Ashtrom Properties: What the Series 13 Amendment Really Bought, and When the Price Shows Up
Ashtrom Properties paid an extra 0.4 percentage points of coupon and got a more flexible deed in return, not a stronger balance sheet. The price already showed up in a NIS 6.5 million liability remeasurement and will keep flowing through finance costs until 2030.
Not Just a Technical Amendment
The main article argued that the core question around Ashtrom Properties is no longer just NOI. It is the company’s ability to turn NOI into financing flexibility. This follow-up isolates the most concrete point inside that broader thesis: the Series 13 deed amendment approved at the end of December 2025.
The short version is simple: the company did not buy lower leverage here, and it did not buy a rescue from an imminent breach. It bought a friendlier measurement framework for a transition period in which debt, acquisitions, and development commitments are recognized immediately, while the NOI meant to offset them arrives with a lag. In exchange, it accepted a higher coupon and immediately recognized a NIS 6.5 million increase in the financial liability.
That is exactly what makes the move interesting. If the company had been brushing up against a covenant, the amendment would read as a defensive maneuver. But the numerical illustration attached to the amended deed, based on September 30, 2025, still showed NIS 2.50 billion of equity, a 33.5% equity-to-balance-sheet ratio, and net financial debt to NOI of 12.14. The year-end covenant table tells the same story: 33.7% equity to balance sheet, 62.8% net financial debt to CAP, and 12.11 net financial debt to NOI. The company was not close to the wall. It paid to move the wall a bit farther out, and more importantly to change the measuring stick.
The presentation makes that point clearly: attributed net financial debt stands at NIS 4.376 billion, leverage at 62.4%, while cash and investments total NIS 549 million and available approved facilities another NIS 251 million. In other words, the Series 13 amendment did not change the balance sheet itself. It changed the framework through which that balance sheet will be judged.
What Actually Changed in the Deed
The easy mistake is to treat this as blunt covenant relief. That is not the right read. The hard numerical thresholds barely moved, and one of them actually became stricter. The real value sits in the definitions.
| Item | Before the amendment | After the amendment | Figure disclosed in the documents | What it means in practice |
|---|---|---|---|---|
| Minimum equity | NIS 950 million | NIS 1.2 billion | NIS 2.50 billion in the 30.9.2025 example | The floor went up, but the buffer still exceeded NIS 1.3 billion |
| Equity to balance sheet | 19% | 19% | 33.5% in the example, 33.7% at year-end 2025 | A 14.7 percentage-point buffer above the floor |
| Net financial debt to CAP | 77.5% maximum | 77.5% maximum | 62.8% at year-end 2025 | A 14.7 percentage-point buffer below the ceiling |
| Net financial debt to NOI | 16.5 maximum | 16.5 maximum | 12.14 in the example, 12.11 at year-end 2025 | A 4.39-turn buffer below the ceiling |
Those numbers matter because they show that the price was not paid to buy immediate survival. At the same time, the amended wording did change the two places where management had the most to gain in timing terms.
Net Financial Debt
The revised definition excludes IFRS 16 lease liabilities and financial instruments whose repayment is at the company’s discretion. Beyond that, it deducts not only cash and short-term investments, but also liabilities tied to projects under construction or development and liabilities tied to investment property under development. In plain language, the calculation tries to separate platform leverage from items management wants treated as more transitional or project-backed.
NOI
The same logic appears on the denominator side. The amended definition excludes fair-value gains and IFRS 16 effects, but it also adds proportionate operating income from associates and allows annualized NOI from assets acquired during the past 12 months or from properties newly classified as income-producing within their first 12 months after classification. In other words, the covenant formula recognizes future NOI earlier than a simple trailing figure would.
That is the heart of the amendment. The headline threshold barely changed, but the numerator and denominator became materially more accommodating to a company growing through acquisitions and through assets that take time to mature. For an income-producing real-estate company, that is much more valuable than another half-point up or down in a formal covenant line.
Why Pay If the Company Was Not Close to a Breach
This is where the real message sits. If the company had been approaching a breach, the amendment would look like a fire drill. But the numerical illustration in the amended deed is based on September 30, 2025 and still shows net financial debt to NOI of only 12.14 against a 16.5 ceiling. By year-end 2025 that ratio had moved to 12.11, and the company disclosed compliance with all deed requirements.
Even the test mechanism reinforces that reading. The deed defines the relevant testing period as two consecutive quarters, and only then does a covenant breach become relevant for that framework. So even in formal timing terms, the company was not acting at the edge of the cliff. It acted in advance, while it still had comfortable room to change the contractual language before the next phase of strategy put more weight on those ratios.
That fits what the company was already doing. Soon after, it signed the acquisition of a commercial property in the Newcastle area in England for about GBP 105 million, financed 65% with bank debt. That is a good example of what the amendment really bought: not new money, but a covenant framework that is more tolerant of the period between signing a transaction and the point at which the asset is fully reflected in NOI.
So the amendment does not say to the market, “there is no problem.” It says something more precise: “we would rather pay a bit more now than enter 2026 and 2027 with a formula that counts debt faster than it counts the NOI that is meant to support it.”
When the Price Shows Up
The price has already shown up once, and it did not wait for 2026. In the annual report, the company states that the change in the terms of Series 13 led it to recognize the full change in the financial liability, amounting to NIS 6.5 million. That is the immediate accounting price of the amendment.
But the economic price trickles in more slowly. The December 31, 2025 immediate report set the coupon step-up at 0.4 percentage points, taking the annual coupon on the outstanding Series 13 principal from 0.9% to 1.3% starting on January 1, 2026. At year-end 2025 the series had NIS 373.5 million of principal outstanding, after the first principal payment in December 2025. Based on the remaining amortization schedule, the additional yearly coupon looks like this:
In nominal terms and before CPI linkage, that means about NIS 1.5 million in 2026, about NIS 1.33 million in 2027, and then a decline to roughly NIS 0.83 million in 2030. On the year-end 2025 outstanding principal base, the cumulative extra coupon comes to about NIS 5.8 million before linkage. Because the series is CPI-linked, the actual cash cost can be higher.
That sharpens an important distinction. The accounting price appeared immediately. The cash price is spread over time. So the amendment should not create one dramatic step-change in the income statement. It should show up as a steadier bleed through finance expense and coupon payments over the remaining life of the series. Anyone looking for a single one-off event can miss that. In practice, this is an insurance premium paid gradually.
What Has to Happen Now for the Move to Look Smart
The real test of the amendment is not the fact that the covenants became easier to live with. That part is already known. The question is what the company does with the time it bought.
- If NOI and FFO keep rising through 2026 and 2027, the extra 0.4 percentage points of coupon will look like a reasonable price for flexibility.
- If debt keeps growing faster than NOI, the market will read the amendment less as smart preparation and more as pre-emptive medication.
- If cash, investments, and available facilities stay comfortable, the amendment will look like genuine flexibility. If the company still has to chase funding despite the new deed language, it will be clear that the deed changed faster than the balance sheet.
- If newly acquired assets move quickly from signed transactions to real NOI, the revised definitions will justify themselves. If not, the company will simply have paid to postpone the moment of truth.
Bottom Line
The Series 13 amendment did not buy Ashtrom Properties a new balance sheet. It bought time and a friendlier measuring stick at exactly the stage where growth, debt, and covenant math can move at different speeds. That is why the price also has to be read correctly: not as a technical footnote, but not as a financing humiliation either. It is a proactive move in which the company accepted a higher coupon and a NIS 6.5 million liability adjustment in order to enter 2026 and 2027 with less contractual friction.
If that extra room is accompanied by real growth in NOI, FFO, and financing headroom, the move will look cheap in hindsight. If not, it will turn out that the company bought little more than temporary flexibility, and the price will show up not only in interest expense but also in how the market reads the need for the next amendment.
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