Tel Aviv Stock Exchange sees first U.S. real estate debut since last year’s crash

Dallas-based Westdale raised $140M at 4.8%
May 02, 2019 02:30PM

The Tel Aviv Stock Exchange and a rendering of The Epic in Dallas (Credit: iStock)

The Tel Aviv Stock Exchange and a rendering of The Epic in Dallas (Credit: iStock)

Investors on the Israeli stock exchange appeared to sour on U.S. real estate companies last year, after several firms saw their bond values collapse amid troubling disclosures. But a recent offering shows Tel Aviv might still have some appetite left for American bonds.

Dallas-based Westdale Asset Management debuted on the Tel Aviv Stock Exchange last week with a $140 million (or 500 million shekel) bond offer, raised with an interest rate of 4.8 percent, Commercial Observer reported. This made Westdale the first new entrant to the bond market since last year’s crash.

“The market was closed for half a year, and we opened up the market,” consultant Amir Giryes, who advised Westdale on the deal, told CO.

According to a prospectus filed in February, more than half of the proceeds will be used to pay down existing debt, while the remainder will help fund the office portion of the 8-acre Epic complex in downtown Dallas, Westdale’s flagship development.

The bonds, which began trading on Easter Sunday (a work day in Israel), are secured by three properties, including the office portion of the Epic development.

The British Virgin Islands-registered entity that issued the bonds, Westdale America, has a portfolio of 37 assets valued at $1.4 billion, or about one third of Westdale’s $4 billion in real estate holdings. Twenty seven of those properties are located in Texas, while the others are in Georgia, North Carolina, Virginia and Washington state.

Elsewhere in the country, Westdale is seeking to build a 202-unit apartment complex in the Wynwood district of Miami.

Giryes told CO that although the portfolio is heavily residential, some office assets were included to show the firm’s track record in both asset classes. Instead of a more common dutch auction, the deal was done as a book building deal, in which the underwriter committed to hold some of the bonds and can choose which investors to include.

Though it was the first debut, Westdale’s was not the first U.S. bond offering in Tel Aviv this year. Silverstein Properties, which raised about $175 million in its debut last May, raised another $50 million in February, a first sign that the bond markets may have calmed down somewhat.

Meanwhile, other U.S. firms continue to face fallout from last fall’s market meltdown. Boaz Gilad’s Brookland Capital was recently hit with an eviction notice at its Brooklyn office, while Barry Sternlicht’s Starwood Capital Group is facing a class-action lawsuit brought by Israeli bondholders over the firm’s struggling mall portfolio. [CO] — Kevin Sun