ISRAELI CORPORATE BONDS
CORPORATE BOND RAISE IN ISRAEL THE OPPORTUNITY THE CREATION OF AN OFFSHORE CAPITAL PLATFORM Raising debt through Israel’s capital markets has a number of benefits including low cost of capital and a flexible amortization plan. This program is less restrictive than traditional options of mezz or preferred equity. These unsecured corporate bonds do not require any inter-creditory agreements since there is no asset level mortgage, no personal guarantees, no liens or UCC filings. This unique financing structure allows partners to finance only their portion of equity without affecting their partners’ capital stack. Perhaps the most important aspect of this program is the ability to raise additional series of bonds in a matter of days after the successful initial raise.
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Non recourse corporate level debt
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Low interest rate (4%-6%) and flexible payment plan
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Future additional capital raises can be done in a matter of days
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Ability to finance one’s equity without affecting other partners’ capital stack
ABOUT THE TEAM BERKO & ASSOCIATES Berko & Associates, LLC was founded in 2005 as a multidisciplinary commercial real estate firm, providing a network for both entities and individuals to effectively finance and profitably invest in real estate investment ventures. Berko & Associates’discernment of local market trends and their complexities offer our clients the competitive edge to successfully navigate through a comprehensive range of real estate transactions. Our select associates are highly trained experts in various fields of the real estate industry and readily achieve high-level results for our clientele. Berko & Associates is a firm built for the times, a firm that has established itself around the needs of today’s sophisticated investors, and is lead by incomparable knowledge and experience.
LEADER UNDERWRITERS Leader underwriters is a publicly traded investment banking firm, partially owned by the First International Bank of Israel. Leader is Israel’s number one* bond issuance team. The company has raised capital for many of the largest real estate firms in Israel since their inception in 1993. Leaders investment banking experts brings extensive experience and custom tailor the capital raise process to each client’s unique set of circumstances and market conditions. * As ranked by Dun’s 100 and published by Globes, Israel’s Business News
• Co-parent FIBI ltd. • The group also has two overseas banking subsidiaries: FIBI Bank (UK) based in London, and FIBI Bank (Switzerland) in Zurich. FIBI has over $23B in assets.
• Leader Underwriting (1993) Ltd. specializes in public and private placements. • Investment Banking - Expertise in raising capital via public and private issues: • Underwriting, centralized management, and consulting in securities issues • Public issuances - equity, convertible debentures, and debt • Private issue • Block trading • Parent company ‘Leader Capital markets’ is a top-tier investment house with expertise in: • Brokerage • Research • Issuances, distributions, and placements • Investment management (via a 50% interest in ‘Yelin-Lapidot Investment House’ which manages assets in excess of 50 Billion ILS)
• Inter-bank Brokerage: Leader Capital Markets is the owner of ILS BROKERS LT
KEY TEAM MEMBERS NEW YORK PRESIDENT Joe (Yossi) Berko is the founder and president of Berko & Associates. Joe has structured, raised, syndicated, sold, and financed billions of dollars of commercial real estate transactions. Such transactions range from office buildings, mixed-use properties, hotels, shopping centers, and industrial parks. He has arranged for joint ventures, equity participation and mezzanine debt, as well as dispositions of distressed and performing notes for national and regional portfolio lenders.
JOE BERKO
MANAGING DIRECTOR, HEAD OF FINANCE & CAPITAL MARKETS
MICHAEL KORINE
Michael Korine is the Managing Director of Finance & Capital Markets at Berko & Associates. He joined the Firm in December 2011, with a broad mandate to lead the expansion of Firm’s capital markets and advisory services. His background is in structuring, underwriting and syndicating multifaceted financing solutions, having structured and syndicated over $7 billion in corporate public and private debt and equity. He has advised on $3 billion in commercial real estate transactions and has closed on over half a billion dollars in related debt and equity financings.
COO, SENIOR ANALYST Lee Silpe is the Senior Analyst and COO of Berko & Associates. Mr. Silpe’s responsibilities include valuation analysis and pricing recommendation on commercial real estate properties based on market studies, cash flow analyses, financial statement analysis, and underwriting potential transactions for highest and best use, having underwritten and analyzed over $20 billion in real estate transactions.
LEE SILPE
TEL AVIV
CEO, LEADER UNDERWRITERS Mr. Cohen Orgad has 15 years of capital markets experience. He has managed Leader’s investment banking operations since 2008 and has served as an investment banker, at Leader.
RANEN COHEN ORGAD
DEPUTY CEO, LEADER CAPITAL MARKETS Mr. Ben Yakar joined Leader in 2011 with 20 years of capital markets experience. Mr. Ben Yakar previously served as a VP finance at Elad group (part of Teshuva Group) after serving as a VP finance at Gazit Globe ltd.
SHAY BENYAKAR
HEAD OF STRUCTURED FINANCE Mr. Nevo, CPA, has 8 Years of capital markets experience. He served as a Manager in the Real estate industry at Deloitte. He has vast experience with issuing corporate bonds and debt restructuring.
MICHEL NEVO
Dun’s 100 ranks Leader as Israel’s top underwriters Published 04/21/2016 by Globes[online] The “Globes”-Dun’s 100 underwriting ranking, based on the number of Israeli offerings as chief underwriter and the size of the offerings by the underwriters, showed a number of changes in last year’s rating, especially in the top three places. The big breakthrough in the 2016 ranking (based on performance in 2015) was by Leader Underwriters, which jumped into first place for 2015 with 46 offerings totaling NIS 13.6 billion, including offerings by Gazit-Globe Ltd. (NYSE: GZT; TASE: GZT; TSX: GZT), Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ), Delek Group Ltd. (TASE: DLEKG), Azrieli Group Ltd. (TASE: AZRG), and others.
U.S. Managed Bond Issuances Africa Israel $401 Million USD
BIG
$60 Million USD
PBC
$670 Million USD
Elad Group $300 Million USD
U.S. Co Managed Bond Issuances Cooperline Del Shah $88 Million USD
Related
$104 Million USD $220 Million USD
The Leser
$115 Million USD
Klein
$55 Million USD
BERKO-LEADER PROFESSIONAL SERVICES EXCEPTIONAL RESULTS
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A leading team of devoted professional real estate advisors Our experts walk the client through every step of the process
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Tailor-made solutions, designed to fit our client’s profile in both the public and private sectors
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A widespread global network with notable contacts in Israeli capital markets
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Past transactions with leading investors (PE/VC/Hedge funds, family offices), financial institutions, investment banks and industry leaders
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Economies of scale; our clients enjoy a variety of services including: investment sales brokerage, structured finance advisory, capital raise, research, and asset management
FROM ASSET-BASED TO CORPORATE DEBT FINANCING PRIOR DEAL STRUCTURE
PRIOR DEAL STRUCTURE CHARACTERISTICS
Private individual
No debt above assets level LLC
LLC
LLC
LLC
ASSET
ASSET
ASSET
ASSET
Senior Debt
Senior Debt
Senior Debt
Senior Debt
Debt is issued and secured by specific asset
NEW DEAL OWNERSHIP STUCTURE Public Corporate Debt
NEW DEAL STRUCTURE CHARACTERISTICS
Private individual
Assets are transferred to a wholly owned offshore SPC
Holdco BVI
LLC
LLC
LLC
LLC
ASSET
ASSET
ASSET
ASSET
The SPC will issue Corporate debt on Tel Aviv stock exchange. The new structure has no tax implications Non Recourse corporate debt Financing one’s equity without affecting other partners’ capital stack
Senior Debt
Senior Debt
Senior Debt
Senior Debt
A TYPICAL LIFECYCLE OF ISSUED BONDS AN ONGOING OPTION FOR A FOLLOW-UP SERIES
Issuance of NIS denominated public bonds on TSE Up to 5 years duration and 8 years to maturity
Asset purchases, property development, business expansion
Interest payment only
Year 0 Debt Raising
NOI from assets level supports fixed interest and principal payment
Debt maturity, an option for a new raise using the existing platform
Year 3-7 Year 1-2
Year 8
DEBT STRUCTURE WILL BE CUSTOMIZED TO MEET BORROWER’S SPECIFIC OBJECTIVES
FAVORABLE CONDITIONS FAVORABLE CONDITIONS MAKE ISRAEL AN EXCELLENT MARKET FOR U.S. CORPORATE BOND ISSUERS Steady Growth in Institutional Money Manager’s AUM
Relevant Investment Pool is on a Steady Decrease
U.S. Companies Face a Favorable Credit Rating Landscape
HIGH DEMAND
LOWER SUPPLY
RATING ARBITRAGE
Since 2010 the public’s financial assets base increased by a 6% CAGR
Historically low Bank Of Israel’s interest rate results in all time low corporate bonds yields
An American ‘BB’ rating is equivalent to an ‘A’ rating in Israel by Moody’s/S&P, creating a significant rating arbitrage
Local pension and benefits funds enjoy an ever growing deposits stream, backed by the ‘Mandatory Pension Act’
All time high Real Estate prices encourage investors to diversify their Portfolio by investing in RE in North America
Quality U.S. Real Estate companies are positioned to achieve very attractive rates and conditions at the corporate level
BEST IN CLASS U.S. COMPANIES ARE SUCCESSFULLY ISSUING BONDS IN THE ISRAELI MARKET IN EXCESS OF $2.5 BILLION
WHO IS THE OPTIMAL CANDIDATE Minimum Asset Value:
$250M Income Producing Properties Located in Developed Countries
An Ideal Candidate
Has Growth Plans Through Asset Development, Partner Buyouts, Business Expansion, etc.
Minimum Shareholder Equity:
$120M ISRAEL DEBT RAISE OPPORTUNITY
THE COMMON TRANSACTION TIMEFRAME IS FOUR TO FIVE MONTHS Portfolio selection and structure, materials preparation
1-3 Weeks
Prospectus drafting including audited financial statements
4 Weeks Preliminary Rating Completion
7-10 Weeks Rating process, presentation delivery, ISA meeting and deed of trust preparation
3 Months Road show, issuance process and tender management
4-5 Months Discussions with ISA, bond raising and managing the issuance
* Same color states take place simultaneously
MAJOR ADVANTAGES FOR U.S. COMPANIES
ATTRACTIVELY PRICED
A mezzanine type of debt, while carrying a much better interest rate
UNSECURED DEBT
Unsecured notes are common in Israel when dealing with quality issuers
FLEXIBLE USE OF PROCEEDS
Proceeds are eligible for a variety of uses including: business expansion initiatives, asset purchases, and property development
LENIENT COVENANTS
Relatively lenient covenants tailored to the specific objectives of the portfolio
DEAL COSTS AND TIMEFRAME
Initial indication after 1 month and average timeframe of 4 months for full process. Most of the costs are on a success-only basis
ON-GOING CREDIT PLATFORM
Borrowers will establish a platform for future finance needs, located in an alternative capital market
BERKO & ASSOCIATES RECENT SALES & FINANCE TRANSACTIONS
With years of collective local experience, we understand your real estate values. Most importantly, we know how to convey the message effectively to the Israeli market to achieve the best ratings and optimal capital amounts.
485 SEVENTH AVE.
Advised on the sale of the 300,000 SF office building sold to the Lightstone Group for
$182,000,000
95 EVERGREEN AVE.
Structured the transaction for the sale of a 170,000 SF loft building to office conversion, sold to Savanna Fund for
$33,680,000
THE PAPER FACTORY HOTEL, LIC
Procured the Debt and Capital placement for the 80,000 SF loft building conversion to the famed Paper Factory Hotel in Long Island City, Queens for
$27,000,000
SELECT BOND TRANSACTIONS
ILS 126,000,000
Public Share Offering Mars 2015
ILS 847,000,000
Public Share Offering March 2015
ILS 163,000,000
ILS 680,000,000
ILS 260,000,000
ILS 161,000,000
ILS112,000,000
Public Share Offering April 2015
Public Share Offering March 2015
ILS 800,000,000
Public Bond Offering January 2015
Public Bond Offering January 2015
ILS 125,000,000
ILS 105,000,000
Public Bond Offering September 2014
ILS 545,000,000
Public Bond Offering September 2014
ILS 242,000,000
Public Shares & Warrants October 2014
ILS 242,000,000
Public Bond Offering July 2014
ILS 242,000,000
Public Bond Offering July 2014
Public Bond Offering August 2014
ILS 112,000,000
ILS 242,000,000
Public Bond Offering June 2014
Private Placement’ June 2014
Private Placement January 2015
Private Placement October 2014
ILS 168,000,000
Public Bond Offering September 2014
ILS 242,000,000
Public Bond Offering July 2014
ILS 112,000,000
Public Bond Offering June 2014
ILS 428,000,000
Public Bond Offering August 2014
ILS 118,000,000
Public Shares & Warrants July 2014
ILS 623,000,000
Public Bond Offering February 2015
ILS 29,390,000
Public ShareOffering December 2014
ILS 141,000,000
Public Bond Offering September 2014
ILS 197,980,000
ILS 155,500,000
Public Share Offering February 2015
ILS 251,000,000
Public Bond Offering January 2015
ILS 121,000,000
Public Bond Offering September 2014
ILS 428,000,000
Public Bond Offering August 2014
Public Bond Offering August 2014
ILS 40,000,000
ILS 118,000,000
Private Placement’ June 2014
ILS 545,000,000
Public Bond Offering September 2014
ILS 102,000,000
Public Bond Offering July 2014
Public Shares & Warrants July 2014
ILS 144,000,000
Public Bond Offering September 2014
ILS 868,000,000
Public Bond Offering June 2014
ILS 450,000,000
Public BondOffering April 2014
ILS 145,340,000
Public Bond Offering January 2014
ILS 230,400,000
Public Bond Offering November 2013
ILS 400,000,000
Public Bond Offering Series 6,7 September 2013
ILS 162,155,139
Public Bond Offering Series 5 August 2013
ILS 242,000,000
Public Bond Offering June 2013
ILS 70,000,000
ILS 199,000,000
Public Bond Offering May 2014
Public Bond Offering May 2014
ILS 249,000,000
ILS 51,000,000
Public Bond Offering February 2014
ILS 160,300,000
Public Bond Offering December 2013
ILS 78,000,000
Public Bond Offering October 2013
ILS 160,281,331
Public Bond Offering Series 1 August 2013
ILS 242,000,000
Public Bond Offering June 2013
Public Offering February 2014
ILS 197,980,000
Public Bond Offering December 2013
ILS 451,000,000
Public Bond Offering October 2013
ILS 126,300,000
Public Bond Offering Series 6 August 2013
ILS 428,000,000
Public Bond Offering Series 6 July 2013
ILS 1,464,000,000
Public Share Bond Offering May 2014
ILS 274,000,000
Public Bond Offering April 2014
ILS 374,310,000
Public Bond Offering December 2013
ILS 40,000,000
Public Bond Offering October 2013
ILS 663,090,000
Public Bond Offering Series 9 August 2013
ILS 195,395,000
Public Bond Offering Series 4 July 2013
ILS 155,500,000
Public Bond Offering June 2014
ILS 306,230,000
Public Bond Offering April 2014
ILS 220,940,000
Public Bond Offering December 2013
ILS 27,000,000
Public Bond Offering October 2013
ILS 430,000,000
Public Bond Offering Series 6.7 August 2013
ILS 144,000,000
Public Bond Offering Series 2 July 2013
T: 212.687.0777 | F: 212.687.0771 info@berkoassociates.com | www.berkoassociates.com 18 East 41st Street, Suite 1600, New York, NY 10017