By Konrad Putzier
The Lightstone Group became the latest New York developer to tap into the Israeli bond market, raising $120 million on the Tel Aviv Stock Exchange.
The firm plans to use the money from the unsecured corporate bond sale to fund “future strategic growth.”
“The public bond issuance marks the start of a new chapter for Lightstone,” David Lichtenstein, chairman and CEO of Lightstone, said in a press release. “This is an important ongoing source of capital, but more importantly, it is a testament to the quality of Lightstone’s real estate portfolio and the institutional capability of its management team and staff members.”
New York developers have raised hundreds of millions of dollars through bond sales in Israel this year.
In June, Extell and Brookland Capital raised $270 million and $34.5 million in Israel, respectively. The Witkoff Group is also looking to raise capital in Tel Aviv, according to the Israeli newspaper Haaretz.
Bond sales in Israel are attractive as a cheap source of capital, according to people familiar with the market.
In an article in this week’s Real Estate Weekly, Shahab Moreh, head of WeiserMazars LLP’s Real Estate Group, explained that A-rated bonds with a five-year term trade at fixed coupons of 4 to 4.5 percent in Tel Aviv. He added that developers often have to pay twice as much for capital in the U.S.
Joe Berko, head of commercial brokerage Berko & Associates, has noticed growing interest in the Israeli bond market from New York developers.
“Years ago, there were few issuances (by U.S. real estate firms), but now we are at a particular moment in time where more capital is available in Israel,” he told Real Estate Weekly last August.
