Luxury Retirement Resort Seeks to Raise $160 Million via Bonds

Oranim al Hayam, controlled by real estate developer Menachem Oren, is planning to issue bonds worth up to 600 million shekels (approximately $160 million USD) to repay a 500 million shekel bank debt incurred during the construction of its ultra-luxury retirement resort, Sea One, located on the beach in Rishon LeZion.

The Sea One project, targeting individuals aged 60 and over, offers high-end living with amenities such as sea-view pools, a spa, a gym, cultural activities, and dining options. The resort comprises two buildings with 270 assisted living units and a commercial center, spanning 56,000 square meters. The project's value was estimated at 928 million shekels at the end of the first quarter of this year.

The bond issuance aims to improve the company's financial standing. Oranim al Hayam currently has negative working capital of 525 million shekels, largely due to its outstanding bank credit. Construction and marketing were delayed, partly due to labor shortages exacerbated by the war, leading the company to extend and increase its credit line.

With the project receiving its occupancy permit in March and initial move-ins beginning, the company intends to use the bond proceeds to clear the 510 million shekel bank debt and a 13 million shekel debt to a related party. This repayment will release existing commitments and liens held by Bank Leumi. The remaining funds will support ongoing operations.

The bonds are expected to be issued with a 4% interest rate (approximately 5.5% effective) and are anticipated to be completed soon. Bondholders will receive a lien on the project's commercial center and a unique security interest in tenant deposits, which serve as a guarantee for residents' living rights. The value of the pledged assets is expected to exceed the debt amount, contributing to the relatively low interest rate offered.