Luxury Senior Living Project Seeks $165 Million in Bonds

The Sea One project, a luxury senior living resort in Rishon LeZion, is entering the capital markets to raise up to 600 million shekels (approximately $165 million) in bonds. The company behind the project, Oranim al Hayam, controlled by real estate developer Menachem Oren, aims to use the funds primarily to repay a 500 million shekel bank loan incurred during the project's construction. The bond issuance is also intended to improve the company's financial standing, as it currently has negative working capital of 525 million shekels.

The Sea One complex, situated on the Rishon LeZion beachfront, comprises two buildings with 270 senior living units and a commercial center. The project faced construction and marketing delays, partly due to labor shortages exacerbated by the war. The project received its occupancy permit in March, and initial move-ins have begun. The resort boasts amenities such as swimming pools with sea views, a spa, a gym, and various cultural and sports activities.

Oranim al Hayam anticipates that the commercial center will generate approximately 5 million shekels in rent next year and 5.5 million shekels in 2028. The company projects that 10% of the project will be occupied by the end of this year, rising to 25% by the end of next year and 45% by the end of 2028. Tenant deposits are expected to total 152 million shekels in the next year and 101 million shekels the year after, with individual unit deposits ranging from 2 to 5 million shekels. Monthly maintenance fees are projected to be between 7.6 million and 9.8 million shekels annually.

The bond offering is expected to carry a linked interest rate of approximately 4% (effectively around 5.5%). Upon repayment of the bank debt, the commercial center will be pledged to the bondholders. Uniquely, bondholders will also receive a pledge on tenant deposit funds, which serve as a security for residents' housing rights. The value of the pledged assets is expected to exceed the debt amount, contributing to the relatively low interest rate offered.