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Starwood Defaults on $254M Israeli Bond, CMBS Malls Hang in the Balance

A Starwood Capital Group mall portfolio has entered default on a $254M bond in Tel Aviv.  The debt is junior to a $549M senior CMBS loan with Goldman Sachs that matures in 2021. 77% of the bondholders voted to put the portfolio in default on Wednesday and there are six mall owners bidding to manage the properties. The portfolio includes seven regional malls in the U.S. located in California, Ohio, Indiana, and Washington.


Starwood initially issued the bond in Israel in March 2018 and closed the CMBS loan a few months later. After the CMBS loan closed, the bond began to struggle. After the coronavirus hit, it was downgraded by Israeli rating agencies, moving bondholders to push for repayment.


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