A Starwood capital Group mall portfolio has entered into default on a $254 million bond in Tel Aviv. The assets include malls in the US, located in California, Ohio, Indiana and Washington. Starwood initially issued the bond in Israel in march 2018, to help refinance $760mm in debt on the five-mall portfolio. The Israeli debt is junior to $539mm of Commercial Mortgage Backed Security (CMBS) loan which the Group holds with Goldman Sachs – which has been placed on a grace period for May. Since then bonds have been struggling in the Tel Aviv market and traded at junk-bond yields afterwards.

At the investor meeting Wednesday, bondholders representing 77 percent of the total voted to pursue the default option and take over the assets. 

What does this mean for other retail and commercial property owners? Discuss…

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