Amot 2025: The core is steady, but development has not yet reached FFO per share

Getting to know the company

At first glance, Amot looks like one of the cleaner listed income-producing real estate stories in Israel. At the end of 2025 it had 111 properties, 1.16 million sqm of above-ground leasable space, 1,730 tenants, NOI of NIS 1.06 billion, overall occupancy of 93.3%, and investment property valued at NIS 21.5 billion. As of April 6, 2026, its market cap was about NIS 9.4 billion, slightly below year-end equity of NIS 9.85 billion and at a deeper discount to year-end EPRA NTA of NIS 10.86 billion.

But Amot is no longer just a stable rent machine. It is a combination of a large stabilized portfolio, a heavy development pipeline, a generous dividend policy, and active access to capital markets. That is why the key question is no longer whether the core works. It does. The real question is whether the next layer of value, mainly ToHa2, Halehi and the K Complex, can move on time from promise, appraisal and invested capital into NOI and FFO per share.

What is working now is fairly clear. The existing assets still generate modest growth, same-property NOI is up, logistics and supermarket occupancy remain very high, and the balance sheet is far from covenant stress. What is still not clean is the office layer, which remains the heart of the value story, with occupancy of only 86.7%, while the company itself is guiding for a 2026 in which NOI edges up but FFO per share declines. That is the signature of a bridge year, not a breakout year.

The model also needs to be read correctly. Amot runs a deeper service and execution platform than many peers, through Amot Construction and its property management platform, and employs 198 people. That helps explain why it can handle project delivery, tenant fit-outs and operating services at scale. It also means the next growth phase is not just about rent collection. It is about execution, delivery, lease-up and funding.

What does not jump out on first read

• Operating numbers improved, but not the economics per share. NOI rose 1.6% to NIS 1.06 billion and same-property NOI rose 1.3% to NIS 1.039 billion, but management-approach FFO per share fell 4.5% to 166.7 agorot.
• The gap between the two FFO measures is already an insight, not a footnote. SEC-approach FFO rose 4% to NIS 549.8 million, while management-approach FFO fell 2% to NIS 803.7 million, largely because CPI was lower than in 2024 and the management measure adds back debt principal linkage differences.
• Overall occupancy hides the real friction. 93.3% sounds strong, but the office portfolio, which is 47% of income-producing property value, is only 86.7% occupied, or 88.2% excluding assets reclassified this year from construction.
• The real test has moved to all-in cash. On a normalized recurring basis the business is very strong, but after development spending and dividends, Amot still relies on external capital to close the gap.

Events and triggers

ToHa2 has moved from story to contract

ToHa2 is the company’s central trigger. The project includes 156 thousand sqm above ground, with Amot holding 50%, and it stands above the rest of the pipeline in terms of future contribution. The Google lease signed in June 2024 already turns part of the story from theory into a contractual anchor: Google will lease about 60 thousand sqm in shell and core in the upper part of the tower, plus several hundred parking spaces, for 10 years with a one-time exit right after 5 years, at rent of about NIS 120 million per year at the full-asset level. Amot’s share is 50%.

The important point is not just that there is an anchor tenant. It is that the company is still reporting negotiations for additional tens of thousands of square meters. In other words, ToHa2 has not yet moved into harvest mode. It is still in conversion mode. The company expects construction completion and Form 4 by the end of 2026, and expected annual NOI at full occupancy is NIS 150 million to NIS 165 million for Amot’s share. That is material upside, but it is also concentrated execution risk. If timing slips, or if the remaining space is leased on weaker terms, the market will feel it quickly in 2027.

The Park has started to flow into NOI, while K is still a later-stage story

Halehi in Bnei Brak, branded by the company as The Park, already shows the difference between development that has started to enter operations and development that still sits mostly on promise. The retail component was reclassified in the second quarter of 2025 from property under construction to income-producing property. As of the report date, stores had opened to the public and contracts had been signed for about 13 thousand sqm, with Amot’s 50% share expected to generate around NIS 22 million of annual rent. That is not enough to transform the company on its own, but it is already evidence that the pipeline is beginning to leak into NOI.

By contrast, the K Complex in Jerusalem is a later story. Estimated construction cost for Amot’s share is NIS 750 million to NIS 800 million, completion is expected in 2028, and expected NOI is NIS 49 million to NIS 53 million. It can create value, but it is not what will solve the 2026 read.

2025 was also a year of active funding

Anyone reading Amot only through NOI could miss how much of 2025 was also a financing year. In May 2025 the company raised net proceeds of about NIS 665 million through an expansion of Series J, at an effective CPI-linked interest rate of 3.4% and an average life of about 7.5 years. In July 2025 it raised about NIS 505 million net through the issue of about 20.7 million ordinary shares and about 10.3 million traded warrants, which could add about NIS 290 million gross in the future if fully exercised by the end of 2026.

In February 2026 a further equity-linked compensation layer was added for employees, officers and the CEO. The package covers up to 2.3 million non-traded options, equal to about 0.46% of share capital after allocation and about 0.45% on a fully diluted basis. This is not major dilution, but it is a clear signal: management is being incentivized around the same 2026 to 2028 window in which it is supposed to convert the current development pipeline into hard results.

Efficiency, profitability and competition

The core still works, but not at a pace that looks explosive

Amot’s stabilized layer still behaves like a high-quality income-producing real estate platform, but not like a business currently in sharp acceleration. NOI rose to NIS 1.0597 billion from NIS 1.0427 billion in 2024. Same-property NOI rose to NIS 1.0388 billion from NIS 1.0250 billion. In the fourth quarter, total NOI was NIS 267.9 million versus NIS 265.0 million in the comparable quarter, and same-property NOI rose 1.0% to NIS 266.2 million. These are good numbers, but they point to stability and modest improvement, not to a breakout.

That matters because it shows current organic growth is still coming from the existing portfolio and from assets that have already matured, not from a wave of new deliveries. Anyone looking for the step-change has to look forward, not at 2025 itself.

The average is misleading, the real issue sits in offices

This is the center of the story. At year-end 2025, offices represented 428 thousand sqm, NIS 503.3 million of NOI, and NIS 8.35 billion of income-producing property value. That is the single largest value bucket in the portfolio. But occupancy there stood at only 86.7%, or 88.2% excluding assets reclassified this year from construction. By contrast, logistics and industry stood at 97.0%, retail at 96.9%, and supermarkets at 100%.

The implication is that Amot’s overall performance currently rests on two opposing forces. On one side, it has a logistics, industrial and retail layer that still delivers strong stability. On the other, the part of the portfolio that can add the most future value, namely offices in stronger locations, is not yet fully de-risked. The company itself says the flight to quality continues, with new buildings in prime markets holding up far better, but it also notes that secondary markets such as Petah Tikva, Bnei Brak and Holon still face some difficulty in maintaining lease-up and rent growth in line with CPI. That is exactly the context in which Halehi and the broader office layer need to be read.

Even the FFO measure needs to be read carefully

There is another layer that can be missed on first read. SEC-approach FFO rose 4% in 2025 to NIS 549.8 million, while management-approach FFO fell 2% to NIS 803.7 million. The gap matters because the management measure adds back debt principal linkage differences, and in 2025 CPI rose 2.4% versus 3.4% in 2024. So the difference between the two FFO measures is not just a technical matter. It is a reminder that the preferred company measure is influenced by the inflation environment, not only by lease quality.

That is why it is better to hold two numbers in mind at the same time. NOI and same-property NOI say the core is fine. FFO per share says the translation to shareholder economics is still not improving at the same pace.

Cash flow, debt and capital structure

The normalized picture is strong

If the question is how much recurring cash the existing business generates, the picture is comfortable. Cash flow from operating activities was NIS 874.5 million in 2025. The company explicitly discloses maintenance CAPEX, including public-area upgrades and tenant fit-outs in occupied assets, of NIS 31 million. That leaves a strong normalized cash generation picture, around NIS 843.5 million before growth CAPEX, acquisitions and dividends.

That matters because it shows the stabilized business is not the problem. Existing assets continue to generate cash. The real issue is the combination of growth, dividends and financing.

The all-in picture is much tighter

This is where the analysis has to shift to all-in cash flexibility, meaning how much cash remains after actual uses of cash during the year. On that basis, the picture changes materially. Operating cash flow of NIS 874.5 million, less net investment cash outflow of NIS 540.4 million, less dividends paid of NIS 629.5 million, leaves a negative gap of about NIS 295.4 million before considering that actual property investment spending was much larger than maintenance CAPEX.

In other words, Amot is not facing a liquidity problem, but in 2025 it did not fund both the dividend and the development pipeline purely from recurring internal cash. To close the gap it used equity markets and debt markets. That is exactly the difference between a strong income-producing business and a story that is still financing external growth.

Debt is far from stress, but it is not free

The good news is that Amot’s balance sheet is genuinely strong. At the end of 2025 it had financial liabilities of NIS 9.825 billion, net financial debt of NIS 9.27 billion, 98% unencumbered assets, unused credit lines of NIS 1.05 billion, about NIS 200 million of cash at the report publication date, average debt duration of 4.8 years, and an effective CPI-linked debt cost of 2.02%. The company also reports compliance with all financial covenants.

The external signals support that read. Bond ratings remain Aa2 and ilAA, and covenant thresholds look distant. On bank lines, net financial debt to NOI cannot exceed 10, and in the bond series a more meaningful trigger appears only above 14 for two consecutive quarters. Even before deducting investment property under construction, the simple ratio of NIS 9.27 billion of net financial debt to NIS 1.06 billion of NOI stays below 9. This is not a stress zone.

The less comfortable side is that new debt is already more expensive than the legacy stack. The company still shows a healthy spread between the weighted cap rate of 6.33% and the weighted debt cost of 2.02%, but it also makes clear that current funding costs are above the historical average. The book remains strong, but the next project wave now has to work harder to create the same benefit per share.

Another point worth keeping in mind is valuation sensitivity. The company calculates that a 25 basis point move in cap rate changes investment property value by about NIS 680 million, or roughly NIS 524 million after deferred tax. That means the balance sheet is strong, but it is also sensitive. Anyone building the whole case only on valuation uplift is missing that the layer which still needs to prove itself is the income layer, not only the appraisal layer.

Forecast and outlook

Four points to keep in mind before looking at the guidance

• 2026 is a bridge year. On midpoint numbers, NOI rises about 2.4%, but management-approach FFO declines about 0.5% and FFO per share declines about 2.8%.
• The company still assumes asset disposals. The 2026 framework includes continued disposals at 2% to 3% of the income-producing portfolio value, meaning ongoing portfolio improvement at the cost of some current NOI.
• ToHa2 is still not inside the numbers in full force. The real contribution is meant to appear only after completion, occupancy and Form 4, so 2026 will be judged more by execution progress than by a major reported jump.
• The per-share bridge depends on more than NOI. After the issue of 20.7 million shares in 2025, even decent operating growth first has to work through dilution and a higher marginal cost of capital.

The guidance itself says management is not yet calling this a breakout year

2026 guidance stands at NOI of NIS 1.07 billion to NIS 1.10 billion, versus NIS 1.06 billion in 2025. That is an improvement, but not one that tells a fundamentally new story on its own. Management-approach FFO is guided to NIS 790 million to NIS 810 million, versus NIS 804 million in 2025. FFO per share is guided to 160 to 164 agorot, versus 166.7 agorot in 2025.

That is a key point. If even in a year in which the company sits on a strong portfolio, open credit lines, largely unencumbered assets and a visible development pipeline, management still guides to lower FFO per share, the implication is that the machine has not yet reached the point where development pushes per-share economics faster than funding cost, asset sales and dilution pull them back.

Future NOI is already mapped, but it has not landed yet

That said, the upside should not be ignored. The company presents standardized annual NOI of NIS 1.089 billion, potential NOI of NIS 1.155 billion after filling vacant areas, and potential NOI of NIS 1.411 billion after occupancy of projects under construction by the end of 2028. That is NIS 256 million above the post-vacancy layer, and about 30% above the standardized base.

But there needs to be a hard line between potential and base case. The company itself says this number does not include projects still in planning and licensing and does not assume additional upside from CPI, lease renewals or other value drivers. It should therefore be read as a map of what could happen, not as something already sitting in value with no execution risk.

What sits outside the base case

Amot also has longer-dated options. The company is examining data center infrastructure on some of its land parcels, and is also advancing a request related to a natural gas power station on a parcel of about 100 dunams, with potential capacity of up to roughly 1,200 MW at full utilization. These are interesting options, mainly because they sit on a logistics and industrial footprint of roughly 500 thousand sqm and around 1,000 dunams of land. But disclosure is still too early to underwrite them as part of the 2026 to 2028 base thesis.

Risks

The first risk is office risk, not balance-sheet risk

The main headline is not covenant pressure. It is office leasing quality and timing. The company has a real advantage in strong locations and new assets, but it also acknowledges that secondary markets still face more friction in occupancy and rent growth. Any further delay in the office layer leaves the story dependent for longer on logistics, retail and funding.

The second risk is execution concentration

ToHa2 carries too much of the future thesis to be treated as just another project. The late-2026 delivery timeline, Form 4, additional leasing beyond Google, and eventual full occupancy all have to arrive without a long slide. Halehi and K also matter, but ToHa2 is the point that can really change how the company is read.

The third risk is capital allocation

The dividend is both a strength and a friction point. It enforces clear distribution discipline and sends a confidence signal, but together with a development pipeline above NIS 3 billion it also creates more real dependence on capital markets. 2025 already showed that through an equity raise, bond expansion and reliance on warrants. This is not an immediate risk, but it is a real constraint that keeps the thesis from being cleaner.

The fourth risk is confusing profit with value and value with cash

Net profit in 2025 was NIS 781.8 million, but it included NIS 353.2 million of fair-value adjustments and realization gains. That is standard for the sector, but anyone reading net income as cash is missing the point. The company also discloses legal, tax and municipal proceedings totaling about NIS 36 million, with the group’s share as defendant at about NIS 32 million and provisions of about NIS 17 million. This is not a thesis-breaking issue, but it is another reminder that the income statement is not always the layer that defines business quality.

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Conclusions

Amot exits 2025 as a strong, diversified and well-run income-producing real estate company. The core portfolio still generates stable NOI, the balance sheet is far from stress, and access to capital markets remains open. But anyone reading Amot only as a stable NOI stock is missing that the test has already moved to the next layer: not whether the current assets work, but whether development can convert on time and on reasonable terms into FFO per share.

Current thesis: Amot is now more a story of converting development into per-share economics than a story of survival or of the existing asset base.

What changed relative to the simpler view of Amot as just a stable core platform is that the market now has to measure conversion speed, not just base quality. The strongest counter-thesis is that the caution is excessive because the company has repeatedly shown that it can refinance, build, sell assets and maintain a dividend without losing control. That is a serious counter-thesis. Still, the current evidence shows that per-share growth is not there yet.

There is also no sign of an aggressive bearish positioning in the market. As of March 27, 2026, short interest stood at about 0.45% of float and SIR at 0.66, below sector averages of 0.55% and 1.562 respectively. In other words, the market is not currently running a heavy short case against the name. The real test will come through leasing pace, project execution and cost of capital, not through technical market pressure.

What has to happen over the next 2 to 4 quarters for the thesis to strengthen? ToHa2 has to stay on track, Halehi has to add a real leasing layer, office occupancy has to improve without buying occupancy through weak terms, and the company has to show it can keep funding both development and dividends without returning too quickly for fresh equity. What would weaken the read? Delay at ToHa2, prolonged weakness in the office market, or another year in which NOI rises but FFO per share erodes.