Los Angeles-based national office building owner Hertz Investment Group has lost control of an office campus spanning 1.5 million square feet in Pittsburgh.
The Court of Common Pleas in Allegheny County, Pennsylvania, has ordered the appointment of a receiver for the four-building Gateway Center. The move was made as part of a mortgage foreclosure proceeding initiated by the loan holder two weeks ago.
Including Gateway Center, Hertz Investment had been the sixth-largest office building owner in downtown Pittsburgh. The ruling cuts short the firm's attempt to refinance and redevelop the complex and demonstrates the challenge of reinvigorating downtown office properties struggling to hold onto tenants.
Gateway Center has seen its physical occupancy fall from 82% at the end of 2019 to 57.8% leased as of September, according to loan documents.
The property is subject to a $112 million commercial mortgage-backed securities loan, according to court documents. Hertz defaulted on the loan in September and CWCapital, the special servicer for the CMBS deal, immediately began foreclosure proceedings.
CBRE was appointed as receiver, according to court documents. The order gives the brokerage the right to immediately seize possession of the property, begin collecting rents, and oversee all management and leasing. Hertz Property agreed to cooperate with the order and foreclosure proceedings.
William ‘Zev’ Hertz, CEO of Hertz Investment, signed off on the order, court papers show. He did not immediately respond to a CoStar News request for comment.
Hertz Investment earlier reported it may not meet the final payment of the loan due in January.
Earlier this summer, Hertz Investment secured approval to inject cash into Gateway Center, a move intended to pave the way for potential refinancing and sale of one of the four buildings. JPMorgan Chase had agreed to refinance Gateway One, Two and Four, while Gateway Three was to be sold.