly. All Year’s 911-unit complex is spread between two buildings, at 123 Melrose Street and 54 Noll Street (The Rabsky Group is also building a 500-unit rental building on part of the former brewery, at 10 Monteith Street). In July, All Year closed on a $270 million construction loan from Madison Realty Capital, and the first phase is scheduled for completion in the first quarter of 2018, according to a presentation to bondholders.
In addition, a 125-unit rental at 608 Franklin Avenue in Crown Heights, completed in 2016, has been fully leased, according to the presentation, and construction has wrapped up at Albee Square, a 150-unit rental in Downtown Brooklyn.
The Bushwick project helped boost the company’s numbers when it was appraised in June at $300 million, up from $227 million as of December 2016. The Franklin project was also reappraised and increased from $67 million to $93 million. Both properties were appraised by Level Valuation, with an assumed 4.75 percent cap rate.
All Year is part-owner on most of these projects, owning 50 percent of the William Vale, Albee and the Franklin rental, and 96.8 percent of the Bushwick development.