Alex Sapir wants to take his firm private. This could be the right time

Alex Sapir, CEO of the Sapir Organization (Credit: Getty; iStock)

Alex Sapir, CEO of the Sapir Organization (Credit: Getty; iStock)

Alex Sapir has another chance to do something he failed to pull off three years ago — seize greater control of his eponymous real estate investment firm by buying out its outstanding shares and going private. In the middle of a pandemic that has slammed stock prices on the Tel Aviv Stock Exchange, where the firm is listed, may be just the right time.

An LLC controlled by Alex Sapir is offering to buy up about 5 million shares of the company, Sapir Corp., at 3 Israeli shekels apiece, or about $4.3 million in total, according to a disclosure published Sunday in Tel Aviv. Those shares represent 13.29 percent of the company’s market capitalization.

Sapir and business partner Gerard Guez already own 86.71 percent of the company combined — two Sapir-controlled entities control about 62 percent of the total shares, while a trust for Guez’s benefit holds about 24 percent.

Sapir Corp.’s stock price has jumped sharply in the past few days, from 2.62 shekels a share last week to 3.71 shekels at the latest close. The disclosure notes that the average stock price over the past six months was 3.51 shekels.

Bank Leumi will be coordinating the buyout process. In 2017, the bank provided a $90 million loan for the construction of Sapir Corp.’s 12-story, 16-unit luxury condominium in Miami called Arte. With only three of the units sold — to Alex Sapir’s sister, mother and Guez — the company just secured a 12-month extension to pay back the loan and secured lender approval to rent the units to cover costs and provide flexibility in light of the coronavirus pandemic.

Sapir Corp. is also planning to sell a nearly 2 million-square-foot mixed-use development in Miami’s Arts & Entertainment District, and owns the 264-key NoMo Soho hotel in New York City.

Sapir Corp. shareholders have until May 31 to accept the buyout offer, which will only take effect if two conditions are met: more than 95 percent of all shareholders, as well as more than half of the shareholders whose shares are being acquired, need to approve of the transaction.

Sapir declined to comment, citing securities regulations.

Sapir’s previous attempt at a stock buyout in 2017, when the company was still known as ASRR Capital, failed to garner sufficient demand. The company had first offered to buy back its shares at 9.8 shekels apiece, before upping the offer to 10.8 per share or about $15 million in total, disclosures from the time show.

That buyout attempt came soon after Sapir surprisingly bought out partner and then-brother-in-law Rotem Rosen’s 40.5 percent stake in the company for $70 million.

In the event that this second buyout attempt does not go through, the disclosure says, Sapir “reserves the right to work towards the erasure of the company’s shares by means of a reverse triangular merger.”

If Sapir Corp does go private, the firm will still be subject to disclosure requirements in Tel Aviv because of its roughly $36 million in bonds that are trading on the exchange, which are set to mature in 2022.

KBS seals Israeli bond offering at $249M

From left: 110 William Street, Peter Bren and 424 Bedford Avenue
From the New York website: KBS Strategic Opportunity REIT closed its Israeli bond offering Monday after issuing nearly $33 million in debt through a public tender, bringing the first bond issuance by a U.S.-based REIT in Israel to roughly $249 million, sources said.
KBS secured 127.7 million shekels, or more than $32.6 million, through the second phase of its bond offering – a public tender open to a wide array of Israeli investors.
The public tender follows last week’s institutional tender, open only to qualified Israeli investment funds and financial institutions, that saw the REIT raise more than 842 million shekels, or nearly $216 million.
The public, non-traded REIT’s total issuance now stands at nearly $249 million, secured at an interest rate of 4.25 percent, according to sources with knowledge of the matter. This makes KBS the latest American real estate firm to capitalize on affordable Israeli debt deals available through public bond offerings on the Tel Aviv Stock Exchange, as well as the first U.S. REIT to do so.
While KBS – managed by Newport Beach, Calif.-based real estate investment firm KBS Capital Advisors – could have raised up to 1 billion shekels, or $256 million, sources close to the company described the issuance as a “huge success.”
The REIT is understood to have initially targeted a total raise of 600 million shekels, or just over $153 million, but saw the institutional phase of its offering receive more than $300 million in demand from institutional investors, as The Real Deal reported last week.
In addition to being one of the larger bond offerings by a U.S. company in Israel – the record is currently held by the Moinian Group, which closed on a $361 million issuance last May – the deal is also notable for the 4.25 percent interest rate on the debt issued by KBS.
For comparison, Moinian’s 4.2 percent interest rate on its $361 million offering was one of the lowest ever secured by a U.S. company in Israel, with only Joel Wiener’s Pinnacle Group raising debt at a lower cost.
KBS, whose assets include a 32-story, 928,000-square-foot office building at 110 William Street in the Financial District, is expected to use the proceeds from the deal to continue exercising its strategy of buying commercial assets and stabilizing them through increased leasing and occupancy.
The REIT was advised on its offering by Gal Amit and Rafael Lipa of Victory Consulting Group. Israeli financial services firms Poalim IBI and Leumi Partners were the underwriters on the issuance.

Source: The Real Deal Miami