Published On: Wed, Aug 27th, 2014

US Real Estate Developers Steven Witkoff, David Lichtenstein, Playing Tel Aviv Debt Market

Steven Witkoff

New York Real estate developer Steven Witkoff’s Witkoff Group is planning on entering the Israeli capital debt market. Witkoff will be joined in that field of investment by fellow New York developer David Lichtenstein of the Lightstone Group. The two are trying to get in on the action that many other American real estate financiers and developers have already gotten a piece of.

Currently Joel Weiner of Zarasai Group, Gary Barnett of Extell Development, Abraham Lesser’s Lesser Group, and David Goldberg and Boaz Gilad of Brookland are all playing the Israeli debt markets.

Witkoff Group is considering a 500 million Shekel ($141.6 million) bond offering in Israel, according to a report in the newspaper Haaretz. The paper says that Lightstone Group is also considering a 500 Million Shekel offering. The Russian Jewish investor Boris Mintz is another developer looking to offer 500 million Shekels in bonds.

The American real estate firms are looking to raise money in Israel because of its low interest rates and the fact that its strong economy has left many Israeli investors with plenty of cash to loan to foreign companies. It is also easier for them to issue bonds in Israel than in the U.S. where such bonds can only be issued by REITs.

If the trend continues, then billions of Dollars could possibly be bought with the Shekels raised in Israeli investments. This will, at least to some degree, help to devalue the Shekel which has been unusually strong against the Dollar in recent years, hurting Israeli exports.

Since the start of 2014, American real estate firms have raise 2.5 billion Shekels ($710 million) from bonds issued in Israel. But none have issued stock there, preferring to take on new debt.

Israeli underwriters are enjoying large windfalls from the increased activity. They are able to charge fees as high as 20 million Shekels for their services. Efraim Kriel, an Israeli property developer, earned some 7.5 million shekels for his role in leading Extell Development’s 1.05 billion Shekel ($250 million) debt issue.

Many of the bonds issued have already risen in Value. Brookland Upreal’s bonds have risen 2% and trade at a yield of 6.38%. Extell‘s bonds have performed less well but still have risen 0.6% and are currently yielding 4.7%.

 

 

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