Eastern Union Funding closed an $8 million refinance for The Pottery Building, a Philadelphia construction project.
The loan was originated and arranged by senior managing director Eli Breiner and loan analyst Abraham Miller.
The property is located at 105 North 2nd street, and has 43 apartment housing units and one retail building. The borrower is Doron Gelfand, of Gelfand Yardeni Real Estate Development & Management.
Gelfand is from Israel, and the deal highlights that country’s dominance in the American real estate market.
The loan was supplied by Fox Chase Bank at a rate of 4.75 percent on a two year term. Most notably however, the arrangement covers 100 percent of hard and soft costs and demands no fresh equity from the borrower.
This is the second such loan Eastern has closed in the last month on these terms — Real Estate Weekly last week reported an Eastern deal in Far Rockaway which covered 105 percent of the total costs.
But this arrangement also has broader implications. With overseas investors impatiently lining up to purchase American real estate, Eastern’s latest deal reflects the increasing presence of one small but significant pocket of Middle Eastern buyers.
Over a three year period, Israel emerged as the third largest investor of American soil, according to Reuters in an article published the week before the deal closed.
For a country barely the size of New Jersey to keep up with the likes of Germany, China and Canada seems to defy common sense. Breiner, on the contrary, thinks it makes perfect sense.
“Think about it like this,” he said. “You’re an Israeli with funds for a building. You can look in your local market, or you can increase your options by a factor of ten by comparison shopping in America.”
Reuters also pointed to Israel’s size as incentive for their increasingly ambitious spending habits. They quote Robert Ivanhoe, global real estate practice chair at the Greenberg Traurig law firm. “There appears to be a need for greater diversification and for finding additional opportunities because Israel is a small country and domestic investment opportunities are limited,” he said in the article.
Still, one question lingers. How does such a small country have so many powerful investors? The Jerusalem Post asked the same question in November. Their answer may antagonize Americans frustrated by their 401k.
“One big reason is the large amount of money Israelis put in their pension funds, which in turn invest some of the money abroad,” wrote the Jerusalem Post in their November article ‘The US system of 401k retirement funds limits investment to exchange-traded funds and mutual funds.’
Americans have nowhere near the amount of money invested in pension funds as Israel per capita.
America, meanwhile, is in full-force recovery mode which “also increases Israeli investors appetite for American real estate,” according to the JPost. Executives at Eastern are taking note of this shift.
“Israel is leading the pack right now.” said Eastern president Ira Zlotowitz, in reference to foreign investors. “The most important thing we can do is stay informed and, as always, be the most trusted advisors in the market.
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