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BONDS PAYABLE AND INTEREST PAYABLE | 12 Months Ended
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Dec. 31, 2017
Bonds Payable And Interest Payable |
BONDS PAYABLE AND INTEREST PAYABLE |
NOTE 6. | BONDS AND BONDS INTEREST PAYABLE
In August 2016 Southern Properties Capital LTD (“Southern”), a British Virgin Islands corporation was incorporated for the purpose of raising funds by issuing Bonds to be traded on the Tel Aviv Stock Exchange (“TASE”). The Company transferred certain residential and commercial properties located in the United States to Southern, its wholly owned subsidiary. On February 13, 2017, Southern filed a final prospectus with the TASE for an offering and sale of nonconvertible Series A Bonds to be issued by Southern. The bonds are unsecured obligations of Southern. During 2017 on three separate occasions Southern issued nonconvertible Series A Bonds which in total amounted to approximately NIS400 million New Israeli Shekels (“NIS”) which converted to approximately $115 million dollars. The Series A Bonds have a stated interest rate of 7.3%. At December 31, 2017 the effective interest rate is 9.17%. The bonds require semi-annual equal installments on January 31 and July 31 of each year from 2019 to 2023 (inclusive). The interest will be repaid on January 31 and July 31 of each of the years 2018 to 2023 (inclusive), first payment commenced on July 31, 2017.
a. Consisting of the following: |
|  | December 31, |
|  | 2017 |  |  | 2016 |
Bonds (Series A) |  | $ | 115,336 |  |  | $ | — |
Less; deferred issuance expense, net |  |  | (5,916 | ) |  |  | — |
Accrued Interest |  |  | 3,629 |  |  |  | — |
|  | $ | 113,049 |  |  | $ | — |
b. Aggregate maturities are as follows:
|  | December 31, |
|  |  | 2017 |  |  |  | 2016 |
2018 |  | $ | — |  |  |  | — |
2019 |  |  | 23,067 |  |  |  | — |
2020 |  |  | 23,067 |  |  |  | — |
2021 |  |  | 23,067 |  |  |  | — |
2022 |  |  | 23,067 |  |  |  | — |
Thereafter |  |  | 23,067 |  |  |  | — |
|  | $ | 115,335 |  |  |  | — |
The funds were used principally for the acquisition and development of additional real estate operations in the United States. The funds were raised and will be repaid in NIS however the funds raised have been converted to US dollars. The Company records unrealized gains or losses each quarter based upon the relative exchange values of the US dollar and the NIS; however, no gain or loss will be realized until a conversion from US dollars to NIS actually occurs in the future. The recorded unrealized gain or loss is reflected as a separate line item to highlight the fact that it is a non-cash transaction until such time as actual payment of principal and interest on the bonds is made. For 2017 the Company reflected an unrealized foreign currency loss of $4.5 million related to debenture transactions.

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