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Loans from Everything Next Near: The Eldad Perry Method and the Mountain of Debts Revealed
The buyers borrowed far beyond the price of the apartment, the financing companies mobilized and the Swiss investor "fell in love".
That's how Eldad Perry's real estate bubble was inflated, and that's how it crashed
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Eldad Perry
Arik Mirowski
Tuesday, 15 September 2020, 05:56
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In January 2015, E., a resident of Even Yehuda, lent NIS 850,000 to Perry Real Estate, which is controlled by Eldad Perry. An additional NIS 750,000 in about a week. Why does an individual lend money to a large real estate company?
According to the contract, A. wanted to purchase a 4-room apartment on the fifth floor of the Orot Hanan residential project in Rehovot, and the loan money, it seems, constituted the payment, or part of it.
As of January 2015, the land plan in the project enabled the construction of a building with 28 apartments, with E.'s apartment not included in them.
The loan contract explains that Perry Real Estate applied to the Rehovot municipality to increase the building rights in the project by an additional 14 apartments.
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Too many loans.
Eldad Perry (Photo: Eyal Yitzhar, Globes)
Swiss millionaire who "fell in love": Who is Eldad Perry's investor?
E. is not the only private person who has lent money to the construction company in recent years.
In June 2015, four other private individuals signed a loan agreement with IPG Perry Investments, which is managed by Eldad Perry.
"The parties are interested in establishing a registered enlarged partnership whose main business is to provide a loan in a fixed and limited amount, for the purpose of completing the construction of a residential project to build 11 units at 29 David Mizrahi Street in Rehovot," the agreement states.
The funds, up to a framework of five million shekels, will be transferred to the account of the contracting company "Solara", which is affiliated with the Perry Group.
The annual interest rate for the loan will stand at eight percent stated in the agreement.
Both agreements are included in an urgent request sent last week by Adv. Ariel Junger on behalf of 13 buyers in the Orot Rabin project to the Central District Court, to join the process of freezing the proceedings in Peri Real Estate.
The proceeding was initiated by Gami and Haim, controlled by Haim Hemo, which lent hundreds of millions of shekels to the Perry Group.
According to Junger, in the fruit of real estate, “leaders have been misled by the seekers by making false promises, taking full advantage of the weak person and putting him into additional private leverage on non-bank financing from an institution and making a pyramid.
"Perry Real Estate chose to adopt a pattern of lies and making false promises and with the sole purpose of stabilizing and injecting money into the company at the expense of the applicants," it was written in its appeal to the court.
The economic test that exposed the pit
For several years now, the real estate industry has been treating Eldad Perry with caution. On the one hand, he is a person who presents a wide range of projects, and pours a lot of money into advertising. On the other hand, Perry grew rapidly, almost out of nowhere, The Central District, Irit Weinberg-Notovich, on the issuance of a stay of proceedings to the company, and appointed attorneys Ehud Ginds and Gonen Kastenbaum as trustees of the company. Frequent loans and everything to come. The
company controlled by Hemo lent NIS 218 million to Peri Real Estate.
Expo Fund NIS 130 million.
The non-banking and bonus finance companies Tria and Bonus are also mentioned in documents submitted to the court along with a description of complications in other projects, and of course there were private individuals as well.
Is this how the Perry Group's method worked, which allowed it to operate for almost a decade, until the affair exploded last week?
Gami and Haim, which lent hundreds of millions of shekels to Real Estate in the past year. In September 2019, Mr. Hemo asked to purchase apartments in one of the group's projects, by the way, Mr. Hemo met Eldad Perry.
Mr. Hamo's inquiries revealed that this is an established real estate group with an excellent reputation in Israel for years, "it was claimed.
The appeal to the court states that "Perry was the one who offered Lehemo" to invest in the group ", and that in this context Mr. Perry claimed that the company has a huge value amounting to NIS 1 billion, and that it needs funds to bridge the cash flow gap.
And it worked.
His father-in-law's company transferred the money in a few beats, but something went wrong with his father-in-law, who four months ago wanted to check the financial situation of the Perry Group.
In the first phase, Beta Finance was brought into the matter, and an accountant on its behalf examined the group. The report issued by the company emphasized that its findings are based on processed data provided to them by the group's management, and that more in-depth tests should be performed in the future, according to Beta Finance. Peri Real Estate was in cash flow difficulties and that while its expenses in 2020 will reach NIS 162 million, its revenues will be limited to only NIS 82 million.
Another finding that lit a red light was the salary of the company, which was NIS 13.6 million.
The manpower situation and the level of salaries in the group are not reasonable in relation to the group's activities and its current situation, it was written.
It was also found that the employer's cost for Perry's own salary is NIS 266,000 per month.
Beta Finance's conclusion was bleak.
"If no money is pumped into the company, it will not be able to realize the potential for land improvement and the 'Perry Real Estate' brand will have no economic value."
According to the request, Perry claimed in response that the editors of the report erred in every parameter, and that the company's business situation is good, and the problem is only cash flow, and this is expected to be resolved soon.
The request states that his father-in-law decided at this stage to deepen the tests, and along with additional loans he gave, he sent an economic advisor and CFO named, Ronen Azulai, to re-examine the company's situation.
According to the description, Azoulay was given access to the group's membership data, and he was also allowed to have an "open dialogue", he said, with the group's managers, headed by Eldad Perry and his brother Liron Perry.
Azoulay's findings appear to have been the trigger for the freezing proceedings on his father - in - law's side.
"For many weeks now, every week the group has been required for loans in the amounts of NIS 1 million to NIS 5 million, in order for the group's companies to meet their obligations for that week (!!)," Azoulay wrote in an affidavit submitted as part of the appeal to the court.
Azoulay writes in his affidavit that in recent times the Perry Group has been living mainly from short-term loans.
In March 2018, the subsidiary Perry Resort took out a NIS 5 million loan from the company, a bonus, for a period of one year at an annual interest rate of 8%.
Bonus is a non-banking finance company which deals with funding and support projects and specializes in real estate, among others accompanied by purchasing groups. Group Fruit been linked to two projects are published on its website: "Pecan Park" in the streets and "horiizn "Bat Yam.
The name of the bonus on background Of loans to the Perry Group also rose in the context of the "Orot Hanan" project in Rehovot.
The financial collapse in Peri Real Estate also goes to the non-bank non-bank financing company. Like Bonus, it is also a company that specializes in non-bank financing for real estate projects, and especially for purchasing groups.
Her connection to the Perry Group can be learned from the failed project "Orot Hanan".
On the Perry Group's website, it is written that this is a project that is a dream come true for young people, and the visualization of the project presented on the website is written "under construction".
During a visit to the place this week, we found a building skeleton, which seems to have stood like this for a long time.
In contrast to A. mentioned at the beginning of the article, and others who purchased a right to an apartment in this project, as part of the increase in rights declared by Peri Real Estate, there are 28 members of a construction association called Orot Hanan, who purchased the land themselves as part of a purchase group organized by Perry Real Estate.
Today they also want to join the freezing process, and in a lawsuit filed through attorneys Ariel Junger and Shira Schwartz it was stated that, "Perry Real Estate undertook to the association members to establish the project for a final price paid by each according to the personal agreement. Real Estate was supposed to set up the project using funds paid by the association's members and funds from Perry Real Estate's own sources! But Perry Real Estate, instead of putting his hand in his pocket and "bringing money from home to complete the project, led the applicant (association) with great charm to take "A loan from the Trea Fund and to encumber the applicant's land in order for the fund to provide funds for the completion of the project - the same funds that Perry Real Estate undertook to bring from its own pocket."
A disturbing loan of NIS 7 million
The loan taken was in the amount of NIS 7 million, also at an interest rate of about 8%, and as collateral a mortgage was registered on the land.
When the members of the association realized that the project was not progressing, and as part of the procedure, it was discovered that Tria was repaying the loan.
As described in the court application, Perry Real Estate offered the association members to convert Tria's loan into a new loan on behalf of "Bonus", but the association members refused.
In a conversation between Globes and Tria, the company clarified that the financing was given only to the association members and not to Perry or To one of his friends.On the association members' claim that they were asked by Perry to take the loan, even though they did not need it they said in Tria that all group members personally signed the financing each according to his share and that in their estimation the group would continue to build and complete the project with another contractor.
Annual loans at high interest rates
The list of such lenders does not end here.
Yesterday, "Globes" revealed the depth of the Expo Fund's exposure to Perry Real Estate's activities. This is a financial financing fund that provides credit for various purposes. The fund's CEO is Avi Deutsch, who founded Excellence Investment House about 20 years ago.
His partner in leading the activity is Shimon Heiblum, who has held senior positions at Bank Hapoalim and the Shikun VeBinui Group.
According to documents submitted by the fund to the court, it claims a debt of NIS 132 million towards it, for loans it provided to Peri Real Estate in 2017 and 2018. This is for the purchase and start of construction of an extensive project in the streets to build dormitories, as well as commercial and office space. " The application is submitted urgently in light of fundamental violations of the loan agreements, "reads a request to the court filed by attorney Gabriel Rubenbach.
In the application submitted by Gami and Haim Ltd. to the court last week, additional loan agreements can be found. For example, the documents include a mortgage of NIS 15.5 million registered by Perry Strategies, which belongs to the Perry Group, on properties at the corner of Gutman and Baron Hirsch streets. Petah Tikva, where the project is planned for 48 apartments. beneficiaries pledge, Guy, Boaz Tal gentle and Ronnie'Adini Spiegelman, loaned the company millions of shekels interest rate of 12% gross.
in another case, a woman named Naomi lent Jacobs companies in the fruit, and the fruit itself Eldad 8.3 million, as part of the 164 residential apartments Yochanan street in Bat Yam. the loan is intended to assist in completing the acquisition of land rights group. here the interest rate has already reached 15% of the net, according summarizing submitted to the court.
In his affidavit of Azoulay he notes that according to the findings now In recent years, it has borrowed millions of shekels from private entities at extremely high annual interest rates of 12% -18% per annum. According to its findings, most of the company's activities today revolve around the issue of loan repayments by taking out new loans. In respect of interest payments and redemption of loans of those private lenders
"Azoulay wrote in his affidavit.
"In the current situation of the group, any amount transferred to the group of companies by new private lenders is intended to repay the interest of old private lenders and there is a huge danger to additional potential lenders' money," Azoulay's affidavit, which was submitted to the court, said.
Mifri Real Estate stated in response that, "Since bank credit is a complex issue in purchasing groups, loans from financing funds and zenith loans from private entities are commonplace in the field.
All the loans were made in coordination and in full transparency with the committees and members of the groups. "
The company also stated that," The Eldad Perry Group began last Thursday in the recovery process.
Despite the disagreements between the partners, they are willing to join hands and work together with the trustees appointed by the court in order to heal the group and meet all its obligations.
The group's management will do everything in its power to continue the projects it has committed to, to protect the money of the buyers and suppliers, to protect the employees and to heal the group.
"Despite the temporary cash flow situation that the group found itself in, it has an excess of assets and collateral over liabilities, and it will meet all its obligations."
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