Almog Kfar Saba: what the new financing structure really fixes
The new Kfar Saba financing structure solves the land closing and the bridge into project finance, but it does not erase the financing problem. It replaces an immediate cash gap with an expensive, milestone-driven stack of senior debt, a VAT bridge, mezzanine, and an additional loan.
What This Follow-up Is Isolating
The main article argued that Almog's real 2026 test is financing, not a lack of activity. Kfar Saba is the cleanest place to check whether anything was truly solved. This is a land win for a 192-unit project, with 154 units in the government's Target Price track and the rest in the free market, for about NIS 132.3 million plus about NIS 48.5 million of development costs.
What happened in January and February 2026 is not "project financing" in the broad sense. It is a four-layer structure designed to close four different timing gaps: the land payment, the VAT bridge, the equity gap until bank project finance opens, and the purchase-tax and carry burden on the land loan. So the right question is not whether Almog raised money. The right question is which gap each layer closes, for how long, and at what cost.
That is the key point. The new structure solves the closing problem. It does not, by itself, solve Kfar Saba's full funding question through completion. Once the land closed, the risk moved from "can the company pay on time?" to "can the company get to the zero report, the full permit, and bank project finance quickly enough before the expensive layers start eating into project economics?"
Four Layers, Four Timing Gaps
| Layer | Size | What it is for | Core economics and terms | What it really fixes |
|---|---|---|---|---|
| Senior bank debt | Up to NIS 143 million | Part of the land payment, part of development costs, and performance guarantees | Prime-based interest with a margin, first-ranking security, maturity on January 25, 2028 | Closes the land payment and lets the transaction finish |
| VAT bridge | Up to NIS 24 million | VAT on the acquisition | Inside the bank package, repayable within 3 months from drawdown or when VAT refunds arrive, whichever is earlier | Bridges the short gap between paying VAT and recovering it |
| Mezzanine for equity completion | NIS 44 million, of which NIS 38 million is for the land equity piece | Completing the equity required to open project finance, with the remainder earmarked for equity under the project-finance agreement | Profit-linked return, 12.5% IRR floor, 14.5% core return logic, 18% cap, second-ranking security | Funds the gap between the equity the bank requires and the cash the company would otherwise have to put in itself |
| Additional loan | Up to NIS 20.35 million | Purchase tax and interest on the land loan | Initially disclosed at 7.5% to 8.5%; the annual report later states 8.5%. Repayable within 21 months | Funds the carrying cost until the project moves from land-acquisition logic into project-finance logic |
The real change is the decomposition, not the headline size. Instead of looking for one lender to fund everything, Almog split the problem into layers. The bank funds the land and the short VAT bridge. The non-bank lender takes the equity-completion layer and the carry burden around purchase tax and land-loan interest. This is a structure built to get the company over one obstacle, not to give it a clean all-purpose capital solution for the full life of the project.
The land closing is already done
The proof that this structure solved something concrete appears in the annual report: the full land consideration was paid in January 2026, and on January 22 the company had already drawn about NIS 142 million from the bank facility to complete the purchase. In other words, the senior debt did not stay theoretical. It was used almost immediately.
That matters because there is a difference between "financing exists" and "the deal closed." In Kfar Saba, the first problem was binary, paying the land consideration on time. The new structure solved that. Without the bank layer, the project would have remained a tender win rather than moving into a stage where permits, budgeting, and project finance are even relevant.
The VAT bridge and the purchase tax are not the same hole
A quick read can blur together two different cash gaps. The VAT bridge is there to carry acquisition VAT until the refund comes in. The additional loan is there to fund purchase tax and the interest burden on the land loan. Those are different uses, with different clocks.
There is a deeper layer here as well. The company says it filed an objection with the tax authorities on Kfar Saba after paying about NIS 1 million of purchase tax and recording a provision of about NIS 5 million for the remaining tax linked to the designated units. In other words, part of the extra debt is funding a cost that management is actively trying to reduce or recover. That is not productive business capital. It is bridge capital for a disputed tax item and for land carrying costs until the project moves forward.
The mezzanine does not replace equity, it buys time for equity
The NIS 44 million mezzanine sounds like an equity solution, but in practice it is more a bridge to equity than clean equity. NIS 38 million of it is earmarked for the land equity requirement, and the remainder is meant for the equity the project-finance agreement will require later. This layer lets the company avoid putting up the full amount from its own pocket on day one, but it does so at a meaningful cost and with second-ranking security.
That cost is not a simple bank coupon. The lender's return is based on the lower of 43% of expected project profits or a mechanism tied to a 14.5% IRR, with a 12.5% floor and an 18% cap. This is not cheap debt. In a project where 154 of 192 units sit in the Target Price track, which means a large part of the revenue base comes with limited pricing flexibility, a mezzanine layer that takes its economics from the project itself is a material issue, not a footnote.
What The Structure Still Does Not Fix
The mistake would be to read the filings and conclude that the entire financing question is now solved. In practice, the new structure simply moved the bottleneck forward. Instead of an immediate land-payment gap, there is now a milestone race.
| Milestone | Deadline under the mezzanine terms | Why it matters |
|---|---|---|
| Zero report and lender approval | Within 21 months from the loan date | Without an approved zero report, the project's economics still lack a lender-backed budget base |
| Signing the project-finance agreement | Within 24 months | Without project finance, the mezzanine remains a bridge with nowhere to land |
| Full building permit | Within 27 months | Without a full permit, the project cannot move from land ownership into financed execution |
| Meeting all conditions to open project finance and draw the full package | Within 30 months | This is where the layered structure is supposed to collapse into one orderly financing frame |
| Form 4 and occupancy approval | Within 36 months from the opening of project finance | This sets the economic end point for the mezzanine layer |
There are other limits that did not disappear. The bank required equity of 21% of acquisition costs, including development, or NIS 38 million, whichever is higher, plus the purchase tax. If land value falls and the LTV ratio rises above 79%, the company has to inject more equity to bring the ratio back down. So the bank layer is not just available money. It is a system that can demand more equity if valuation moves against the company.
Another issue remains outside the financing package. The bank does not allow its money to be used for costs tied to deadline extensions with the Israel Land Authority or the municipality. If an extension is needed, the company committed to fund that from its own sources. So even after the deal closed, not all timing risk moved into the financing structure. Part of it still sits on the company's own cash.
The additional loan is not all sitting on the table on day one either. It becomes available only after the mezzanine conditions are met and the security package is registered. NIS 6.95 million is supposed to be advanced within 7 business days after the conditions are satisfied, and then NIS 2.5 million each quarter after that. That matters because this is not a blanket liquidity solution. It is a staged carry facility. If planning or financing progress slips, the availability of the money will not be neutral.
What Changed Between The Initial Report And The Annual Report
The January 22 filing described the structure mainly as a list of facilities. The annual report already shows what actually happened next. First, the company did not just sign the senior facility, it almost fully drew it. Second, the mezzanine and the additional loan moved from "expected" to signed agreements with harder terms. Third, the additional loan that was initially framed at 7.5% to 8.5% appears in the annual report at 8.5%.
That looks like a small numerical change, but it is a bigger analytical shift. Once the range becomes the top end, the company did not just buy flexibility. It bought flexibility at full price. So the right read on Kfar Saba is not "problem solved." It is "one problem was solved in order to make the race to the next one possible."
Why It Matters Now
Kfar Saba is a good example of how a financing structure can improve a situation without cleaning up the risk. Without this package, the land would not have closed. With it, the land closed, VAT got a bridge, the equity requirement got a mezzanine layer, and purchase tax plus land-loan interest got a carry facility.
But this is also a structure that makes execution discipline tighter. Once the senior debt is largely drawn, and once the mezzanine is taking its economics from the project itself, the company has to move quickly toward the zero report, the full permit, and bank project finance. If that happens, the new structure did its job. If not, Kfar Saba can shift from a land parcel waiting for money into a project financed too expensively in the interim period.
Conclusion
The new Kfar Saba financing structure mainly fixes the closing gap and the bridge gap, not the full financing question of the project. That distinction matters. The company managed to replace an immediate land-payment risk with a working layered structure, but each layer comes with its own clock, cost, and conditions.
The thesis is simple. If Kfar Saba moves quickly into full bank project finance, permitting, and orderly execution, this financing package will look like the right answer to a real bottleneck. If progress slips, what looks today like a solution will turn out to be an expensive temporary bridge, and in a project where most units sit in the Target Price track, that can start eating directly into the developer's profit layer.
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