Rotem Rosen to fund Hotel Indigo purchase with Tel Aviv bonds

Rotem Rosen plans to raise up to $72 million in Israel to finance the purchase of a Lower East Side hotel.

Rosen’s MRR Development went into contract in June to buy the Hotel Indigo for $162.5 million from Brack Capital and InterContinental Hotels Group.

To fund the purchase, MRR filed a prospectus for a secured bond offer of up to $72 million in Tel Aviv with bondholders taking the senior position on the 294-key hotel. MRR will seek to raise up to 45 percent of the hotel’s value, and contribute the rest of the purchase price from the company’s capital, according to documents filed on the Tel Aviv Stock Exchange.

The hotel, located at 171 Ludlow Street, took a decade to build and opened in 2015. Two years later, Brack and InterContinental put it on the market for $176 million. The Indigo chain is a boutique brand under InterContinental, which has a 20-year management deal for the property.

According to the documents filed to TASE, the hotel had a net operating income of $9.1 million in 2017, up from $8.1 million in 2016. Also as of 2017, the hotel had an 80.3 percent occupancy rate, and average daily rate of $264.

Rosen is testing the Tel Aviv market’s appetite for more New York real estate at a moment when the sector is losing its luster. The Tel Bond-Global, an index which tracks foreign companies, has fallen by more than 8 percent since January, with companies like Brookland Capital, All Year Management and Starwood West trending downwards.

Rosen launched MRR with Indian billionaire Anand Mahindra and former Deutsche Bank executive Jerry Rotonda earlier this year. The hotel will be the company’s first asset.

Discount Bank advised MRR on the deal. MRR Development was not immediately available for comment.