The Real Deal Miami

Cornerstone Group raises $72M on Tel Aviv bond market

Issue is backed by a 5,281-unit affordable-housing portfolio
By Chava Gourarie | January 13, 2017 01:30PM

Cornerstone Group. Inset: from left, Jorge Lopez and Lenny Wolfe

Cornerstone Group, a Hollywood-based firm led by Jorge Lopez and Lenny Wolfe, raised $71.5 million on the Tel Aviv Stock Exchange, in its first entrance into the Israeli bond market.

Cornerstone was originally seeking to raise $70 million at a 6.25 percent interest rate, but were oversubscribed by almost triple that amount, and finalized with a 4.9 percent rate.

Cornerstone, which specializes in affordable housing, operates primarily in Broward, Miami Dade and Palm Beach counties, and is one of several Florida-based companies to seek money on the Israeli stock exchange recently, after the tactic became popular with New York real estate heavyweights like Related Companies, the Moinian Group and Gary Barnett’s Extell Development.

The issuing entity, Cornerstone Properties Limited, is backed by a portfolio of 20 properties with 5,831 affordable-housing units, out of a total 13,777 units owned by Cornerstone, according to a presentation to Israeli bondholders. The properties include the 14-building Sanctuary Cove complex in Fort Lauderdale at 5351 West McNab Road, and the 17-Building Renaissance complex in West Palm Beach at 4200 Bear Lakes Court.

“They’re all stabilized income-producing properties,” Lopez said. He and Wolfe were in Israel in November to market the bonds. “We called it a ‘boring portfolio,’” Wolfe said, because of the low risk and stable, rather than the potential for explosive growth.

The 4.9 percent interest rate, while not the lowest for an American real estate company on the exchange, is an indication of positive sentiment, considering the Fed recently raised interest rates. Namdar Realty, the most recent American entrant to the bond market, borrowed at 5.9 percent.

The vice president of InFin, Yossi Levi, who orchestrated the bond issue for Cornerstone, said the low interest rate is due to improved markets in Israel, and the strength of the affordable-housing portfolio.

The money will serve to refinance existing loans and as capital for future acquisitions.