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U.S. Real-Estate Investors Turn to Israel for Cash

U.S. debt markets are booming and companies from Apple Inc. to Union Pacific Corp. are borrowing money at historically low rates. So why are some of New York’s biggest real-estate investors heading to Israel to raise cash? Israel, it turns out, offers some key advantages. Large developers with good credit can sell corporate bonds for about 5%, often less than half what they would pay in the U.S. for a junior loan known as mezzanine debt. They also can issue debt in smaller chunks.

Why US developers are tapping into a new bond market

US property companies are heading to Tel Aviv to access a new source of competitive capital Back in 2006, Boaz Gilad, CEO of Brooklyn-based condominium developer Brookland Capital, met with a group of Israeli financial consultants to contemplate doing something that no US-based real estate owner or developer had done before: launch a bond in Israel to raise funds for US projects. The concept was simple. Take advantage of the cheap cost of capital and liquidity of the Israeli bond market, then use money pooled from eager Israeli investors to fund the US projects.

U.S. real estate firms turn to Israel bond market for funds

Foreign real estate developers are expected to issue over $1 billion in bonds in Israel in 2015, as small-to-medium sized firms take advantage of favorable terms provided by Israeli institutions that are limited to investing locally.

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