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When people from abroad decide to relocate to Israel and launch local businesses, their reasons vary, but one of the most notable factors is usually their desire to contribute to the country's development and participate in its success.
Take for instance Ilan Rubinstein and Gerson Schapiro. Immigrants from Canada and the US respectively, they launched Ruby Capital in 2015. The company provides financing solutions for real estate projects essentially acting as accelerators for Israeli developers. "We are part of the Israeli start-up nation," quips Schapiro, "it’s just that we have travelled in the opposite direction, starting abroad and bringing know-how and capital from overseas to Israel." In the meantime, Rubinstein and Schapiro feel entirely at home in Israel and have successfully assembled a strong team of professionals within the local real estate market.
Indeed, over the past few years, Ruby Capital has emerged as a prominent player in the local industry, collaborating with renowned local banks and institutions. The company specializes in three primary areas: It provides extensive support and financing for construction projects and purchase groups; offers innovative credit solutions specifically designed for urban renewal initiatives, and finally, also engages in silent partnerships with developers via its preferred equity fund, Ruby Sapphire.
Immigration and Integration
Rubinstein comes from a family with a real estate legacy spanning three generations. His father began investing in Israel back in the 1980s and was instrumental in establishing a strong real estate connection between Canada and Israel. Rubinstein himself has actively contributed to the industry for over 20 years as a real estate developer, investor, and financier in North America and Israel. Schapiro, a born entrepreneur, was partner and CEO in a global metal trading company and was involved in senior positions in several high-tech firms before co-founding Ruby Capital. The third founder, Andrew Mestel, also an immigrant from the United States, has extensive expertise in global trade, financing, and marketing. The three leveraged their individual strengths and synergized their efforts, to create Ruby Capital's distinctive business model. Joining the founding team as partners are Yaakov Nitzan and Omer Alpern, well-known Israeli professionals in the fields of financing and real estate.
In an interview ahead of the company’s eight-year anniversary, Rubinstein and Schapiro talk about their experiences, their company, and their take on the future of the real estate market.
You came here and started from scratch in a new country. What do you think helped you to succeed?
Schapiro: "I think part of what helped was that we understood that as the new kids on the block, we needed to connect with established entities. Mainly, however, we had tremendous confidence in our vision and in the company, we were building. We took time to learn the field, build trust, understand the local dynamics, and attract investors and clients. All these efforts paid off for everyone involved. In the beginning we proceeded thoughtfully and deliberately; and today we know are here to stay."
Gerson Schapiro / Credit: Reuven Kopitchinski
Rubinstein: "Look, we are entrepreneurs ourselves, just like the developers we work with. Our advantage is that we understand the need for creativity in financing and for providing opportunities. We know how to approach and structure deals and can react quickly and responsibly. We gained a deep understanding of how the market works and how to serve the needs of everyone involved, from developers to investors to institutional entitles. As real estate financiers, our goal is to mitigate risk and protect both our own capital and that of our investors."
Ilan Rubinstein / Credit: Reuven Kopitchinski
Flexibility and Creativity
In recent years, the perception of "non-bank financing" has significantly improved. Alternative funding has emerged as the driving force behind complex real estate projects. The reason is clear: Given the new regulatory restrictions, developers find it increasingly difficult to secure traditional bank credit even if they own substantial assets. This is where alternative financing options come into play. They, too, adhere to stringent banking requirements and standards.
How do you choose your projects?
Rubinstein: "At Ruby Capital, we rely on our, meticulous due diligence process, thoroughly scrutinize every aspect of a deal and have it analyzed and approved by both internal and external credit committees. We maintain very strict admission criteria, especially given the current market conditions."
Schapiro: "We evaluate the developers’ financial strength and capacity to bridge cash flow gaps all while offering creative, flexible solutions designed to support ventures. We also leverage our unique corporate DNA and our global perspective."
Ruby Capital Partners. From right to left: Gerson Schapiro, Omer Alpern, Yaakov Nitzan / Credit: Guy Yechiely
The current real estate market is very volatile. Are you concerned?
Schapiro: "The primary challenge lies in the increasing interest rates, which make it difficult for real estate entrepreneurs to secure funding from banks. The regulatory change implemented by the Bank of Israel about a year ago further compounds this challenge. Indeed, official data shows that 52% of real estate lending is now coming from non-bank entities, rather than from traditional banks. So, in response to your question: rather than being concerned, we rely on our rigorous controls and are confident that we are in the right place at the right time."
Rubinstein: "Even though we see a slowdown in transactions right now, we are confident that housing demand will rebound and soar again in the first or second quarter of 2024. Developers want to be ready for that."
So, there is reason for optimism?
Rubinstein: "It’s precisely situations like the current one that hold opportunities. Yes, we strongly believe in the Israeli real estate market and its significant growth potential."
Schapiro: "Rising interest rates lead to an increase in construction costs and put a heavy financial burden on developers. But there is still a shortage of land and a big gap between supply and demand. So, we believe that the market will inevitably normalize, and demand will pick up once interest rates come down again."
What do you do for corporate social responsibility?
Schapiro: "Supporting the less fortunate is an integral part of our mission. Indeed, as co-founders, we set out to back viable projects while at the same time also actively engaging in social and community activities through volunteer work with several non-profit organizations. To that end we launched our ‘Panim LaKehila’ outreach initiative."
Rubinstein: "We contribute to various organizations, both large and small, based on certain pre-defined criteria. At the same time, we also encourage our developer-partners to join in. You’d be surprised how many gladly heed the call."
How would you sum up your integration into Israel?
Rubinstein: "Ruby Capital, to some extent, embodies the mindset of ‘Kibbutz Galuyot’. We bring together a team with a global outlook. But we not only hail from different parts of the world, we also come from different regions inside the country, reflecting the rich fabric of Israeli society."
Schapiro: "Within a short time, Ruby Capital transformed from a company of three immigrants to a vibrant reflection of Israel’s society and culture."
For further information about Ruby Capital, please click here>>
*This article has been adapted and translated from the Hebrew original.
