Israeli Real Estate Firm Realco Faces Financial Collapse After US Office Property Sells at Huge Loss
Realco, an Israeli real estate investment company specializing in income-generating properties in the US, is undergoing severe financial difficulties. Founded in 2016 by Tomer Hai and Guy Rajuan, the company once managed about 1,000 investors and assets worth approximately 3 billion shekels. However, recent developments have exposed major losses and operational challenges. Earlier this year, Realco sold an Ohio office building called Eastpoint for $2 million, a steep drop from the $17 million purchase price five years prior. The lender bank, which financed most of the purchase, took ownership after being the sole bidder in the sale process. The investment partnership involved 42 investors who collectively contributed nearly $7 million, with the remainder funded by the bank.
Realco's financial troubles surfaced in mid-2025 when founder Tomer Hai requested additional capital from investors to prevent lender takeovers. Several investor groups, represented by attorney Ido Kosover, formed to try to gain control over some assets despite limited management rights. Kosover, known for his work in financial litigation, highlighted alleged mismanagement and excessive fees harming investors. At least three other Realco properties, valued around $10 million, are also reported to be in distress.
The company’s difficulties are attributed to rising US interest rates, which increased loan costs from 3.5% to about 7%, and a weakened US office market impacted by the pandemic and technological changes. Realco’s rapid growth between 2021 and 2023 was not matched by adequate management adjustments, leading to losses on some projects. Despite some profitable sales, the overall portfolio has suffered, with estimated losses around $30 million.
Realco marketed its investments to accredited Israeli investors with over 8 million shekels in capital, operating through limited partnerships that offer profit shares but no management control. The company was fined by the Israeli Securities Authority in 2022 for offering investments to more than the legally allowed number of non-accredited investors. In 2024, Realco signed a sponsorship deal with Maccabi Tel Aviv football club but ceased active promotion and investor recruitment later that year. Currently, Realco’s website is inactive, and it is listed as a "breach of law" and "restricted" company in the Israeli corporate registry.
This case reflects broader challenges faced by Israeli firms marketing US real estate investments amid rising interest rates, inflation, and market shifts. Other companies like Vision & Beyond and Safe Future have also encountered financial distress, leaving many Israeli investors exposed to significant losses. The US real estate market, once attractive for its lower entry costs and higher rental yields compared to Israel, has become riskier due to increased financing costs and operational expenses, as well as declining rental prices in some areas. These factors have pressured Israeli real estate investment firms and their clients, revealing vulnerabilities in cross-border property investment models.
