Hertz secures financing for Houston office complex via Israeli bond sale

Robert Licht (left) and Zev Hertz (right) with W Governors Circle (LinkedIn, Hertz, Loopnet, iStock)

Hertz Investment Group secured $65 million in funding for its Brookhollow Central office campus in northwest Houston by tapping the Tel Aviv Stock Exchange.

The California-based REIT raised funds through a bond sale and applied it to leasing costs and paying down existing debt on the resort.

In the company’s June 1 announcement, Hertz said it was seeking funding in the U.S. and Israeli capital markets, and “after extensive research and due diligence” decided to finalize the issuance. $65 million bond through the Tel Aviv Stock Exchange.

The three-tower Class A office complex at 2900 N Loop W in Houston totals more than 800,000 square feet nestled in the Brookhollow Business Center – a huge commercial corridor where US 290 HOV meets Route 610. The towers measure between 12 and 14 floors. and include an auditorium-style conference room, various shops, a fitness center and a delicatessen.

“Our existing subsidiary in Israel offers additional capital options that most of our competitors do not have,” says CFO Robert Licht. “These additional options allow us to execute our strategic plans more efficiently.”

Hertz first acquired the three-building campus in 2018, just after the property lost major tenant Comerica Bank. Shortly thereafter, Hertz’s debt exceeded the value of its real estate assets, according to the company’s SEC filing for the first quarter of 2019. Compared to net worth of $1.5 billion for its 71 properties, Hertz reported $1.7 billion in outstanding mortgage debt. .

Its business model of acquiring properties at 70-80% occupancy and then injecting cash to attract new tenants has proven highly problematic as Covid-19 ravaged the commercial real estate market .

Today, Brookhollow Central is 62% leased, according to Hertz, which is only a slight improvement from its 50% occupancy rate at the time of acquisition.

“Even though Houston’s real estate market has been tough over the past two years, we’ve been able to outperform in our leasing efforts during this time,” said Zev Hertz, president and CEO. “We have weathered the storm for many reasons, primarily due to the property’s prime location, our focused on-site management, one-to-one relationships with our tenants, and being anchored by strong and well-established businesses. established.”