GFI Capital could miss Israeli bond payments

Allen Gross’ GFI Capital said it might miss its next payment on a portion of its Israeli bonds if it cannot restructure its debt. 

A British Virgin Islands company tied to GFI disclosed in a filing on the Tel Aviv Stock Exchange on Aug. 10 that it might not have the funds to meet its principal and interest payments on nearly $60 million of bonds maturing on Dec. 1. 

The company, which owns the historic Beekman Hotel in Manhattan, is asking bondholders to grant it a three-year extension on the bonds’ maturity date. GFI said it will repay bondholders 50 percent of the principal by Dec. 1 if it can secure a refinance for its struggling Seville NoMad hotel.

GFI disclosed the news in filings this month on the Tel Aviv Stock Exchange. The New York City-based firm became the latest American developer to run into trouble in Israel in the past few months. Simad, the owner of 30 summer camps, disclosed it would miss payments and further revealed that about $34 million from Simad was diverted to the owners. Kohan Retail Investment Group, a company known for buying up distressed malls, recently discovered that millions of dollars in company loans were diverted to its CEO. Kohan has denied he misused money.

Unlike Simad or Kohan, GFI is not facing allegations it diverted or misused bondholders’ money. GFI’s financial challenges stem from the poor performance of the Seville, formerly known as the James Hotel. The company blames this, in part, on a decline in international tourism caused by the conflict with Iran. GFI has raised money on the Israeli bond market for over a decade through six separate bond raises and has previously repaid its Israeli bond offerings. 

Globes first reported the news.

The Seville’s occupancy fell to 51.2 percent in the first quarter of 2026 from 64.6 percent in the first quarter of 2025. It posted an operating loss of $1.21 million in the first quarter compared to a loss of $423,000 in the same period in 2025, according to Tel Aviv Stock Exchange filings. The company also reported a negative working capital of $224 million in the first quarter.

But GFI said in a filing that it is engaged in positive talks with its senior lender, who is interested in extending the $136 million senior loan by three years. As an added incentive, GFI is offering bondholders a lien on the ritzy Beekman Hotel as collateral. GFI will pay interest of 9 percent semiannually to bondholders during the proposed extension, up from 8.75 percent.

The market did not react positively to GFI’s proposed restructuring; the company’s bonds fell 25 percent this month. 

GFI did not return a request for a comment. 

GFI owns a number of hotel and condo properties in NYC, including the Ace Hotel New York and Ace Hotel Brooklyn, the ONE11 Residences at Thompson Central Park, and 144 North 8th Street in Williamsburg. 

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