The Real Deal New York

All Year bonds downgraded in Tel Aviv after steep declines in value

One of the series is backed by the William Vale hotel
By Chava Gourarie | December 31, 2018 10:00AM

The William Vale at 111 North 12th Street in Brooklyn (Credit: The William Vale and iStock)

All four of All Year Management’s bond series were downgraded on the Tel Aviv Stock Exchange last week, as multiple New York-based developers have seen their bonds fall at unprecedented rates.

Two of the bonds closed the week with sky-high yields of 24.9 and 22.3 percent. And at the time of publishing, the bonds reached 25.5 and 22.4 percent, respectively. The remaining two bonds, one of which is secured by a first position on the William Vale in hotel Williamsburg, closed with 6 and 7 percent yields (at 5.8 and 7.6 percent on Monday). The downgrade was a result of the company’s failure to maintain the required leverage ratios, the rating agency Midroog reported.

At par, the four bond series combined are worth roughly $624 million, and are currently valued at a total $487.5 million. The bulk of the decline comes from bond series D, which lost 47 percent of its value in the last 12 months.

All Year’s bonds have been declining over the last month, along with the majority of bonds issued by American real estate companies in Israel. Several triggers, including a default by Brooklyn multifamily developer Brookland Capital and several concerning financial disclosures, led to massive declines in the asset class. That was compounded last week by the fluctuations in the U.S. and global markets.

However, Yoel Goldman’s All Year is facing concern from investors after the company reported in early December that $3.7 million had been accidentally transferred from the company’s funds to Goldman’s personal accounts. Goldman pointed out on a call to investors, that it was an internal auditor who had found the mistake. “We did have a good system and it worked,” he said.

Nevertheless, considering both All Year’s disclosure as well as from other American companies, investors are concerned about whether the current oversight is sufficient, according to multiple sources.

Midroog downgraded the bonds one notch, from A2 to A3 with a stable outlook, due to All Year’s failure to maintain a 65 percent leverage ratio, as well as low liquidity, according to the report. As of the third quarter, its debt to capital ratio was 69 percent, and without access to Israel’s markets, any additional liquidity will have to come from other sources, the report noted.

The downgrade triggered increases to the interest rates on the four bonds until ratios are in compliance. The first of the principal payments is due in 2023.

All Year could did not reply for request to comment. In early December, Goldman reassured investors he would do anything to restore their confidence.

“I personally didn’t sleep in the last few days,” Goldman said on the call, “because investors lost money on my bonds.”