Moinian Group is that United States is that company that was able to create the largest real estate bond offering in Israel. This was because the tax policies of Israel did not require to pay double-tax like in the US, and the "5/50" rule was ineffective in their market.
As reported by Jerusalem Post, a deal between Tel Aviv Stock Exchange and Moinian Group yielded the largest real estate bond offering in history amounting to NIS 1.4 billion last May.
Since July, the bond offers were closed at 100.3 which provided for a small profit for those who took part in the retail auction aside from other potential bonds, and the regular interests were then paid to the investors. This deal went epic because of two things in mind: a complex corporate scheme and a tax structural analysis.
In fact, Reuters reported that bond offerings in Israel are even cheaper than mezzanine financing, that the US developers were able to raise $915 million in Israel alone for this year, and that Canadian bonds are expected to enter the market soon after as well.
According to a financial adviser, Moinian Group was able to land this deal due to its gradual planning and careful decision-making.
Israel afforded for only 4% interest to debt investors; if the same deal was afforded in the US, it would require 10-15% interest. Clearly, the better choice was for Israel.
However, with the US bond markets having investors borrow large funds at relatively low rates, why then did the company feel that they would be at an advantage if they were to deal in Israel?
There was only one reasonable decision for this: tax structure in Israel and US differed to the extent that when investors would want to raise their reserves by affording debt to investors, they are required in the latter market to establish a corporation. In doing so, it would then be required to pay taxes on profits but an additional corporate capital-gains tax as well.
In comparison to Israel's market, they allow the Moinian Group to have a corporate entity without having to establish a corporation and could be just a pass-through entity. Therefore, they are afforded more return on investments due to the minimal rates on taxes.
Furthermore, in the US, it is also required that the "5/50" rule would be observed wherein no five shareholders can control more than 50% of the equity in the company's real estate investment fund. However, in Israel, there is no such tight restriction regarding REITs, an advantageous factor in the real estate bond between Monian Goup, a US investor company and that of Israel's Tel Aviv Stock Exchange.
