GFI Faces Debt Crisis, Seeks Bondholders' Approval for Debt Restructuring in Tel Aviv

GFI, a British Virgin Islands-based real estate company owned by Jewish-American developer Alan Gross, is warning of potential default on its Tel Aviv bond payments totaling 280 million shekels. The company, which focuses on residential and hospitality real estate in the U.S., issued a bond series in January 2024 raising 170 million shekels (about 55 million USD), due for full repayment in December 2026. GFI has pledged a second lien on its New York hotel as collateral but currently holds only 13 million USD in cash, insufficient to cover the upcoming debt.

The bond series dropped 19% on the Tel Aviv Stock Exchange, reflecting investor concerns over GFI's ability to repay. The company attributes its financial difficulties to failing to refinance a senior 138 million USD (414 million shekels) loan on the Manhattan Seville Nomad hotel, which is also due in December. Additional challenges include slower-than-expected hotel operator Hyatt's ramp-up, declining tourism in New York, and interest rate shifts.

GFI proposes a debt restructuring plan seeking bondholders' consent to pay 50% of the principal by the original maturity date and defer the remaining 85 million shekels for three years with a 9% annual interest rate, slightly above the original terms. The company also offers a lien on another New York hotel, though this collateral ranks junior to the senior lender's claim. GFI expects to sell some assets over the next three years to fund the deferred payments and has secured tentative agreement from the senior lender to postpone loan repayment, contingent on bondholder approval.

Founded in 2014, GFI has issued six bond series totaling approximately 1.2 billion shekels, with four fully repaid. Another bond series issued in 2023 matures in 2029 and trades at a high yield but remains less risky than the current series. The company had considered issuing new bonds to refinance the troubled series but did not complete the plan. Credit rating agency S&P Maalot downgraded GFI's outlook to negative in March 2024, citing operational and financial concerns but acknowledged the owner's positive track record in debt servicing.

GFI's financial strain intensified after canceling a hotel management contract shortly after the bond issuance, which worsened the hotel's performance. The 348-room Seville Nomad hotel was valued at 289 million USD at the end of 2025 but saw net operating income drop from 13 million USD in 2024 to 4.5 million USD, with occupancy falling from 76% to 69%. Hyatt took over hotel operations in early 2025, rebranding the property.