Oy Vey

A Canadian developer finds Israel to be a lender of last resort.

May 22, 2016

About the author

Noam Ganel, CFA is the founder of Pen&Paper, a value-oriented, contrary-minded journal of the financial markets. Between 2010 and 2020, Ganel worked for Silvergate as Vice President in Capital Markets. He provides advisory services to family offices,  private companies, and financial advisors.

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‍UrbanCorp became a popular Google keyword. Compared to an average of 2,500 monthly searches, 17,000 times users researched the Toronto-based real estate developer in this month alone.

Bankruptcy appears to explain the sudden interest in the company. Its bonds, traded on the Israeli stock exchange, issued at par with a face value of $50 million, are now a hot item with distressed debt firms.  

This was unexpected.  Five months ago, the company and its auditors showed a promising well-established firm, and a successful track record with just the right amount of optimism. One of its residential projects, Kingsclub, presold 506 residential units and 157,000 square feet of office space. A second project, 1071 King, almost completed, was expected to hold 300 rental apartments with 21,000 square feet of retail space.

Reputable real estate firms joined in to augment UrbanCorp’s reputation. To name a few: First Capital Realty, a leading REIT firm in Canada, and Mattamy Homes, a large multifamily builder.

And Israeli institutional investors bought into the company’s vision. The company successfully issued a $50 million bond offering in November 2015.

Pen&Paper reviewed the 710-page bond offering; It emphasized its prosperous future and lured investors by portraying a promising macroeconomic outlook.  

“The residential market in Toronto is expected to exhibit a long term increase in rental rates. During 1998 to 2014, the increase in rental rates stood at six percent.”

Average home price in Canadian Dollars


“The Canadian real estate industry is showing positive fundamentals, which support the rental market. For example, in the past ten years, the growth in number of households was greater than the construction of homes - which should increase housing prices”.

Apartment index in selected cities worldwide

·         “The company is in the process of developing a project where all units have been presold.  Additionally, in the short term, it will commence with Mattamy Homes, a development of 459 additional units that is holding 49 percent interest.”

Two-bedroom Average Rent and Vacancy Rates


“In light of the recent resignation of the Audit Committee and the independent Israeli Directors, I feel that I must resign as a Director of UrbanCorp,” wrote Phillip Gales, UrbanCorp’s CFO. “Without their independent input, I believe it will be exceedingly difficult to set clear and effective route to financial and business stability for the company.” 

Was the writing on the wall? David Fleming of Toronto Realty Blog would agree. Once an investor at UrbanCorp’s pre-construction units, he turned out to be one of its largest critics. He laments how in recent times, the firm increased closing costs to $50,000 from zero, and levied hefty down payments.

The Israeli debt offering should have been a warning sign in and of itself. Known for warm weather, great cuisine, and passionate people, Israel does not have the reputation of being a lender of last resort.