Brooklyn’s most active developer takes tumble in Israel

Brookland’s bonds dove 15 percent in two days, then slightly recovered

New York /
Jul.July 20, 2018 06:00 PM

Boaz Gilad and 447-449 Decatur Street in Brooklyn (Credit: Boaz Gilad photographed by Axel Dupeux and Brookland Capital)

Boaz Gilad’s Brookland Capital had a rough week in Tel Aviv.

Over the course of two days, the company’s bonds on the Tel Aviv Stock Exchange lost 15 percent of their value, tanking into junk-bond territory. The price fell on Monday, nosedived on Tuesday, before recovering and ending the week with a loss of 8.6 percent.

“It’s the cost of being a public company and has nothing to do with the strength of our company,” Gilad told The Real Deal in an email.

Brookland is the most active developer in Brooklyn at the moment, according to an analysis by TRD, with 37 projects throughout the borough in various stages of development.

During an investor meeting on Wednesday, Gilad said the company had “no idea what caused this crazy change.”

Though it wasn’t immediately clear what had triggered the selloff, a report from consulting firm Giza Singer Even that circulated among financial firms may have been the cause.

According to the Giza report, Brookland owes a total of $45 million in bond payments between now and 2021, but is expecting $44 million in profit.

“In our opinion, if there’s no improvement in the rate [of development] and/or sale prices, the expected profits from existing projects won’t be sufficient to repay its full liabilities,” the report said. Part of the criticism was that much of Brookland’s expected profits are based on promote agreements, which only kick in if and when profits are high enough.

Gilad explained on the call that the $44 million calculation is incorrect. “They completely forgot to count the collateral on the bonds, and the company’s capital,” he said. “They ignored a very, very significant part.”

Another explanation is that there was some speculation on the bond, since the fall began with one large transaction. “We suspect someone speculated on our bonds, and used the last report to short,” Gilad said in the email to TRD.

Brookland’s bond had been trending downwards since last month, when Israeli rating agency Maalot downgraded the bond one notch from BBB+ to BBB stable because of low leverage. In an investor call, Gilad explained that 2017 was a slow year as most of the projects are due for completion in 2018.

In addition, the bonds of American real estate companies have begun to lose their luster. Since the beginning of the year, the Tel Bond Global, which tracks over 20 foreign companies on the Tel Aviv Stock Exchange, fell by 4 percent.


Related Articles

arrow_forward_ios
With a cooling trade war, stocks perform well, including real estate. (Credit: iStock)

Real estate stocks push up this week as U.S.-China trade tensions ease

Real estate stocks push up this week as U.S.-China trade tensions ease
416 West 25th Street and Maverick Real Estate Partners principal David Aviram (Credit: Google Maps and LinkedIn)

Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case

Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case
Clockwise from top: David Bistricer of Clipper Equity, Joseph Chetrit a rendering of the Gramercy Square condominium and Robyn Sorid of G4 Capital Partners (Photos via Clipper Equity, Getty, VUW, G4)

Chetrit, Bistricer’s Gramercy Square condo lands $207M loan

Chetrit, Bistricer’s Gramercy Square condo lands $207M loan
One Madison Avenue and Marc Holliday (Photos via SL Green)

SL Green snags $1.25B construction loan for One Madison Avenue

SL Green snags $1.25B construction loan for One Madison Avenue
11 Penn Plaza and 120 Wall Street (VNO, Wikipedia Commons)

Manhattan’s top real estate loans post second best month since March

Manhattan’s top real estate loans post second best month since March
Square Mile Capital CEO Craig Solomon and The Real Deal's Hiten Samtani

WATCH: “It’s going to take longer, and it’s going to cost more”: Craig Solomon on the real estate capital stack

WATCH: “It’s going to take longer, and it’s going to cost more”: Craig Solomon on the real estate capital stack
OneTitle's Seth Brown (iStock)

OneTitle set out to change the title industry. Now it’s out of business

OneTitle set out to change the title industry. Now it’s out of business
The Scribner Building at at 597 Fifth Avenue and Joe Sitt of Thor Equities (Wikipedia Commons)

Thor delinquent on $105M loan at 597 Fifth

Thor delinquent on $105M loan at 597 Fifth
arrow_forward_ios

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

Loading...