• 1-800-123-789
  • info@webriti.com

Category ArchiveStandard & Poor’s

Joseph Iacono’s Crescit Capital Strategies Opens Offices in NY and LA

A jam-packed market for commercial real estate finance in the U.S., where traditional lenders have jockeyed for position with increasingly competitive private-equity and life insurers, stands to get a bit more crowded.

Joseph Iacono, the former chief investment officer of Petra Real Estate Opportunity Trust, announced Friday that his new financing platform, Crescit Capital Strategies, is ready to hang out its shingle. The firm calls itself as a “one-stop solution” for real estate financing up and down the capital stack.

Crescit, working out of offices in Midtown Manhattan and Newport Beach, Calif., proclaimed that it’s ready to lean into areas of the commercial property lending space whence old-fashioned banks have withdrawn.

Crescit’s services “are designed to meet the needs created by the retrenchment of traditional financing sources in the commercial real estate debt market, while also prudently traversing cyclical market changes,” the company said in a statement. “Crescit offers the entire spectrum of commercial real estate debt products, including construction transitional and term financing across all property types.”

A spokesman for the company declined to identify the sources of the lending platform’s funding.

The roster of four executives that the nascent lender unveiled this week is speckled with familiar faces, but its founder’s recent doings have been quiet. Petra, Iacono’s former company, filed for bankruptcy in 2010 after the majority of the portfolio a $1 billion CDO it issued, Petra CRE CDO 2007-1, defaulted during the financial crisis, leaving the real estate investment trust with liabilities of nearly $500 million, according to a Reuters report.

The REIT has had little public presence since then, but Iacono’s profile on LinkedIn states that he worked for the same commercial real estate-focused alternative asset manager (unnamed on LinkedIn) from 2005 through April, 2017, when Crescit was founded.

A spokesman for Iacono said he was not available for comment this week, but a source familiar with Crescit’s executives confirmed that Petra employed Iacono until 2017.

Others announced for the new lender’s leadership team include COO Edmund Taylor, an ex-Credit Suisse executive who served on the bank’s global-markets management committee, and Kim Diamond, a former Standard & Poor’s managing director who was central in growing Kroll Bond Rating Agencys commercial mortgage-backed securities practice. Diamond will be in charge of structuring and credit for Crescit.

Source: commercial

2018 CMBS: The Rating Agencies’ Predictions

After a stellar 2017, what’s in store for CMBS next year? We asked the industry experts to opine…


erin stafford 2017 06 27 dbrs 3455 2018 CMBS: The Rating Agencies’ Predictions
Erin Stafford. Jeff Wasserman/ For DBRS

Erin Stafford,  Head of North American CMBS at DBRS

What are your predictions in terms of 2018 CMBS issuance volume and what will be the key drivers of that issuance?

We are expecting volume to be flat compared to 2017. The lion’s share of the increase in U.S. CMBS volume in 2017 came from increased issuance in the single-asset, single-borrower (SASB) market, while the conduit market in 2017, after adopting risk retention, is likely to end up close to flat from the previous year. It is likely that the SASB volume could remain strong as many of those transactions are short-term in nature and may need to be refinanced into the CMBS market as interest rates remain low.

Are there any property types or regions that you are paying close attention to as we go into the new year? Why?

We are seeing some softening in certain markets. For instance, Houston was on our radar prior to Hurricane Harvey as office vacancies in the energy corridor had increased in addition to lower hotel occupancies and higher concessions at higher-end multifamily properties. There are markets where new supply may cause short-term disruptions; this is particularly noteworthy for hotels. Regional malls are something that we are watching very closely especially since last year retailers were quick to make store closure decisions following disappointing holiday sales, and we expect this again in 2018. We notice that some mall operators are making great strides to upgrade their offerings while others are lagging, seemingly awaiting more store closures. Other areas we are paying close attention to are suburban office projects and student housing properties.


James Manzi, Senior Director at S&P Global Ratings

jmanzi 2018 CMBS: The Rating Agencies’ Predictions
James Manzi. Photo: Standard & Poor’s

What are your predictions in terms of 2018 CMBS issuance volume and what will be the key drivers of that issuance?

We’re expecting about $85 billion in CMBS issuance next year, which is slightly lower than this year’s total, which we expect to be around $90 billion. Lower CMBS loan maturities are a headwind, while continued activity in the single-borrower space and the potential for more multifamily collateral making its way into conduits are tailwinds.

Are there any property types or regions that you are paying close attention to as we go into the new year? Why?

With offices taking a leading role in conduits in the 2017 vintage (at around 40 percent of collateral) and being second only to lodging in terms of volume securitized in single borrower deals, we’ll be closely watching performance in that sector. It will be interesting to see if companies (office tenants) choose to use smaller footprints over time, similar to the way retailers have reduced theirs.


zanda lynn 1 2018 CMBS: The Rating Agencies’ Predictions
Zanda Lynn. Photo: Stefan Falke/ For Fitch Ratings

Zanda Lynn and Huxley Somerville, Head of U.S. CMBS Business Development and Head of U.S. CMBS at Fitch Ratings

What are your predictions in terms of 2018 CMBS issuance volume and what will be the key drivers of that issuance?

Zanda Lynn: Our projection for non-agency CMBS is approximately $75 billion for 2018. We expect the slowdown in commercial real estate activity to contribute to a decline in overall volume, though the single-borrower market looks strong.


huxley somerville 3 2018 CMBS: The Rating Agencies’ Predictions
Huxley Somerville. Photo: Stefan Falke/ For Fitch Ratings




Are there any property type or regions that you are paying close attention to as we go into the new year? Why?

Huxley Somerville: Hotels, while continuing to perform, are showing signs of slowing revenue growth especially in New York City where new construction is adding to underperformance. We do not believe current revenue levels are sustainable over the longer term.


larry kay kbra senior director 2018 CMBS: The Rating Agencies’ Predictions
Larry Kay. Photo: KBRA

 Larry Kay and Eric Thompson, Managing Director and Senior Managing Director at KBRA

What are your predictions in terms of 2018 CMBS issuance volume and what will be the key drivers of that issuance?

While we are forecasting that CMBS private label issuance will decline from 2017 levels, there is still good support for new issuance as many positive CMBS and CRE underpinnings remain intact. Interest rates are still historically low, CRE provides favorable returns compared to other asset classes, CRE capital flows while slightly down are still strong, and credit performance remains stable. However, a potential market disruptor could be if the market believes that the Federal Reserve’s balance sheet unwinding is taking too much liquidity out of the system; this could trigger a jump in, or more volatile, interest rates. In addition, investors may be more cautious in their CMBS and CRE allocations in 2018 as property values are beginning to feel stretched, and a decline in scheduled maturities may limit refinancing opportunities. As a result, we are forecasting $65 billion of private label issuance in 2018, which could end up being 25 to 30 percent lower than 2017 levels.

eric thompson kbra senior managing director 2018 CMBS: The Rating Agencies’ Predictions
Eric Thompson. Photo: KBRA


Are there any property types or regions that you are paying close attention to as we go into the new year? Why?

In addition to concerns regarding full-price department stores, in 2018, we will be watching their off-price formats very closely. Chains that report sales with off-price department store offerings include Nordstrom Rack, which just reported fiscal 3Q 2017, and Saks Off Fifth with reported fiscal 2Q 2017 numbers. Both experienced declines in same-store sales performance for each respective quarter and through the nine and six months ending October and July 2017. Declining sales in what has been a high-growth segment leads us to believe there could be sales cannibalization and brand dilution taking place.

Historically, the underlying assertion was that department store retailers would not open off-price stores close to their full-line brand if it cannibalized sales. Based on KBRA’s analysis, which used Nordstrom financial disclosures, the distance between Nordstrom Rack and the retailer’s full-line offerings will increase in the future. Of the existing stores, approximately 42 percent of the off-price locations were situated within five miles of the nearest full-line store—the comparable figure for scheduled openings is just 17 percent. Perhaps this has to do with the availability of real estate. However, it could also signal that the retailer is trying to mitigate the potential for cannibalization and brand dilution.

img 1976 edit 2018 CMBS: The Rating Agencies’ Predictions
Lea Overby. Photo: Kaitlyn Flannagan/ For Commercial Observer

Lea Overby, Head of CMBS Research and Analytics, Structured Credit Research and Ratings at Morningstar Credit Ratings

What are your predictions in terms of 2018 CMBS issuance volume and what will be the key drivers of that issuance?

We expect 2018 nonagency issuance of $70 billion to $75 billion, down slightly from this year’s full-year total of around $85 billion. We are also likely to see another $100 billion in agency issuance next year. The volume of maturing loans that must be refinanced in 2018 will be far lower than in 2017, and most maturing loans are with portfolio lenders, rather than in CMBS. In fact, only $24 billion in CMBS will mature next year, down from over $80 billion that matured in 2017.

Despite the dip in maturing loan volume, we believe that lending may remain relatively constant. We expect transaction volume to remain steady, and borrowers may prepay loans to get ahead of potential interest rate increases. Also boosting CMBS issuance, conduit lenders may become more competitive with balance sheet lenders because conditions in the capital markets remain favorable with tighter CMBS spreads and low volatility. 

Are there any property types or regions that you are paying close attention to as we go into the New Year? Why?

Even though we believe that talk of the retail apocalypse is overblown, we do have concerns for this sector. We expect to see another round of bankruptcies and store closures after the holiday shopping season, and this will likely result in higher vacancy rates in 2018. We will also be keeping a close eye on grocery-anchored space. We believe this sector will see further consolidation, as Amazon’s purchase of Whole Foods and the U.S. expansion of discounters, such as Aldi and Lidl, affect traditional grocers.  Aside from the retail sector, we are also watching the multifamily and hotel sectors. Both have done extremely well during this economic cycle, but the party might not last too much longer. We are seeing signs of overbuilding in certain markets, which may leave multifamily properties and hotels more vulnerable to changes in the economic cycle. There are indications that the stable economy may at last be leading to rising homeownership rates, which may hurt apartment performance. On the other hand, the hotel sector is always vulnerable to economic downturns, and this is exacerbated by increased supply.

Keith Banhazl, Managing Director, Moody’s Investors Service

keith banhazl moodys 2018 CMBS: The Rating Agencies’ Predictions
Keith Banhazl. Photo: Moody’s Investors Service

What does 2018 hold in store for CMBS?

The credit quality of newly originated and outstanding commercial mortgage-backed securities conduit and fusion loans will remain steady in 2018. Rising interest rates and a cyclical inflection point in the commercial real estate cycle pose some challenges to CMBS collateral performance, but declining leverage and increasing coverage in conduit loans provide some degree of protection. Further, the wave of maturing and aggressively underwritten loans from the 2006 and 2007 vintages has mostly come and gone, and we expect the overall delinquency rate to improve as the volume of newly issued CMBS 2.0 loans outweighs that of delinquent CMBS 1.0 loans.

Source: commercial

Brookfield’s Takeover Bid Is the Latest Chapter in Mall Giant GGP’s Turbulent History

When Brookfield Property Partners lodged a $14.8 billion takeover bid for GGP last month, it raised the possibility of one of the biggest real estate mergers and acquisitions seen in recent years—one that would create a massive company with nearly $100 billion in assets globally and annual net operating income of roughly $5 billion, Brookfield said in announcing the bid.

It also marked the latest chapter in the tumultuous history of the Chicago-based real estate investment trust formerly known as General Growth Properties. The past decade, in particular, saw GGP emerge from the wreckage of one of the biggest real estate bankruptcies in history in 2009—when it was unable to refinance more than $27 billion of debt in the wake of the financial crisis—to re-establish itself as one of the nation’s major players in the Class A mall space, with assets ranging from prestigious shopping centers in Honolulu and Southern California to high-street storefronts on Fifth Avenue.

GGP’s renaissance has come under the guidance of Sandeep Mathrani, who left his role as head of Vornado Realty Trust’s retail division to become the REIT’s chief executive officer in 2010, when the company was just getting back on its feet after the bankruptcy. With the help of investment from the likes of Brookfield and hedge fund investor Bill Ackman’s Pershing Square Capital Management, GGP shed dozens of properties, rid itself of burdensome holdings by spinning off Rouse Properties and the Howard Hughes Corporation into standalone companies and exiled to the past the legacy of the Bucksbaum family—which founded General Growth Properties in the 1950s but also oversaw its descent into financial ruin. Today, GGP has regained its status as one of the largest publicly traded owners and operators of retail properties in the U.S., with a portfolio of more than 120 properties spanning roughly 123 million square feet.

Yet, the Brookfield takeover proposal comes at a significant juncture for both the company and the market in which it specializes. The challenges facing the brick-and-mortar retail sector today have been well documented, with the Amazon-fueled rise of e-commerce having contributed to store closures at a rate unseen since the Great Recession.

Though GGP’s profile as an owner of high-quality, Class A malls has insulated it somewhat from headwinds that have most heavily impacted Class B and Class C malls and shopping centers throughout the country, the company has not been altogether immune from the great retail apocalypse of 2017. The struggles of department stores like Sears, Macy’s and J.C. Penney, which historically were counted on as mall anchor tenants capable of driving customer traffic, have prompted GGP to spend more than $2 billion to redevelop roughly 9 million square feet of space across its portfolio—mostly “anchor boxes” formerly occupied by such department stores that it has sought to reposition into restaurants, cinemas and other uses more relevant to the current retail market climate.

headshot mathrani e1512493521894 Brookfields Takeover Bid Is the Latest Chapter in Mall Giant GGPs Turbulent History
Sandeep Mathrani. Photo: GGP

Like fellow Class A mall REITs Simon Property Group, Macerich and Taubman Centers, GGP has seen its stock price undertake a slow and steady slide over the last 12 months as investors have increasingly subscribed to the doom-and-gloom narrative surrounding the retail sector. Market conditions have meant that GGP (also like its peers) has found itself consistently trading at a discount to its actual net asset value (NAV); by Nov. 6, the day before news broke of the Brookfield takeover talks, GGP’s share price had fallen to $19.01, down from its 52-week high of $26.63 and well below the company’s consensus NAV of more than $28 per share (analysts who spoke to Commercial Observer for this story pegged GGP’s NAV at anywhere from $26 per share to $35 per share).

Brookfield’s initial bid for GGP, meanwhile, came in at $23 per share, or $14.8 billion in total, and took the form of a 50-50 cash-equity offer comprising $7.4 billion in cash and another $7.4 billion in Brookfield Property Partners (BPY) stock. BPY, a subsidiary of Toronto-based investment giant Brookfield Asset Management, has held a sizable stake in GGP since helping bring the company out of bankruptcy in 2010, and the deal would see it acquire the 66 percent of GGP that it does not already own. (In the third quarter of this year, Brookfield exercised stock warrants to increase its ownership interest in the REIT from 29 percent to 34 percent by purchasing 68 million GGP shares for $462 million.)

“Brookfield’s access to large-scale capital and deep operating expertise across multiple sectors, combined with GGP’s high-quality retail asset base, will allow us to maximize the value of these irreplaceable assets,” Brookfield Property Partners CEO Brian Kingston said in a statement announcing the bid.

Brookfield noted that its takeover offer constituted a 21 percent premium on GGP’s “unaffected closing share price” of $19.01 on Nov. 6, as news of the proposal immediately pushed GGP stock to north of $22 per share the next day and above $24 per share on Nov. 13, when Brookfield officially announced its offer. In the wake of the bid, GGP said it had formed a “special committee” of independent directors—excluding Mathrani and directors affiliated with Brookfield, such as Kingston, BPY Chairman Ric Clark and Brookfield Asset Management CEO Bruce Flatt—to review and consider Brookfield’s proposal and “pursue the course of action that it believes is in the best interests of the company.”

Representatives for both GGP and Brookfield declined to comment for this story.

With the offer coming in well below most analysts’ valuation of GGP, many are split on whether the deal provides good value for GGP shareholders at a challenging time for the retail sector at large, or if it undervalues one of the top publicly traded commercial landlords in the country and could prove a mere starting point in negotiations between the two sides.

“I’m sure everyone would like to get a deal done; the question is, What is the price Brookfield is willing to pay?” said Alexander Goldfarb, a managing director and senior REIT analyst at Sandler O’Neill + Partners, who noted that the initial Brookfield bid “undervalues” GGP below Brookfield’s own internal net asset valuation of the company of around $30 per share.

Goldfarb and other analysts also called into question whether GGP investors would be willing to accept BPY stock as part of any deal. In a note released last month, BTIG equity research analysts James Sullivan and Ami Probandt described BPY’s stock, which has been trading between $21 to $24 per share for most of this year, as “relatively illiquid with very low average trading volume.”

“Our assumption is they’ll have to improve their offer; no one ever throws in their best offer first,” Goldfarb said. “I think Brookfield sees the real story, which is the company being undervalued by the Street.”

Anita Ogbara, a director and credit analyst at Standard & Poor’s, described the Brookfield bid as “opportunistic” at a time when there is “a lot of pressure on valuations” in the mall REIT sector. “We don’t know what the ultimate outcome is going to be, but there’s a clear sign that [Brookfield is] trying to take advantage of the discount versus the true value of [GGP’s] assets.”

While Brookfield’s first crack at a GGP takeover may have been “an underwhelming offer” for many stakeholders, Haendel St. Juste, a managing director and senior equity research analyst at Mizuho Securities USA, said that challenging conditions in the retail space could end up having outsized sway over whether a deal gets done or not. He noted that, speaking to participants at the National Association of Real Estate Investment Trusts’ annual REITworld convention last month, there is a sense that an offer of around $25 per share “would maybe carry the day.”

“People are disappointed [in the $23-per-share offer], but then again I think there’s been a resignation among folks—that maybe it’s not great on its face, but given the current dynamic, maybe it’s as good as you could hope for or expect,” St. Juste said.

gettyimages 171080470 Brookfields Takeover Bid Is the Latest Chapter in Mall Giant GGPs Turbulent History
Brookfield Place in Battery Park City, Manhattan. Photo: Getty Images

Should a deal go through and Brookfield acquire GGP, it is unclear what will become of the company’s leadership and whether the likes of Mathrani will remain in some position or capacity. What appears more certain, according to analysts as well as sources with knowledge of Brookfield’s operations, is that the combined company would look to leverage Brookfield’s exposure in nonretail sectors, such as office and residential, to potentially reposition underperforming properties in the GGP portfolio.

“We are excited about the opportunity to leverage our expertise to grow, transform or reposition GGP’s shopping centers, creating long-term value in a way that would not otherwise be possible,” Kingston said in his statement announcing the bid.

While GGP has already made steps toward pursuing such repositionings—having recently announced a partnership with residential REIT AvalonBay Communities to build apartments at one of GGP’s malls in Seattle—Brookfield would likely seek to further that approach, as it did with select Rouse Properties assets in New Jersey and Vermont in the wake of its $2.8 billion acquisition of the mall landlord last year.

Mizuho’s St. Juste said the integration of a more diverse array of uses at malls and shopping centers is warranted in an environment where “there’s too much retail in the United States” and landlords are seeking new ways to drive traffic.

Sources also said that while Brookfield would almost certainly look to hold long-term onto GGP’s premier retail assets—such as the Ala Moana Center in Honolulu, Glendale Galleria in Glendale, Calif., and Tysons Galleria in Washington, D.C., suburbs—it would probably seek to offload other lower-quality properties either through outright sales or joint-venture partnerships.

It would also remain to be seen what happens to GGP’s high-street retail portfolio, a market in which former Vornado executive Mathrani upped the REIT’s exposure via the acquisition of pricey storefronts along luxury retail strips like Manhattan’s upper Fifth Avenue corridor.

Sandler O’Neill’s Goldfarb noted that GGP’s foray into the luxury street retail space was one of the few areas where Mathrani “got pushback” from investors and observers, given that the REIT entered that market “right at the peak” of New York City property values—via deals like its nearly $1.8 billion acquisition of the Crown Building at 730 Fifth Avenue, which GGP acquired alongside retail magnate Jeff Sutton of Wharton Properties.

“[Mathrani] had done [street retail] at Vornado and he saw an opportunity at GGP,” Goldfarb said. “It was just that the prices he was paying were top of the market.” While GGP has found success with its street retail assets—most notably signing luxury fashion brand Bulgari to a pricey lease to maintain its presence at the Crown Building—depressed Manhattan street retail rents could contribute to a change in approach.

Whatever direction is in store for a new Brookfield-helmed GGP, it is almost certain that a successful takeover would shake up the market as far as publicly traded retail landlords are concerned—and very well signal a time of heightened consolidation as the industry takes on virtually unprecedented headwinds.

“It’s created an M&A tailwind and brought some investors back in the space,” St. Juste said, citing how the likes of Simon, Macerich and Taubman have also seen their share prices run up in the wake of the Brookfield bid. “Next year is going to be tough from an operational perspective; without this M&A buzz, the stocks would be down. They’re not trading on fundamentals right now.”

Source: commercial

Credit Suisse Lends $300M on LA’s One California Plaza

Rising Realty Partners and Colony Northstar nabbed a $300 million loan from Credit Suisse in their acquisition of Downtown L.A. office skyscraper One California Plaza, according to a presale report from Standard & Poor’s.

The seven-year loan was originated by Column Financial— Credit Suisse’s lending subsidiary—and has a fixed interest rate of 3.83 percent. It pays off an existing $288 million bridge loan on the property and returns $7.3 million in equity to the sponsor, according to the S&P report.

The loan is being securitized in a single asset CMBS deal, CSMC 2017-CALI. The trust collateral comprises a $250 million slice of the $300 million whole loan, securitized by the borrower’s fee interest in the office tower. The $250 million included in the securitization comprises an $86 million senior A-1 note and a $164 million junior note.

One California Plaza is a 42-story, 1.1-million-square-foot office building at 300 South Grand Avenue in L.A.’s Bunker Hill district and is part of a larger mixed-use development that includes an adjacent office property, a hotel property and an outdoor plaza. The property also has a lower-level retail pavilion, a five-level parking garage, an outdoor terrace and a helicopter landing pad.

The property was built in 1985 and is 84 percent leased to 34 office and retail tenants, including law firm Skadden and engineering firm AECOM, which signed a 15-year lease in March 2016.

L.A.-based developer Nelson Rising’s Rising Realty and REIT Colony Northstar acquired the asset in June for $459 million from Boston-based Beacon Capital. Colony is retaining $159 million in equity.

The Real Deal reported that Rising Realty was in contract to buy the building in March, although it was unclear at the time whether the firm would have a partner in the acquisition.

According to the Los Angeles Downtown News, Beacon Capital purchased the property in early 2012 for $144.5 million. A year later,  Madison International Realty acquired a 49 percent stake for a reported $295 million.

Beacon Capital was also the prior owner of the leased fee position, after purchasing the existing ground lease from the city of L.A.for $33.4 million in November 2016.

Officials at Credit Suisse and Colony Northstar declined to comment. Officials at Rising Realty did not respond to a request for comment.

Source: commercial

KBRA’s Eric Thompson on The Evolution of CMBS

Source: commercial

Texas Firm Raises $147M on Israeli Bond Market [Updated]

Dallas-based Encore Enterprises became the latest U.S. real estate company to successfully issue debt on the Tel Aviv Stock Exchange this week, raising roughly $147 million in a deal displaying the Israeli bond market’s increased comfort level with American firms based outside of core markets like New York.

Encore, which owns and operates around 50 commercial, multifamily and hotel properties located mostly across the southeastern U.S., issued two series of bonds backed by 23 of those assets—nearly half of which are multifamily—valued at roughly $580 million.

The company raised 435 million shekels, or just over $123 million, through the first series—which was secured against seven of the company’s properties—at an interest rate of 5.4 percent, according to sources with knowledge of the transaction. Encore issued another 82 million shekels, or more than $23 million, at a rate of 7.2 percent through the second, unsecured series of debt.

Encore initially raised around $135 million across the two series through an “institutional tender,” the first phase of a Tel Aviv Stock Exchange bond offering open to Israeli banks, pension funds, high-net worth individuals and other institutional investors earlier this week. The firm closed the issuance Thursday by raising another $12 million through a “public tender” open to a broader range of investors. Both series of bonds are due to mature in 2024.

The deal was met by outsized demand from investors that could have supported an offering up to $190 million, according to Yossi Levi of InFin, the Tel Aviv-based financial consultancy which advised Encore on the issuance.

Levi said the demand was impressive given the relatively modest BBB+ rating placed on Encore’s portfolio by ratings agency Standard & Poor’s Israeli subsidiary Maalot, as well as the Dallas firm’s status as a company focused well outside the New York real estate market with which Israeli investors are most familiar.

An overwhelming majority of the nearly two dozen American real estate companies to have successfully raised money on the Israeli bond market to date—including the likes of Related Companies, Extell Development Company, The Moinian Group and retail landlord Jeff Sutton’s Wharton Properties—are either based in New York or have significant holdings in the city.

“Until now, because the market in Israel was very sensitive [to U.S. bond issuers], New York City was an easy negotiation point,” Levi said, citing Israeli investors’ relatively “shallow” knowledge of American real estate markets outside of New York.

The Encore deal, however, shows that the Israeli bond market “is now open to companies outside of major gateway cities” in the U.S., as well as “lower-rating companies” not backed by an exceptionally robust portfolio of Class A assets, Levi added.

“This gives an opportunity for players outside of New York City, like Encore, with cash flow-generating assets,” he said. “The fact that we had such big demand shows the market is in a very comfortable position.”

Encore is understood to be allocating the proceeds from the deal to buy out minority partners at several properties and refinance existing debt.

“Our very successful bond offering in Israel is just the beginning of a continued trend of success for Encore,” Patrick Barber, the company’s president and chief executive officer, said in a statement. “We look forward to the rapid expansion of our company to come as a result of this deal.”

Update: This story has been updated to include comment from Encore Enterprises.

Source: commercial