US businessman Jeff Sutton has decided to postpone the large Tel Aviv Stock Exchange (TASE) bond offering of his company Wharton Properties. The institutional tender for the Wharton bond offering was held yesterday and on its completion Sutton decided not to continue and postponed the offering at this stage, in which the company was supposed to raise NIS 2 billion. Due to low demand, Wharton failed to raise even NIS 1 billion at maximum interest.
Sutton's Wharton Properties specializes in owning and leasing high-end stores in Manhattan's prime locations such as Fifth Avenue. Sutton, like most of the other US real estate companies that have issued corporate bonds on the TASE transferred some of his assets to a new company incorporated in the British Virgin Islands against which the debt is raised.
For the purpose of the bond offering in Israel, Sutton transferred 17 New York income-producing assets to the new Virgin Islands incorporated company, which he called Wharton Properties Ltd.
Initially, back in May, Wharton Properties was given an AA rating by S&P Maalot and Aa2 by Midroog. However, in August Wharton changed the outline of the offering and filed an amended prospectus, which only kept its rating from S&P Maalot.
This was Sutton's second attempt to raise debt in Tel Aviv. At the start of May, Wharton filed a prospectus designed to raise money to buy back mezzanine debt of up to 9% interest from US banks as secondary financing for purchasing assets. Due to the complex structure of the offering, that probably deterred many investors, the outline of the offering was altered.
Last week, "Globes" revealed that Sutton joined with Aurora Capital, controlled by Bobby Cayre, to sign a 99-year lease for the building, located on 5th Avenue, corner of 42nd St (at 511 5th Avenue) for $250 million. The building contains the headquarters of Discount Bank of New York.
Sutton is a US Jewish entrepreneur who has been working in the real estate sector for 25 years. During this time, in New York alone, he has purchased more than 120 properties worth an overall $10 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on September 17, 2015
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