Tshuva's Elad Canada to raise NIS 435m TASE bond

Yitzhak Tshuva

The bonds will be backed by a senior lien on Elad Canada's rights in a property called Galleria.

One day after an impressive exit by Yitzhak Tshuva from the sale of a rental housing portfolio in the southeastern US, mainly in Florida, was reported, Tshuva is joining the tide of debt issues by foreign real estate companies on the Tel Aviv Stock Exchange (TASE). Elad Canada, fully owned by Tshuva, today won an A rating from S&P Ma'alot for a secured issue of up to NIS 435 million (C$161 million) in Series B bonds.

Elad Canada's obligations to holders of Series B bonds will be backed by a senior lien on its rights in a property called Galleria. Proceeds from the issue will be used primarily to replace existing debt on the property, buy out a minority partner in the property, and for the company's regular activity.

Elad Canada already has NIS 280 million in outstanding Series A bonds, which have been listed on the TASE since August 2018. These bonds, which are unsecured, have an average duration of two years, and bear 5.85% interest, are currently traded at an annual yield to maturity of only 2.7%.

The Series A bonds are rated A minus. S&P Ma'alot said that the higher rating awarded to the Series B bonds resulted from its assessment that the debt recovery rate for the Series B bonds in the event of hypothetical insolvency would be 70-90%.

Elad Canada's financial statements published in August this year indicate that Galleria's existing loans amount to C$120.5 million, following a C$25 million increase in February. The company said that it was in advanced negotiations for an agreement (including signing a binding letter of intent) to acquire the partner's 20% rights in Galleria for C$40.5 million.

Galleria is an extensive project by Elad Canada in Toronto. It has six main parts, including residential, commercial, and office space; a community center; a park; and public space. The site currently houses a commercial center, which has been partially vacated, and will be partially demolished according to progress in the project.

The project is in the advanced planning stage, and Elad Canada believes that it will begin marketing the first stage this year and begin construction of the first stage in 2020. Completion dates for the various stages are in 2030-2032. Elad Canada has invested C$300.4 million to date in buying the land and in related costs, and its investment will reach C$1.46 billion by the time the entire project is completed.

Elad Canada has greatly expanded its activity in recent months, after completing its acquisition of North American real estate fund Agellan for C$393 million in February 2019. Elad Canada reported a C$26 million net profit on C$175 million in revenue in the first half of 2019.

Elad Canada's shareholders' equity totaled C$418 million at the end of June 2019, 24.4% of its balance sheet total. For the sake of comparison, Elad Canada's shareholders' equity at the end of 2018, before the acquisition, was C$261 million, 27.1% of its balance sheet total.

Published by Globes, Israel business news - en.globes.co.il - on September 12, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

Yitzhak Tshuva
Yitzhak Tshuva
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