Willingness to pay investors a high interest rate is ensuring the success of bond issues by foreign real estate companies on the Tel Aviv Stock Exchange (TASE). Strawberry Fields yesterday raised NIS 265 million in its initial bond offering, following strong demand in the tender for investment institutions, and is holding its tender for the general public today.
Spencer Equity, a company controlled by Joel Gluck that leases apartments in New York, is also holding its tender for institutions today. The company, which raised NIS 396 million in a bond issue last year, will now try to raise NIS 200 million in an additional issue led by Poalim IBI Underwriting and Investments (TASE: PIU).
Demand in yesterday's tender for institutions held by the Klein Group, controlled by real estate investor Jacob Klein, totaled NIS 280 million. The group offered bonds at 6.4% interest at a discount of up to NIS 0.045 on NIS 1 par value. NIS 202 million of this demand in par value terms was at a price of at least NIS 0.975 (a NIS 0.025 discount), so the bonds will provide their holders with an effective interest rate of 7% even before the 0.7% commission that participants in the tender will receive, and before the commission to be paid to the underwriters and consultants.
The Klein Group issue, rated A3 by Midroog, was led by Clal Finance Underwriting. More than half of the bonds in the tender for institutions were purchased by investment institutions, headed by Yelin Lapidot, Poalim IBI, and Harel Insurance Investments and Financial Services Ltd. (TASE: HARL). Following the results of the preliminary stage, the volume of the issue was raised from NIS 220 million to NIS 247 million ($64 million).
The Klein Group has managed and enhanced the value of commercial assets in the US for the past 20 years. As part of the issue, controlling shares in six properties in New York, 14 in New Jersey, and two in Pennsylvania, constituting most of the Klein Group's properties, will be transferred to the issuing company. The Klein Group is partnered in some of the properties by Mody Kidon's Alto Private Investments, and another property was previously purchased jointly with Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS).
The company's balance sheet includes $235 million in real estate for investment and other investments, and $110 million in debt. The company finished the third quarter with $3.2 million in rental revenue and a $632,000 net profit.
Published by Globes [online], Israel business news - www.globes-online.com - on November 26, 2015
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