(Source: The Real Deal) Israeli road show veteran Micheal Shah raised $52 million in a bond issuance on
the Tel Aviv Stock Exchange to finance a $250 million redevelopment project in
Morningside Heights. The total falls short of Shah’s $63 million offer, and
carries a fixed interest rate of 6.15 percent, the maximum allowed under the
terms of the offer.
Shah planned to finance the project — which would convert a
five-building complex at 30 Morningside Drive to high-end rentals — with a
combination of a roughly $130 million construction loan, $70 million in bonds
raised in Tel Aviv, and $50 million from capital sources, including EB-5 money,
according to a bondholder presentation.
His company, Delshah Capital, purchased the complex for $102
million in 2014, also with funds raised in Tel Aviv. He plans to convert it
to 205 high-end rentals.
Unlike previous bonds, Shah’s offer gives the bondholders
membership interest in the entity that owns 30 Morningside, putting them in the
second position in the capital stack. Up to $30 million in excess EB-5 money
would serve as a cushion for paying back the bond money, Shah said. Delshah
thus far has raised $12.5 million in Eb-5 funds, out of a possible $50 million, Shah said.
The real estate firm previously had about $120 million in
the Israeli bond market and Shah’s first substantial payment, of close to $22
million, is due in 2021. Delshah has 14 properties in its portfolio at a value
of $623 million, according to the rating company Midroog. The rating company
put the Delshah’s loan-to-value ratio at 40 percent and loan-to-capital ratio
at 50 percent, which will rise to up to 61 percent once the financing for the
Morningside Heights project is included.
The company recently closed on a $28 million loan from
Cantor Commercial Real Estate to refinance two properties in New York, at 69
Gansevoort and 58-60 Ninth Avenue. The five-year loan carries a 4.25 percent
interest rate.
In May of 2016 The Real Deal published a detailed
feature that shows how U.S. real estate players raise money on the Tel Aviv Stock Exchange.