A court in the British Virgin Islands has ordered the liquidation of Hertz Properties Group, an Israeli entity that owns nine U.S. office buildings.
Hertz Properties owes Israeli bondholders more than $145 million, the remaining amount of unpaid debt on two bond sales conducted in Israel. With the court order, trading in the bonds has been shut down, according to filings this week with the Tel Aviv Stock Exchange.
A trustee is expected to be named next week to oversee the liquidation.
“It is not disputed that Hertz has been insolvent for a long time, both in terms of cash flow and balance sheet,” a translation from Hebrew of the court order said. “Hertz's attempts to reach a debt settlement with the bondholders were in vain, after the bondholders overwhelmingly rejected Hertz's settlement proposal on October 9, 2024.”
The value of its assets is less than its liabilities, according to Virgin Island court filings. The value of its cash holdings as of last month was $19 million.
Hertz Properties Group is an arm of the larger Los Angeles-based Hertz Investment Group, owner of a U.S. office portfolio of 56 buildings totaling about 16.2 million square feet.
The portfolio tied to the Israeli bonds includes interest in eight office properties in several cities in the United States, according to Israeli bond rating firm Midroog. Several of the properties are in default on their outstanding mortgage debts.
Hertz Investment’s other properties are not affected by the Israeli decision, Zev Hertz, chairman, CEO and president of the firm, has previously told CoStar News. Hertz did not immediately respond to a request for comment on the liquidation order. Hertz Properties Group’s chief restructuring officer also did not respond to a query from CoStar News.
In recent months, two Hertz Properties Group officers and two independent directors have announced their resignations, according to company filings. In addition, the company's chief financial officer plans to retire at the end of this year.
Many Hertz Properties Group office buildings are tied up with loans on the commercial mortgage-backed securities market. Affected properties include the following, according to CoStar data:
- Gateway One, Two, Three and Four in downtown Pittsburgh are subject to a $93.7 million loan due in January. The loan is currently in payment default, and a Pennsylvania court appointed a receiver over this property in October.
- In New Orleans, First Bank & Trust Tower at 909 Poydras St. is subject to a $39.4 million loan due in September 2026.
- The One Jackson Place building at 188 E. Capitol St. in Jackson, Mississippi, is subject to a $14.1 million loan due in April 2027.
- Memphis, Tennessee's Prospero Place at 50 S. B.B. King Blvd. is subject to a $9.8 million loan due in September 2027.
- Bridgewater Place at 333 Bridge St. NW in Grand Rapids, Michigan, is subject to a $37.3 million loan due in September and was recently transferred to special servicing.
- 10 S. Broadway in St Louis is in maturity default and also in receivership.
Hertz Properties Group also owns 111 E Capitol St. in Jackson, Mississippi, and the three-building Brookhollow Central office park in Houston.