Follow-up to Airport City: How Much of 2025 Came From NOI and How Much From Revaluation and Planning
The 2025 headline looked strong, but the split matters: recurring property economics were flat to weaker, while profit was driven mainly by fair-value gains, including a meaningful planning component.
The Split That Actually Explains 2025
The main article made a simple point: 2025 looked like a breakout year, but the breakout did not come from the same place as recurring income-producing real-estate economics. This follow-up isolates that gap. The clean way to read 2025 is in three separate layers: recurring NOI, fair-value gains that come through appraisal assumptions, and planning-led value created through rights and zoning.
That distinction matters because the headline profit combines very different things. Revenue from leasing and property management rose to NIS 1,001.8 million from NIS 968.3 million in 2024. On first read that looks like clean operating growth. In practice, direct operating expenses tied to investment property rose faster, to NIS 198.8 million from NIS 159.8 million, so consolidated NOI slipped to NIS 803.0 million from NIS 808.5 million. Same Property NOI also fell to NIS 798.5 million from NIS 806.3 million.
Even at the Airport City complex itself, actual NOI rose to NIS 248.6 million from NIS 243.1 million. That is an improvement, but only a NIS 5.5 million move. It is not large enough to explain by itself a profit uplift measured in the hundreds of millions. In other words, even the flagship asset did not produce the kind of recurring surge that the headline year might suggest.
| Metric | 2024 | 2025 | Change |
|---|---|---|---|
| Revenue from leasing and property management | 968.3 | 1,001.8 | 33.6 |
| Direct operating expenses of investment property | 159.8 | 198.8 | 39.1 |
| Consolidated NOI | 808.5 | 803.0 | (5.5) |
| Consolidated Same Property NOI | 806.3 | 798.5 | (7.8) |
| Actual NOI at the Airport City complex | 243.1 | 248.6 | 5.5 |
| Net fair-value change in investment property | (40.5) | 342.7 | 383.2 |
Once this split is laid out, the year reads differently. The fair-value line improved by NIS 383.2 million year over year, while consolidated NOI moved down by NIS 5.5 million. That is why 2025 should be read primarily as a valuation year, not as a year of explosive recurring property cash economics.
What Actually Sits Inside the Revaluation Line
The fair-value line is not one single story. Note 14 breaks the net fair-value increase of NIS 342.7 million into distinct moving parts, and a material share came from planning and rights rather than rent already collected. Gross upward revaluation in Israel totaled NIS 688 million. Of that, roughly NIS 100 million came from TAMA 70 and another NIS 128 million from TA/5500.
This nuance matters. The company itself states that TAMA 70 is a national outline plan that does not by itself grant building rights, and that those rights will be determined only in local or detailed plans approved under it. So part of the 2025 uplift already passed through profit and loss on the back of a planning framework that still needs to turn into concrete executable rights. That may be real value creation, but it is not current NOI and it is not current cash.
The second positive block looks closer to operating reality, but it still comes through appraisal. Roughly NIS 260 million of the gain in Israel was attributed to higher rents from CPI indexation, lease renewals at better terms, and lower capitalization rates. That matters because a component like this can point to better asset-level economics. But it still sits in valuation, not in the current year's collected NOI. Note 14 says explicitly that leased assets are valued through an income-capitalization approach based on estimated NOI and the capitalization rate. So even when the trigger is a better rental environment, what enters profit is appraisal.
The balancing point is that the same mechanism also worked in reverse. Israel recorded roughly NIS 323 million of downward revaluation, including around NIS 133 million in projects under construction due to budget updates and planning changes, around NIS 116 million from lower rights values, mainly residential, and the rest from higher vacancy in income-producing assets. France added another roughly NIS 22 million of decline, mainly from higher property taxes. So 2025 was not a one-way revaluation year. It was a year in which accounting value rose sharply in some places and was cut back in others by budget pressure, rights erosion, and vacancy.
That is also the core difference between accounting value and operating value. NOI tells you what the assets are producing now. Revaluation tells you what the appraiser is willing to pay today for those assets and for the embedded rights under assumptions on rent, capitalization, construction cost, planning, and risk. Both matter, but they are not the same thing.
Fourth Quarter: Where the Gap Becomes Obvious
The split becomes even sharper in the fourth quarter. Revenue from leasing and property management in the quarter was NIS 260.0 million, while direct property operating costs were NIS 55.0 million. That means gross profit from leasing and management was roughly NIS 205.1 million. In the same quarter, the company recorded a NIS 147.7 million fair-value gain.
That does not mean the recurring business was weak. NIS 205 million of quarterly gross profit from leasing is a heavy base. But the implication is still clear: even in the quarter that closed the year, the valuation line carried a large share of the accounting story. The NIS 147.7 million fair-value gain was about 43% of the full-year revaluation gain and about 44.6% of fourth-quarter pre-tax profit. So even at quarter level, 2025 should not be read as though the recurring engine alone suddenly accelerated.
This matters because the market often reads an annual real-estate report through net profit and value uplift. Here the cleaner reading is more cautious. The existing property base did not weaken dramatically, but it also did not deliver broad recurring NOI acceleration. The big jump came mainly from revaluation and planning.
Conclusion
The right label for 2025 is not a NOI year, but a revaluation year. The Airport City complex itself posted a modest NOI improvement, but at group level consolidated NOI and Same Property NOI both softened. Against that, fair value moved from a NIS 40.5 million loss to a NIS 342.7 million gain, and a material part of that move came from planning, rights, capitalization, and valuation assumptions.
That is not just an accounting distinction. It is a quality-of-earnings distinction. Recurring NOI is the repeatable core of an income-producing real-estate business. Revaluation reflects how appraisers and the market view the same assets and their future potential. When profit is driven mainly by the revaluation line, the next test has to be much stricter: whether Same Property NOI returns to growth, whether planning gains turn into realizable rights, and whether project-budget pressure and vacancy stop eating into the value that fair value added.
If that happens, 2025 will look in retrospect like a bridge year in which value moved ahead of cash. If it does not, 2025 will remain mostly a year in which the report looked stronger than the recurring economics of the portfolio.
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