Follow-up to Alony Hetz: CARR After JPM, More Control but a Lower Earnings Base
The JPM redemption gave Alony Hetz much tighter control over CARR, but it also left it with a smaller office portfolio, more visible leverage, and a 2026 base of just $128 million of NOI and $50 million of FFO in management's presentation. Strategically the move cleaned up control. Economically it starts 2026 from a leaner earnings base.
What Alony Hetz Actually Bought in the JPM Deal
The main article argued that Alony Hetz's value story still had to pass the parent-cash test. This follow-up isolates CARR because the JPM redemption changed, all at once, what the group gets from the US platform: less partnership complexity, more control, but also fewer income-producing assets supporting the earnings base.
In July 2025 CARR completed the redemption of JPM's holdings by transferring full ownership of three debt-free assets with a combined value of $241 million. At the same closing, Alony Hetz injected $100 million of equity into CARR. The result was a sharp change in structure: Alony Hetz says its effective holding in CARR rose to about 79%, CARR was first consolidated from September 30, 2025, and by year-end Alony Hetz held 89.14% of Carr Holdings, which in turn held 89.58% of Carr Properties.
This was not just another step-up in ownership. It was a move from shared control to a platform where Alony Hetz now has board majority, committee control, and a decision structure under which board resolutions require the support of all of its participating nominees. Control became materially cleaner. But the price was real as well: three income-producing assets went out, and the earnings base had to be rebuilt from a smaller portfolio.
| Layer | What changed after JPM | Why it matters now |
|---|---|---|
| Portfolio | Three debt-free assets worth $241 million went to JPM | The recurring NOI base is lower after the deal |
| Capital and accounting | Alony Hetz injected $100 million and CARR was first consolidated from Q3 | 2025 includes one-off accounting noise and is a weaker proxy for a normal base year |
| Governance | Five-member board with company majority, company-controlled operating committee, and a company-appointed chair | Strategic control is much tighter than before |
| Risk picture | Debt, minority interests, and development commitments now sit more visibly in the consolidated story | The balance-sheet burden is harder to ignore |
2026 Starts From a Lower NOI and FFO Base
The key point is not that control improved. The key point is that recurring earnings shrank at the same time. In the presentation, CARR goes from $150 million of NOI in 2024 to $137 million in 2025, and the 2026 forecast falls again to $128 million. FFO under management's approach moves from $63 million to $57 million to $50 million. Over two years, that is about a 14.7% drop in NOI and a 20.6% drop in FFO.
The presentation also explains the bridge. The decline in 2025 and again in 2026 is driven mainly by dispositions, with only partial offsets from same-store NOI, new properties, and savings in financing and G&A expenses. In other words, the JPM redemption did not just clean up the control structure. It also left CARR with a smaller earnings engine.
The detailed note points in the same direction. NOI from the assets that remained after the redemption was about $60 million in the first half, while Q3 NOI was $31 million and Q4 NOI was $29.6 million. That looks much less like temporary quarter noise and much more like a new, slimmer base that 2026 is about to show in full.
And even that base does not start from a clean sheet. In 2025 CARR recorded a net negative revaluation of $14 million, driven mainly by 100 Congress after a major tenant gave notice that it would not renew its lease. If that property continues to need operating and leasing adjustments, 2026 may be a stabilization year before it becomes a recovery year.
The post-balance-sheet moves do not fix the near-term picture either. The acquisition of 1401 New York Ave. was priced off annualized NOI of $9.5 million, but CARR owns only 25%, so the pro rata contribution is roughly $2.4 million a year before any other layers. At the same time, the residential pipeline carries a total construction budget of $412 million, with $321 million still left to complete, while stabilization dates run from Q3 2027 to Q2 2029. That matters strategically, but it is not a 2026 repair kit.
More Control Also Made the Debt and Minority Layer Visible
Before the control step-up, CARR could be read largely through an investment line. After the step-up, the balance sheet moved to center stage. As part of the business combination, the company recognized identifiable assets of NIS 5.852 billion against loans and other liabilities of NIS 3.433 billion, non-controlling interests of NIS 691 million, and equity of NIS 1.727 billion.
The presentation shows the same picture in dollars: $1.714 billion of total investment properties, $1.057 billion of total net financial debt, $657 million of equity, 61.9% leverage, 4.3 years of debt duration, and a 5.1% weighted average interest rate. This is no longer a holding that can be described only through NAV. It is a leveraged office-and-residential platform with a very visible balance-sheet load.
That is where the deal becomes more interesting. On one side, Alony Hetz now has real control: a five-member board with company majority, an operating committee with three company nominees out of four, an audit committee with at least two company nominees, and a company-appointed chair, currently Natan Hetz. On the other side, the minority layer did not disappear. Clal has observer rights and, under certain thresholds, a board-seat option, while minority holders still have tag-along and transfer protections. Control is stronger, but the economics are still not one-layer simple.
The accounting gain also needs to be read correctly. The move to control generated a gain of about NIS 116 million because the JPM redemption and the $100 million equity injection were done at about 10% below NAV at that date. At the same time, a negative NIS 396 million translation-and-hedge reserve was recycled through the income statement, with no effect on total equity. That improves the understanding of the price at which the deal was done, but it does not create recurring earnings.
Operating Disclosure Is Still Not Clean Enough
The more troubling point is not governance. It is operating disclosure. In the summary table and in the presentation, CARR ends 2025 with 7 income-producing assets, 2.3 million square feet, and 92.6% occupancy. But in the detailed note for those same seven office buildings and the same total leasable area, year-end occupancy is 86.7%.
A 5.9-point gap does not necessarily mean an error. It may reflect a different measurement basis, a different timing point, or different inclusions and exclusions. The issue is that the pages themselves do not provide the reconciliation. So anyone trying to track post-JPM leasing quality gets a cleaner control story, but not a cleaner read on the main operating KPI.
The same problem appears around NOI. The summary table shows $136.9 million of NOI, the FFO breakdown shows $132.6 million, and the presentation rounds that to $137 million. There are probably differences around the inclusion of asset-management NOI and simple rounding, but for an investor trying to read CARR as a new earnings base, this matters. 2026 needs to deliver not only execution, but a more consistent operating bridge as well.
Conclusion
The right way to read CARR after JPM is not "more control, therefore a better story," and not "fewer assets, therefore a weaker story." Both readings are too flat. Control clearly improved, and it was achieved at what looks like an attractive price relative to the assets that were effectively bought back. But what remains after the transaction is a platform with lower NOI and FFO, more visible debt, and a development pipeline that still needs time and capital before it becomes stabilized income.
That is the core of the follow-up. In 2025 CARR moved from a complicated shared-control structure to a controlled platform, but 2026 is mainly a proof year for the slimmer portfolio. If same-store NOI stabilizes, if 100 Congress stops eroding the story, and if the residential layer keeps moving without pushing leverage higher, the stronger control will start to justify itself economically. If not, the market will be left with a governance improvement and helpful one-off accounting, but a lower recurring earnings base.
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