Moinian raises $361M on Israeli bond market

Jeff Sutton's Wharton Properties also plans to raise $500M

Joseph Moinian and 3 Columbus Circle in Midtown
Joseph Moinian and 3 Columbus Circle in Midtown

Joseph Moinian’s the Moinian Group has closed a $361 million bond (1.4 billion shekels) issuance on the Tel Aviv Stock Exchange, the largest debt offering on the exchange to date by a U.S. real estate player.

The issuance closed last week at an interest rate of 4.2 percent – one of the lowest ever secured by a U.S. company – and is backed by about 15 properties in the developer’s New York portfolio, including 3 Columbus Circle and 535-545 Fifth Avenue.

Among other projects, funds from the issuance are meant to assist in Moinian’s development of properties at 220 11th Avenue in Chelsea and 572 11th Avenue in Hell’s Kitchen, according to One Ha’am Capital partner Ori Eisenberg, who advised on the deal. Moinian purchased the parcel at 572 11th Avenue for $5.9 million 2004 and acquired 220 11th Avenue for an undisclosed amount in 2002, according to city property records.

The debt offering was met with “very high” interest from the Israeli market, with demand for an issuance closer to $550 million, said Eisenberg. Trading commenced on the debt offering Tuesday, with about $60 million worth of bonds transacted in a single day, he added.

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Representatives for Moinian declined to comment. The developer had been in talks over the bond issue since last year.

“To them, it’s a first-class opportunity to get smartly-priced debt which is not asset-specific,” Eisenberg said of the Israeli market’s interest in the issuance. “They like New York because of the transparency and liquidity in the market, and they like the kind of debt that is not supported by specific assets but a packaged portfolio, which in many cases performs better.”

Jeff Sutton

Jeff Sutton

Moinian‘s venture into the Israeli bond market is the latest in a wave of similar moves made by New York-based real estate players. Jeff Sutton’s Wharton Properties published a prospectus earlier this month to raise $500 million on the Tel Aviv Stock Exchange — which would eclipse Moinian’s issuance in size — while the likes of Gary Barnett’s Extell Development and Stephen Ross’ Related Companies have also dipped into the Israeli market in recent months.

Eisenberg estimated that Israeli debt issuances by U.S. real estate players totaled roughly $700 million last year, with that number likely to rise to about $2 billion in 2015 and “more room to grow” over the next several years.