US real estate firms borrow shekels on the Tel Aviv bond market. See how the bonds are rated and tracked, and what the All Year default showed investors.
US real estate companies borrow shekels on the Tel Aviv Stock Exchange (TASE) by issuing bonds in series, and Israeli rating company Midroog rates them. The market's largest failure was All Year Holdings, a Brooklyn landlord that halted bond payments in November 2020 and was delisted in January 2021. Its bondholders were owed NIS 2.5 billion.
How do US real estate firms raise money on the TASE?
US real estate firms raise money on the TASE by issuing bonds in series, and some series are secured by specific properties. All Year Management had four bond series in Tel Aviv, and Commercial Observer reported in 2020 that two were secured, one by the William Vale Hotel in Williamsburg and one by the Denizen development.
The market has its own benchmark. The Tel Bond Global index tracks foreign real estate companies on the Tel Aviv bond market, and it closed one week in March 2019 with an average yield of 8.37 percent, Commercial Observer reported.
| Issuer | Year | Amount raised | Rate |
|---|---|---|---|
| Westdale Asset Management (Dallas) | 2019 | $140 million | 4.8 percent |
| All Year Management (Series B5 tap) | 2019 | About $19.5 million | 6.4 percent effective |
Both deals were reported by The Real Deal in May 2019. The same report put the total circulation of All Year's B5 bonds at over NIS 820 million, about $228 million, maturing in July 2024.
Who rates and monitors the bonds?
Midroog, an Israeli rating company, rates and monitors these bonds, and its downgrades move prices. Midroog downgraded All Year's bonds in December 2018 after the company failed a required leverage ratio in the third quarter of 2018, Commercial Observer reported.
The Israel Securities Authority also investigates issuers. Globes reported that the authority opened an investigation into All Year Holdings and that financial sanctions had earlier been imposed on the company and its CEO for infringements in 2018.
What happened to All Year Holdings?
All Year Holdings went from a rating downgrade in 2018 to a payment halt in 2020 and a delisting in January 2021. The table below sets out the sequence.
| Date | Event | Source |
|---|---|---|
| November 2018 | All Year disclosed an accidental $3.7 million transfer of company funds, and its bonds began a weeks-long decline | Commercial Observer |
| December 2018 | Midroog downgraded the bonds | Commercial Observer |
| November 2020 | All Year paused bond payments, which put it in default, and prices fell below 50 cents on the dollar in some cases | Commercial Observer |
| January 3, 2021 | Scheduled TASE delisting, with December 31 the last trading day for its four bond series | Commercial Observer |
| 2021 | All Year filed for bankruptcy with $1.6 billion in debt | The Real Deal |
Globes reported that the collapse left NIS 2.5 billion owed to bondholders, and that All Year had to halt a NIS 109 million payment in November 2020.
Which US sponsors have issued on the TASE?
Several well-known US sponsors have issued bonds on the TASE. The Real Deal reported in December 2019 that Silverstein Properties and Lightstone Group had issued new bond series in Tel Aviv in the preceding months. Commercial Observer's 2019 coverage names Gary Barnett's Extell and the Starwood West mall portfolio among the American issuers.
These issuers sit alongside Israel's insurers and pension managers as the buyers of the paper. Olam's map of who owns the TASE covers the Israeli institutional side of that relationship.
What should readers watch next?
The All Year case shows what a missed disclosure and a missed payment cost an issuer: a downgrade, a regulator's investigation, a delisting and a bankruptcy. Readers assessing any US sponsor's Tel Aviv bonds can start with three checks drawn from that case: the Midroog rating, the security behind each series, and the Tel Bond Global yield as the market benchmark.
How we report: Olam stories draw on public filings, company disclosures and named sources, checked by our editors. Read our methodology · Corrections
