Bayit Vegag: What still stands between the Bat Galim permit and a project that can actually start producing
Bat Galim is large enough to reshape Bayit Vegag, but as of year-end 2025 the headline about a conditional permit was still far from a cash-producing engine. The permit improved the economics on paper, while financing, contractor selection, sales and equity funding were still open.
What This Follow-up Is Testing
The main article argued that Bayit Vegag's permit progress was moving faster than its ability to turn that progress into cash. Bat Galim is where that gap becomes sharpest. It is the company's biggest project, and it is also the one that can change the company more than any other single asset in the stack. That is why the December 2025 headline about conditional approval for a full building permit can look, at first glance, like an almost automatic step toward a project that is ready to produce.
But that is exactly where the read has to become more disciplined. At year-end 2025, Bat Galim still had no sales, no signed main contractor, no signed project financing, and only 95% of rights holders signed. Even the company itself does not present it as a project that moved into execution. It is still classified as a planning-stage project, with the full permit expected in the third quarter of 2026, marketing expected to start in the fourth quarter of 2026, construction expected to start in the fourth quarter of 2026, and completion only in the second quarter of 2031.
That is the central point of this continuation analysis: the conditional permit moved Bat Galim one stage forward, but it still did not close the financing, contracting and sales loop that separates expected value on paper from a project that can actually start producing. Even in the company's own numbers, that gap is visible. The expected economics improved sharply in 2025, while the real execution bridge is still mostly missing.
What the Permit Already Changed
Bat Galim is an urban-renewal project at the HaAliya HaShniya complex in Haifa, with 17 existing residential buildings and 176 existing apartments that are meant to become 10 buildings of 9 to 34 stories, with 715 new apartments and 16 commercial units. Of those, 538 apartments and 6 commercial units are intended for the developer. Under the partnership structure, Bayit Vegag has a 50% economic share in the project together with Hachsharat Hayishuv Urban Renewal. That is why apartment counts and area figures are presented on a 100% project basis, while the financial figures in the annual report reflect only the company's share.
This is where the real 2025 change sits. Expected revenue from the project, for Bayit Vegag's share, rose to ILS 813.9 million from ILS 656.6 million in both 2023 and 2024. Expected gross profit rose to ILS 190.8 million from ILS 145.1 million in 2024. That is a meaningful step-up. It suggests the project reached a planning milestone that allowed management to update its modeled economics.
But that improvement happened far more in the expected numbers than in the field. Cumulative invested cost only reached ILS 38.5 million by year-end 2025, versus ILS 36.0 million at year-end 2024. In other words, the expected value jumped, while the actual invested base barely moved in the same magnitude. That is a strong sign that the progress was mainly planning and modeling progress, not real execution progress.
That means the conditional permit already created planning value. It still did not create an operating project.
What Still Stands Between the Permit and a Producing Project
The partner's immediate report matters here because it spells out what can still block the move from committee approval to execution. The risk did not end when the committee approved a conditional full permit. According to that report, the remaining obstacles include completing individual agreements with all existing rights holders, signing a financing agreement with a financial institution, and signing an agreement with an execution contractor. Bayit Vegag's annual report shows that all three gaps were real at year-end.
| Link in the chain | Status at year-end 2025 | Why this still does not "produce" |
|---|---|---|
| Rights-holder signatures | 95% signed | The immediate report still refers to completing agreements with all existing rights holders |
| Full permit | Conditional full permit approval, full permit expected in Q3 2026 | Until the conditions are completed, the project remains classified as planning |
| Main contractor | No execution-contractor agreement yet | Without a contractor there is no real shift into works |
| Project financing | No signed project finance, no specific financing taken | Without financing there is no execution funding or buyer-guarantee framework |
| Marketing and sales | 0 units sold, 0% marketing rate | The first receipt stream has not started |
| Equity and surplus | The company says no equity has yet been invested in the project | Even at the surplus level there is still no visible drawdown layer |
What makes this especially important is the connection between sales and financing. The company explicitly says in its marketing policy that it tries to begin apartment marketing early in order to reduce financial exposure, secure bank financing and improve cash flow. In Bat Galim, according to the annual report, marketing is only expected to begin in the fourth quarter of 2026, and at year-end 2025 not a single apartment had been sold. That means one of the tools the company itself describes as helping secure financing was not yet active here.
That is why the project still cannot be described as "starting to produce." Not because it lacks economics, but because the conversion chain is still open. There is a permit in conditions, but the three practical closures that turn Bat Galim from a modeled project into a financable, marketable and buildable one are still missing.
Why ILS 190.8 Million Still Does Not Mean Accessible Money
The most impressive number in the project is the expected gross profit, ILS 190.8 million for the company's share. But that number should not be translated straight into accessible cash.
First, it is not a 100% project number. It is Bayit Vegag's share. Second, it is expected gross profit, not recognized profit. Third, the company itself shows a ILS 59.1 million adjustment between expected accounting gross profit and expected economic profit, mainly for items not recognized in cost of sales, such as financing, marketing and selling costs. After that adjustment, expected economic profit falls to ILS 131.8 million.
And even that is still not the end of the story. In the section that bridges expected profit to expected distributable surplus, the company leaves the equity and surplus lines blank and explicitly says that no project finance has yet been signed and no equity has yet been invested. That is a very important signal. Even after management already calculates expected economic profit, it still cannot show how much of that value should become drawdown surplus at the project level. This is not a surplus-stage project yet. It is still a feasibility-stage project.
There is also an accounting clue that reinforces the same read. In the company's accounting policy, it says that in urban-renewal deals, even after a building permit is obtained, if material conditions remain that do not allow the company to behave like an owner of the land, first recognition is deferred until those conditions are completed. In plain terms, even at the accounting-recognition level, a permit in conditions is not necessarily the real handover point. That is another indication that the committee headline is not yet equal to full economic control.
What Would Count as Real Progress From Here
If the goal is to understand when Bat Galim moves from "big story" to "project that starts producing," the right framework is not the headline, but the sequence.
First stage: a full permit without material open conditions. As long as the company is still pointing to the third quarter of 2026, this is still a timetable, not a closed fact.
Second stage: signed project financing and a signed contractor. These are not technical details. They are the mechanisms that connect the project to capital, guarantees and actual execution.
Third stage: start of marketing and first sales contracts. The company has a clear policy that places early sales as a tool that helps secure financing and improve cash flow. As long as the marketing rate is 0%, Bat Galim is still outside that loop.
Fourth stage: actual start of works. Even that, according to the annual report, only belongs to the fourth quarter of 2026. So even on management's own timetable, 2026 is a setup year, not a Bat Galim cash-harvest year.
That is why the conclusion here has to be sharper than the headline. Bat Galim is no longer just a planning concept, but it is still far from a project that has started producing. The permit in conditions improved the company's starting point and lifted the expected economics of the project. It still did not solve the gap between expected economics and a project that is financed, marketable and executable.
If the next steps include a full permit, signed financing, a signed contractor and first sales, the read on Bat Galim will change materially. If any of those steps slip, the December 2025 headline will remain important, but it will mostly be remembered as the moment when paper value moved ahead of the operating machine.
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