HaHistadrut 116 Holon American Israel Finance & Development ARYEH (LARRY) DEVERETT Israel 053-831-0270 [email protected]www.americanisrael.com 1. TAMA 38 is a unique construction program from the Israeli government to increase urban housing and to protect older apartment buildings from earthquakes. Developers get to add new floors on the top of existing apartment buildings in exchange for doing improvements on the building. Improvements include strengthening existing building, elevator, new façade, balconies, safe rooms. 2. For their work in improving the existing building, Developer ends up with the best new apartments (top floors), in newly renovated buildings, in the best locations of existing high demand neighborhoods. 3. In the next 10 - 20 years over 25,000 residential apartment buildings in Israel will be rebuilt to TAMA 38 standards, creating thousands of new homes. (over 250,000 buildings qualify for TAMA renovations. Developers are currently focusing on the top markets that produce the highest ROI) 4. American Israel will finance/develop the construction of approximately 10 projects per year, through loans from private funders. Funders will also have the option to purchase new apartments at discounted prices. 5. We anticipate an annual return on investment of 12% - 13% with minimal risk. Investment timeframe is 30 – 36 months for most projects. Projects have excellent security collateral. 6. TAMA projects very much help the State of Israel. They make apartments safer and stronger. They create much needed new housing. They generate jobs and stimulate economic development and tax revenue. 7. Israel’s population is 8.842 million, 43% of world Jewry. Central Bureau of Statistics figures show 74.5% of population is Jewish/ predict population will be 15.2 million by 2048. Much new housing is required. TAMA 38 Finance & Development TAMA 38 What is TAMA 38? A typical TAMA project . . .
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HaHistadrut 116Holon
American Israel Finance & DevelopmentARYEH (LARRY) DEVERETT Israel [email protected] www.americanisrael.com
1. TAMA 38 is a unique construction program from the Israeli government to increase urban housing and to protect older apartment buildings from earthquakes. Developers get to add new floors on the top of existing apartment buildings in exchange for doing improvements on the building. Improvements include strengthening existing building, elevator, new façade, balconies, safe rooms.
2. For their work in improving the existing building, Developer ends up with the best new apartments (top floors), in newly renovated buildings, in the best locations of existing high demand neighborhoods.
3. In the next 10 - 20 years over 25,000 residential apartment buildings in Israel will be rebuilt to TAMA 38 standards, creating thousands of new homes. (over 250,000 buildings qualify for TAMA renovations. Developers are currently focusing on the top markets that produce the highest ROI)
4. American Israel will finance/develop the construction of approximately 10 projects per year, through loans from private funders. Funders will also have the option to purchase new apartments at discounted prices.
5. We anticipate an annual return on investment of 12% - 13% with minimal risk. Investment timeframe is 30 –36 months for most projects. Projects have excellent security collateral.
6. TAMA projects very much help the State of Israel. They make apartments safer and stronger. They create much needed new housing. They generate jobs and stimulate economic development and tax revenue.
7. Israel’s population is 8.842 million, 43% of world Jewry. Central Bureau of Statistics figures show 74.5% of population is Jewish/ predict population will be 15.2 million by 2048. Much new housing is required.
• Centrally located on a nice main street, in very high demand area of Holon• The area is being gentrified with several TAMA 38 projects in construction or planning. • Currently 48 apartments on 4 floors / Plan to add 2.5 new floors; 33 new apartments including 4 penthouses• TAMA renovations planned to commence May 2020• Total forecasted revenue 51,709,000 / Total forecasted costs 40,789,000 / Total forecasted profit 10,920,000
TAMA38Finance&Development
American Israel Finance & DevelopmentARYEH (LARRY) DEVERETT Israel [email protected] www.americanisrael.com
Top left : current building
Bottom Left : new building
Top right: Nice residential street – lots of parking
Bottom left : Lots of room around the building for easy construction
Holon is located just south of Tel Aviv. It is an affordable and beautiful neighborhood for families, with fast and easy access to Tel Aviv. As the buildings in this community undergo renovations, this area will continue to increase in value and demand.
HaHistadrut 116, HolonNote : numbers represented are best estimates > subject to change
OPTION 1 - For loans LESS than 1,000,000
Lender’s earn fixed 11% per year interest
OPTION 2 - For loans MORE than 1,000,000
Lender’s earn fixed 12% - 13.5% per year interest
OPTION 3 - For loans MORE than 4,000,000
Lender’s earn fixed 8.0% per year interest PLUS percentage of profits
>>> Total yearly yield of approximately 15% - 18%
Deal Summary (NIS)
LOAN Options
Funding• TOTAL Project Funding Required 8,500,000• Project completion / loan + interest payout >> May 2022• All funds are advanced as loans to the project (not equity investments)
Lenders receive interest income (not capital gains) • Lenders also have option to purchase an apartment(s) at preferred rates
TAMA38Finance&Development
American Israel Finance & DevelopmentARYEH (LARRY) DEVERETT Israel [email protected] www.americanisrael.com
• AID (American Israel Development) acquires loans from private lenders or funds (investors) to be used in developing and building TAMA 38 projects in Israel.
• Generally each project (or group of projects) is in a separate company, specifically set up for that particular project.
• We raise about 20% - 25% of the costs of a project and finance the remainder using a bank or other institutional lender (keren)
• The main security and collateral that we give to our lenders are the building rights of the TAMA projects. These building rights have significant value.
• The projects pay back the principal of the loan from sales of apartments. The project generates substantial profits to coverour interest payments to lenders.
• Our lenders earn significant returns on their loans with minimal risk. Loans are generally from 30 – 36 months
• We (AID) participate as the initial lenders in our projects, so that we have considerable “skin in the game”. • We manage all aspects of the projects of behalf of the lenders.
1) Security of investment
• The most important criteria for our loans is SECURITY of capital. First and foremost your loan must be safe and secure with complete confidence.
• We provide excellent security/collateral. Our lenders have a lien over the rights of the new apartments.
• TAMA projects are generally very safe investments because we are simply renovating pre-existing buildings that are already in the best, highest demand neighborhoods in the country. These are neighborhoods where people are currently living and want to continue to live; close to their jobs, schools, friends & family, shuls, etc.
• With TAMA renovation, we are not buying expensive land and creating new buildings or neighborhoods. With TAMA, there is minimal risk. We are simply gentrifying existing buildings in the best locations in Israel.
2) Exceptional Return on Investment
• There are very high profits in a TAMA project. As such, the developer (AID) can afford to pay early stage lenders a significant Bonus (interest rate).
3) No hassles – as with owning and renting
• We recognize that people would like to “own” an apartment(s) in Israel. However if you are not going to live in that apartment, do you really want to be a landlord with all of the associated hassles?
• Generally owning and renting an apartment in Israel does not produce a significant cash-flow return. You may earn 2% to 3% per year on net operating income (rental income less operating expenses, taxes, finance costs). But that also comes with the headaches of being a landlord. Even if you employ a management company, you still have the ultimate responsibility of managing renters and rental income, paying for repairs and maintenance, and dealing with any shortfalls or surprises. Yes >> properties may appreciate 5% or 6% per year ,but when you sell them you are subject to capital gains taxes and brokerage fees, which eat into the net profits.
• In a TAMA project, you basically create new and safer homes in Israel, but you have NO hassles of ownership and management. You will earn much more net profit with much less hassle and much less risk >> and lower taxes
• It is sensible to earn as much profit as possible, as hassle free as possible, as risk free as possible, and actually help Israelis much more, by making their current homes safer and nicer.
Lender’s should be proud that their participation in a TAMA project has made the building stronger and safer for the families living there. G-d forbid there is a major earthquake or missile attack, these families now have an earthquake proof building and mamads (saferooms) for protection. These improvements will save lives. Each project also creates much needed new homes and jobs. TAMA is a win/win for everyone involved.
TAMA38Finance&Development
TAMA 38Overview of TAMA 38 investments
Overview
Why participate in a TAMA project
And also . . . . helping Israel
American Israel Finance & DevelopmentARYEH (LARRY) DEVERETT Israel [email protected] www.americanisrael.com
Security/Collateral . . . How we protect your loan
In any investment there is some risk. We try to minimize the risk as much as possible by . . .
1) We have a professional team of very experienced managers and advisors who plan and build our projects. We choose the best architects, engineers, planners and project managers; who have years of experience in TAMA and who also know and have relationships with the various municipal offices where are projects are located.
2) We employ an independent shamai (appraiser) to prepare a feasibility report (doch efes) to fully verify our costs and revenue forecasts. This audit covers all projected costs, revenue figures and feasibility of the entire project. We only proceed on a project if it can earn significant profits.
3) We have extensive and all inclusive legal agreements with the diarim (tenants) and our co-developers. All aspects of our projects are clearly defined in our agreements. We leave nothing to chance.
4) Our lenders receive a charge over the shares of the project company (which allows them to take over the project company and complete or sell the project if necessary)
5) Our lenders receive their full loan principal repayment and their bonus (interest) BEFORE, we earn our profits
6) We monitor all expenses. We have tight controls and systems to safeguard our projects.
7) We have a supervisor who works on-site in tight collaboration with the construction company (kablan). His main job is to control and monitor all aspects of development, construction, cost controls, etc.
8) We, as the developers stand to earn significant profits in our projects after our lenders are paid out. We take every measure possible to maximize those profits, thus ensuring that our lenders are well looked after.
9) Also, the tenants (diarim) in the buildings are very focused on getting the project completed quickly, because they generally live in the building during the renovation. The construction timeframe is contracted with tenants. This is a big incentive for us to stay on time and budget.
Quick FAQs (Frequently asked Questions)
What is the collateral to secure the loans?• The lenders are granted collateral over the rights to the project. These rights give the owner (the SPC) the ability
and permission to build and sell additional apartment units. These rights are very valuable.
What can go wrong? There are two major possible risks in a TAMA project
1) Real estate prices drop. This is an uncontrollable factor• In the case of our TAMA projects, market prices would have to drop by more than about 22% before the lenders are
affected regarding their payback of principal and bonus. Real estate prices in Israel historically have never dropped anywhere near that level (even during wars) and it is not realistic to believe that they will. There is a shortage of housing in these high demand, central areas. The economy is strong, banks have stable lending policies, the population is growing and all forecasts predict a growing demand for homes.
2) The developer (yazam) cannot meet their obligations or expectations. • A developer could over-extend its resources, submissions or administrative approvals could be delayed (which is not
really the developers fault). Or the developer could be negligent in managing various aspects of the project.
• We mitigate any potential concerns by working with quality professionals and advisors. If anything goes wrong, the lender group could take over the project and replace the developer.
How much tax do I pay on the interest income I earn?
Israeli’s pay 15% tax on their interest income. For foreign investors, we must withhold 17.5% tax for USA citizens and 15% for others (Brits, Canadians). All income returned to investors is INTEREST, not capital gains.
American Israel Finance & DevelopmentARYEH (LARRY) DEVERETT Israel [email protected] www.americanisrael.com
SUMMARYAmerican Israel is one of the largest early stage lenders to TAMA 38 projects in Israel.To date we have loaned over 100,000,000 shekels to 37 projects. Our practices and procedures for lending are secure and well established to protect the interests of our lenders. • We do extensive due diligence to ensure the developer and the projects are safe and low risk
• We carefully monitor each project and we are actively involved in expense payments and sales• We have fixed term and fixed rate loans, that are paid before the developer earns his profits
To date we have successfully completed and paid out loans in the following projects : (all numbers in NIS)
1) Kehilat Zion 688, Herzylia Developer : Everest 38OVERVIEW : Original building > 16 apartments on 4 floors. Plan to add 2.5 new floors & 10 new apartments
ORIGINAL LOAN: Advanced 3,500,000 ; May 2015 / 1,500,000 due Sept 2016 + 2,000,000 due Feb 2017
LOAN REPAYMENT: 1,500,000 was repaid on Sept 2016 as contracted (16 mths) / The developer requested an extension of 5 months on the balance (2M). Developer repaid 2,000,000 on July 2017
BONUS (interest) paid: Lenders were paid full bonus on August 2017. Average Bonus rate was 17.2% per year. Lenders were paid a rate of 20% per year for the 5 month extension period.
2) Ein Ganim 53/55 , Petah Tikva Developer : Everest 38 OVERVIEW : Original building > 24 apartments on 3 floors. Plan to add 2.5 new floors & 20 new apartments
ORIGINAL LOAN: Advanced 3,300,000 ; August 2015 + 2,000,000 November 2015 + 1,200,000 July 2016 / 3,00,000 due May 2017 + 3,500,000 due July 2017
LOAN REPAYMENT: TOTAL 6,500,000 was repaid on July 2017 / The developer requested an extension of 2 months on the 3,000,000 due on May 2017.
BONUS (interest) paid: Lenders were paid full bonus on August 2017. Average Bonus rate was 16.8% per year. Lenders were paid a rate of 20% per year for the 2 month extension period.
3) Kinneret Land deal, Migdal Developer : Anbar DevelopmentsOVERVIEW : Loan to developer for large waterfront property on Kinneret. (not a TAMA deal). We received the first mortgage. Developer wasconsidering building a luxury hotel, but decided to sell the land to another hotel development group
ORIGINAL LOAN: Advanced 5,000,000 ; Sept 2016 + 5,000,000 Nov 2016. 10,000,000 due Sept 2017 (1 year loan)
LOAN SCHEDULE: 6,000,000 was repaid on July 2017 (2 mths early). Balance of 4,000,000 repaid Sept 2017
BONUS (interest) paid: Lenders repaid full bonus on Sept 2017. Average Bonus rate was 15.0% per year
DESCRIPTION : This developer was originally planning to build a luxury hotel on the property. He received an excellent offer to sell the land to another hotel developer – which he did. He paid out a large portion of our loan early, at full interest. We are now evaluating additional Kinneret projects with him.
4) Weitzmann 86, Holon Developer : Asael GroupOVERVIEW : Original building > 16 apartments on 4 floors. Added 2.5 new floors & 9 new apartments
ORIGINAL LOAN: Advanced 4,400,000 ; December 2015
LOAN REPAYMENT: TOTAL 5,600,000 was repaid on December 2017; Principal + Interest
BONUS (interest) paid: Lenders were paid full bonus on December 2017. Average Bonus rate was 16.1% per year.
DESCRIPTION : Project was completed March 2018.
5) Kaplanski 10, Holon Developer : Asael GroupOVERVIEW : Original building > 9 apartments on 3 floors. Adding 2.5 new floors & 7 new apartments
ORIGINAL LOAN: Advanced 3,000,000 ; January 2016
LOAN REPAYMENT: TOTAL 3,730,000 was repaid on March 2018
BONUS (interest) paid: Lenders were paid full bonus on March 2018. Average Bonus rate was 15.7% per year.
DESCRIPTION : Project is still underconstruction
American Israel Finance & DevelopmentARYEH (LARRY) DEVERETT Israel [email protected] www.americanisrael.com
American Israel Finance & DevelopmentARYEH (LARRY) DEVERETT Israel [email protected] www.americanisrael.com
About American IsraelWho we are• A team of Americans/Canadians living in Israel. We are developers and funders of TAMA 38 projects in
Israel• Experienced in finance and project management /American business practices and standards• Principals; Aryeh Deverett; CEO / Jonathon Kestenbaum; President
Value added services we provide1. We specialize in acquiring profitable TAMA38 projects that are close to construction. These projects have
strong collateral and excellent locations. We either develop these projects directly or co-develop with another group.
2. We acquire financing from private lenders or equity partners>>> We find & package deals / complete financial review / due diligence / arrange all legal work / project management & weekly supervision of project (on site) / monthly reporting / protect the interests of our funders to insure safety of investment and substantial ROI.
3. Our team includes highly experienced project managers, Shamot (appraisers), architects, engineers, kablanim (construction companies), lawyers, accountants and financial analysts.
Management & Advisors1. Aryeh Deverett, CEO; originally from Toronto, Canada. Extensive background in finance, project
management and marketing. Aryeh focuses on investor relations, marketing, compliance (legal and accounting)
2. Jonathon Kestenbaum; President; Originally from Lawrence (5 Towns) New York. Experienced in project planning and construction management. Jon focuses on project acquisition, project management & construction management.
I. Safety of investment II. Substantial Return on investment for our fundersIII. Creating valuable new housing and jobs in Israel
Dealing directly with the developer . . .
• American Israel Development (AID) is either the developer or the co-developer of this project. In either case AID controls and/or owns the project.
• This is advantageous to the lenders (investors) because they are dealing directly with the developer, not an intermediary manager or broker. If there are any concerns with the project the lenders have first line access to the developer and the project.
• This is also advantageous to the lenders because, without a middleman, there is more profit available in the project to cover their loan and interest payments.
• In a case where the developer (AID) is not able to meet its commitments and there is a potential breach in the loan agreement, the lenders could assign the project’s lawyer/special manager to call on their security and take control of the project on their behalf. Of course we do not anticipate that this will ever happen, but in a worst case scenario, the lenders would have direct access to the project without having an intermediary party to deal with.
TAMA 38LEGAL Structure of AID(American Israel Development)
American Israel Finance & DevelopmentARYEH (LARRY) DEVERETT Israel [email protected] www.americanisrael.com
Israeli KablanConstruction of
project
Lenders advance funds to LendCO
ProjectCOAID owns rights to
building project
LendCOLoans to ProjectCOSecured Creditor
AID (American Israel)Co/Developer (Yazam)
Owns ProjectCo & LendCoAcquires, Finances,
Manages and monitors TAMA 38 projects
advances funds to project
pays back loan & bonus
Pays for expenses
Manages project development &
construction
Money flow
Mgmt flow
All companies are Israeli incorporations
LEGEND
ProjectCO4collateral
ProjectCO3collateral
ProjectCO2collateral
ProjectCO5collateral
others . . .
Other projects owned by AID
Notes :1) Each project either has a separate lending company (LendCO), or the lenders advance funds
directly to the project company (ProjectCO)2) In some situations AID controls 100% of the project (equity). In other “co-developer”
situations AID is equity partners with another developer. However AID controls the projects3) Lender’s advance funds as creditors to the LendCO or direct to the ProjectCO
The LendCO then advances funds to the ProjectCO as a loan1) In call cases, the Lenders or LendCO have collateral in the ProjectCO2) The Lenders or LendCO are paid out their full loan principal and bonus BEFORE the
