Capital markets around the world are struggling with the impact of coronavirus. Still, one New York City landlord is turning to Tel Aviv for its latest refinancing.
Abraham Leser’s Leser Group is examining the possibility of issuing a new bond series on the Tel Aviv Stock Exchange, which will be secured by a first mortgage on two properties in Brooklyn and one in the Bronx, the developer disclosed last week. A rating document published Monday by S&P Global Ratings shows that Leser is hoping to raise up to 260 million shekels, or about $74 million.
S&P has given the prospective issuance a credit rating of A, because the new bonds would be secured by a mortgage. That is one grade higher than its rating for Leser Group as whole and for the firm’s three unsecured bond series, which are all rated A-. S&P notes that its rating is based on the assumption that the pandemic will peak around mid-2020.
Representatives for Leser Group did not respond to a request for comment. The new bonds will be used to refinance existing debt on the three properties and to cover other costs, according to the disclosures.
The largest of the three properties, the Mapleton Rentals, is a six-building, 66-unit residential development at 1555-1575 61st Street, on the border of Mapleton and Borough Park in Brooklyn. Construction at the site is currently on hold due to coronavirus, but is expected to resume in June and be complete by September, according to appraisal documents filed on TASE.
The Mapleton property, which is part of a larger 13-building, 128-unit complex, is currently valued at $52.7 million, or as much as $69.8 million if sold as condominiums. Leser owns an 80-percent stake in the development. Axos Bank (a.k.a. Bank of Internet) has provided a total of $55 million in construction financing for the project since 2018, according to property records.
The other Brooklyn property Leser is seeking to refinance is located at 110 Beard Street and 411 Van Brunt Street in Red Hook. The 70,000-square-foot industrial-office building has five tenants, and a 25,000-square-foot substance abuse rehab center. The property is valued at $38.1 million and carries a $7 million mortgage from Signature Bank.
The Bronx property, which Leser owns an 85-percent stake in, is an 80,000-square-foot school building at 1440 Story Avenue in Soundview, which is fully leased to the NYC School Construction Authority. The property is valued at $18.9 million and has a $5 million mortgage from Signature Bank.
Leser is a long-standing player in the Israeli bond market, and was one of the first New York City developers to tap the market back in 2007. The bond raise that Leser is currently planning would be its sixth overall.