Gilad Mai: The Pipeline Got Bigger, But 2025 Still Did Not Prove The Business Is Stronger

Getting To Know The Company

Gilad Mai is not a small-cap equity story waiting for the market to notice it. It is a bond-listed residential developer and builder. The public market meets the company through its debt series, while control remains with Yoel Yifrah at roughly 91%. That means the right way to read 2025 is not through a headline value story, but through a much harder question: how much value created inside the projects can actually move up to the listed entity in time to service debt and fund the next stage without stretching the equity layer even further.

What is working right now is clear enough. The project map became much bigger: Modiin is relatively close to delivery, Netivot moved deeper into execution, Netanya saw a partial monetization and then received an excavation and shoring permit after year-end, Tzfat secured better senior financing after year-end, Tiberias bought the land and raised bridge financing, and Nof Hagalil added a 536-unit tender win at the start of 2026.

What can mislead the reader is the revenue headline. In 2025 revenue jumped 87.9% to NIS 258.5 million, but apartment sales themselves fell 27.8% to NIS 98.0 million. Gross profit fell 18.3% to NIS 25.7 million, gross margin dropped from 22.9% to 10.0%, operating profit fell 47.5% to NIS 8.7 million, and net profit collapsed 94.8% to just NIS 468 thousand. So the headline showed growth, but the underlying economics weakened.

The active bottleneck is the move from project-level value to accessible value. A large part of the expected surplus still sits in closed project accounts, some of it is pledged to the bondholders, and equity hardly grew despite what looks from the outside like an expansion year. That is why 2026 still looks like a funded bridge year. If Modiin releases surplus on time, if Netanya moves quickly from permits to visible execution, and if Tzfat progresses without adding too much financing strain, the read can improve. If not, the bigger pipeline will start to look more like a burden than like value creation.

The Economic Map

The table clarifies the structure of the story. Only Modiin is close enough to matter directly to the 2026 liquidity bridge. The rest of the pipeline sits further out, much of it still early, and much of it dependent on sales, permits, and financing. That matters even more in a bond-listed company, where the real question is not only whether there is future gross profit, but when that future gross profit becomes liquid.

One more point is worth catching early. At the end of 2025 the company employed 26 people, up from 18 a year earlier, and close to the report date it was already talking about around 31 salaried employees. On the basis of annual revenue, revenue per employee jumped to almost NIS 9.9 million. That is not a sign of an unusually light operating model. It reflects a developer and contractor that runs a large part of its economic activity through contractors, subsidiaries, partnerships, and the associate, so the headcount alone understates the real execution and financing burden.

Events And Triggers

Trigger One: Netanya Changed The 2025 Headline

The single event that most changed the reading of the year was the sale of 25% of the rights in the Netanya project. The transaction, signed in November 2024 and completed by the end of 2025, produced NIS 129.1 million of revenue in 2025, including roughly NIS 9 million of reimbursed expenses, while also bringing in NIS 26.4 million of cash and shifting 25% of the project financing to the buyer. It helped liquidity and validated part of the project value, but it also distorted the annual read: revenue jumped, while the recurring apartment-sales engine did not improve.

After year-end Netanya moved one step forward with the excavation and shoring permit received on February 9, 2026. That is a real positive trigger because the project is moving away from a long planning story and closer to execution. Still, the economic question remains open: will Netanya start producing real development revenue and profit from physical progress, or will it remain for a few more quarters mainly a story of partial monetization, customer advances, and waiting for revenue recognition?

Trigger Two: Netivot Moved From A Planning Story To A Project That Has To Deliver

Ramat Yoram Netivot is probably the heart of the next phase. In July 2025 the project received its Phase A building permit, 76 contracts were signed during 2025 and 79 units had been sold by year-end, and at the same time the company issued Series G for NIS 85.4 million at 6.38%, with part of the proceeds explicitly used for project equity, subordinated-debt repayment, and a loan to the partner.

The important point is that this is no longer a distant option. It is an execution layer that consumes cash now, and precisely for that reason it is also the main collateral pool behind Series G. In other words, Netivot is not only a growth engine. It is also a financing junction. If the project progresses well, it will strengthen the case that 2025 was a bridge year. If not, it could weigh on the company exactly where it tried to open room.

Trigger Three: Tzfat And Tiberias Closed Financing, But Not The Story

In December 2025 Tiberias secured bridge financing of up to NIS 121.5 million, including NIS 95 million of senior debt, NIS 20 million of VAT financing, and NIS 6.5 million of subordinated debt. This is short financing for 12 months or until construction lending begins, at prime plus 0.7% on the senior layer and prime plus 3.8% on the subordinated layer. It opens the road, but it also highlights that Tiberias is still far from the phase in which the project funds itself.

Tzfat matters more. In February 2026 the company signed new senior financing of up to NIS 120 million at prime plus 0.6%, replacing a more expensive prior facility. That is a real improvement. The problem is that this does not remove the remaining NIS 26.7 million mezzanine layer at prime plus 7%, and it does not remove the key condition: a full building permit for Phase A within 12 months from the financing date. So this is a positive event, but not a closed case.

Trigger Four: Nof Hagalil Adds Burden Before It Adds Proven Value

On January 1, 2026 the company won the Nof Hagalil tender for 536 housing units and 17,664 sqm of commercial space. The payment includes about NIS 6.7 million for the land rights and about NIS 103.3 million of development costs, all due within 90 days. In the immediate report the company made clear that it still could not estimate construction cost, profitability, or completion timing, and that the financing source had not yet been selected.

This is exactly the kind of event that has to be held in both hands. On one hand, it is a significant land-bank expansion. On the other, it is another layer of equity and financing needs arriving before the younger projects have started releasing surplus. In a company with only NIS 111.8 million of equity, that is not a side note.

Trigger Five: Management And Execution

During September 2025 the CFO changed, and in February 2026 the company added a new VP of Engineering and Execution, Eyal Bonda, after a long period at Ashstrom Jerusalem. This is not the center of the thesis, but it is still an important organizational signal: the company understands that the next stage is less about telling a project story and more about running several execution fronts in parallel.

Efficiency, Profitability And Competition

The core story of 2025 is a paradox. Revenue almost doubled, but profitability weakened across almost every layer. This is not just a year in which margins softened a bit. It is a year in which the reader has to separate headline growth from the quality of growth.

That chart says most of what matters. Out of NIS 258.5 million of revenue, NIS 129.1 million came from selling rights in Netanya and another NIS 31.5 million came from execution work. In other words, most of the jump did not come from recurring apartment sales. Those actually fell to NIS 98.0 million from NIS 135.7 million in 2024.

Even more important is what happened to gross profit. The NIS 129.1 million of revenue from the Netanya rights sale came with an equal NIS 129.1 million cost line. That does not mean the transaction was bad, because it improved liquidity and brought in a partner. But it does mean that higher revenue did not translate directly into profit. The execution-work layer also did not prove unusual pricing power: revenue was NIS 31.5 million against cost of NIS 28.7 million.

What matters most is the quality of the two new revenue layers.

First, execution revenue is not evidence of a broad third-party contracting franchise. Out of NIS 31.5 million of execution revenue, only NIS 1.6 million came from external activity. The remaining NIS 29.8 million was intersegment, mainly against the associate in Netivot. That matters because anyone reading this revenue line as a strong external growth engine is reading the filing too quickly.

Second, sales quality across the projects needs real care. In Modiin there was one contractor-loan apartment and 11 deals on 20/80 terms. In Netanya most transactions were also structured as 20/80, albeit without a waiver of construction-input index linkage and with an option for earlier payments. In Netivot, 69 apartments were sold on 80/20 and 85/15 terms together with a waiver of the construction-input index linkage. The company says that at this stage the total financing component across all signed contracts is still not material, at about NIS 1.4 million. But that is exactly the point: accounting has not yet absorbed the full economic cost, while the quality of the sales structure has already changed.

The quarterly picture matters because it also breaks the comforting interpretation that the year was weak only for technical reasons. The fourth quarter was already negative, with an operating loss of NIS 1.6 million and a net loss of NIS 3.2 million on revenue of just NIS 29.9 million. So even the year-end run rate did not look like a business entering 2026 with clean profitability momentum.

On competition and industry conditions, the company itself points to a 5.1% increase in the residential construction-input index in 2025, labor shortages in the sector, and tighter financing conditions. This is not a generic macro detour. It matters here because the company is moving further into 20/80, 80/20, and 85/15 deal structures precisely in an environment where both the cost of execution and the cost of capital remain pressured.

Cash Flow, Debt And Capital Structure

Cash Flow

The right cash frame here is all-in cash flexibility. This is not a year in which it is enough to ask whether operating cash flow looked better on paper. The real question is how much cash was left after the actual uses of cash, and how it was built.

The good news is that operating cash flow turned positive at NIS 47.3 million, versus negative NIS 25.7 million in 2024. The less comfortable point is that this cash flow was built mainly from customer advances, supplier and institutional payables, and inventory release, not from a more mature recurring profitability engine. The company itself says the improvement came mainly from about NIS 31 million higher customer advances, about NIS 48 million higher supplier and institutional payables, and roughly NIS 25 million lower inventory, offset by about NIS 27 million higher receivables and around NIS 40 million of interest payments.

The problem is that this path does not create much cushion. Investing cash flow was negative NIS 65.9 million, mainly because of investments and loans to the associate and to the associate’s partner, and year-end cash was only NIS 32.2 million. At the same time the company reports NIS 92.0 million of working capital, but once liabilities are arranged by actual 12-month maturities the picture narrows sharply to NIS 18.5 million. That is a very different number.

Another point readers can easily miss sits inside the finance line. In the P&L, net finance expense looks manageable, with NIS 8.8 million of finance expense against NIS 1.4 million of finance income. But that is far too narrow. In reality, the company bore NIS 9.2 million of bond interest and NIS 49.1 million of loan and other interest in 2025, or roughly NIS 58.3 million of gross interest cost. Out of that, NIS 49.7 million was capitalized into inventory. The cost did not disappear. It was simply moved into the project layer and will come back later through cost of sales.

Debt And Covenants

The year-end capital structure looks like this: NIS 475.8 million of loans from banks and financial institutions, NIS 139.5 million of bonds, and NIS 111.8 million of equity.

The chart shows the center of the reading. Bank debt went down, but the company mainly shifted funding toward the bond market while equity barely moved. This is not a balance sheet entering 2026 with a new equity base. It is a balance sheet that is refinancing, repositioning, and pledging.

The covenants do not tell a story of immediate technical distress, but they do tell a story of discipline. At the end of 2025 the company met every financial covenant. Net debt to collateral stood at 62.22% for Series B versus a 75% ceiling, and at 70.76% for Series G versus an 80% ceiling. The equity-to-net-balance ratio for Series G stood at 14.8% against an 11% floor, while the relevant ratio for Series B stood at 41.1%. So there is no immediate red flag. But there is also not enough room for large mistakes, especially when the surplus itself is project-specific collateral.

Another important point is value accessibility. The trust deeds restrict distributions, and in any case the company cannot distribute a dividend if equity is below NIS 140 million or if the equity-to-net-balance ratio is below 17%. Actual equity stands at NIS 111.8 million. So even if project tables show attractive future surplus, there is still a large gap between that value and free value at the listed-company level.

Series B matures through September 2026, while Series G runs through June 2029. That turns Modiin, with its expected NIS 87.8 million surplus release in Q3/2026, into a critical junction between project economics and debt service. If that surplus is delayed, the pressure on the bridge layer rises quickly.

Outlook

Finding one: 2025 proved the company can partially monetize value and move financing around, but it still did not prove that apartment sales and recurring execution generate stable profitability.

Finding two: the improvement in Tzfat financing is real, but it does not erase the fact that the project still has no sales, still carries expensive mezzanine debt, and still faces a clear regulatory deadline.

Finding three: Modiin is not just another project. It is the only timing bridge that currently looks close enough to connect future surplus with 2026 funding needs.

Finding four: Nof Hagalil expands the pipeline before the company has proved that the existing pipeline can move one stage higher without stretching the equity layer further.

Modiin Is The Nearest Liquidity Test

At MY Modiin the company is already at 85.19% completion, 116 out of 123 units had been sold, and unrecognized gross profit still stands at NIS 37.1 million. This is a mature project, and even more important, the expected surplus release from it is NIS 87.8 million in Q3/2026. That is not just another line in the project table. It is the axis on which the 2026 read sits.

If that surplus arrives on schedule, the company gets real breathing room against Series B, against the financing stack, and against the next pipeline opening. If it is delayed, or if costs slip, the whole story will start to look much faster like a balance sheet pulling value forward from the future.

Netanya And Netivot Are The Operating Pair The Market Has To Watch

In Netanya the company still holds 75% of the project after selling 25%. By the end of 2025, 91 units had been sold, the marketing ratio reached 43.8%, and the excavation permit came after year-end. On paper this is a large future engine, with expected surplus release of NIS 240.4 million in Q2/2029. In practice 2025 still did not show Netanya as a mature operating profit machine. It showed Netanya mainly as a source of partial monetization, customer advances, and liquidity support.

Netivot, by contrast, is already deeper inside the execution decision. Seventy-nine units were sold, the project is 11% complete, and the company explicitly reinforced it through Series G, a partner loan, and subordinated-debt repayment. This can become the next profit engine. But it is still a project whose early sales were made largely on 80/20 and 85/15 terms and with an index waiver. So the question in Netivot is not only whether there is demand. The question is what kind of demand it is, and who funds the bridge period until revenue recognition catches up.

Tzfat, Tiberias, And Nof Hagalil Add Weight Before They Add Cash

That chart makes clear how unusual Modiin is in timing terms. Almost the entire rest of the pipeline sits from 2027 onward. That does not mean there is no value. It means the coming years remain carrying-and-funding years before that value matures.

In Tzfat, the project includes 401 units, of which 199 are under reduced-price housing and 202 are for the free market. The new financing clearly improved the senior rate, but it did not change the fact that the project still needs to cross into a real sales phase and still needs a full permit. Until that happens, Tzfat is mainly a project that consumes financing attention, not one that releases capital.

In Tiberias, the land was acquired only in August 2025 and the financing signed in December is still bridge financing. In plain terms, this is an asset at the beginning of its path. Nof Hagalil is even earlier: there is a tender win and there is a fast payment commitment, but there is still no full economic frame showing how much profit the company actually bought for itself.

What Kind Of Year Is 2026

The most accurate label for 2026 right now is a funded bridge year.

It is not a reset year, because there is pipeline, there are advancing projects, and there were financing moves that pushed the company forward. It is also not a breakout year, because there are still not enough mature projects able to generate liquid surplus in the near term.

What has to happen over the next 2 to 4 quarters for the read to improve?

1. Modiin has to reach delivery and surplus release without a meaningful timing slip.
2. Netanya has to move from excavation permit to visible execution without leaning too much on commercial concessions or another heavy working-capital stretch.
3. Tzfat has to obtain the full Phase A permit and prove it can start selling under a healthier funding structure.
4. Tiberias and Nof Hagalil have to remain within funding boundaries that the company can actually carry, without forcing another early financing round.

If those four things happen, 2025 will look in hindsight like a reasonable bridge year. If not, 2025 will be remembered as the year in which the company opened too many fronts before the equity base truly widened.

Risks

Value Access Is The Central Risk

In a bond-listed developer, the risk is not only whether projects are profitable. The risk is whether that profitability reaches the debt-service layer in time. In Gilad Mai’s case, part of the expected future surplus is directly pledged to the bond series, project accounts are closed, and equity is still relatively small versus the scale of the pipeline. So value that looks real at project level may still remain much less accessible at the listed-company level.

Sales Quality And Working Capital

The use of 20/80, 80/20, and 85/15 payment structures is not automatically a red flag. But it does mean the market should not read the sales pace as if every signed apartment already equals clean cash. In Netivot there is also an index-linkage waiver, and in Netanya the company still relies at this stage on early sales and optional payment acceleration. All of that can work, but it also shifts part of the tension into working capital and bridge financing.

The Financing Layer Is Heavier Than The Bottom Line Suggests

Finance expense in the P&L looks manageable, but as noted above that is a narrow accounting number. The real gross interest burden is much larger, and a meaningful part of it is capitalized into inventory. If rates stay high, if execution stretches, or if funding for the younger projects is more expensive than expected, that pressure will reappear later through cost of sales or through the need for more funding.

Disclosure Is Not Fully Clean

There are also disclosure-quality points worth keeping in view. In the post-balance-sheet sales updates there is a gap between different sections of the annual report: in Modiin one section mentions two additional sales and one cancellation, while the project note shows one additional sale and one cancellation; in Netivot one part of the report shows 12 additional sales close to the report date while the note shows 14. This is not the kind of issue that breaks a thesis on its own, but it does mean the reader should keep the red pen nearby.

Related Parties And Legal Claims

In Netanya, apartment purchases were disclosed by the controlling shareholder, the CEO, the chairman, and additional related parties. The company disclosed these sales explicitly, so there is nothing hidden here. Still, when judging sales quality, it is worth remembering that not every sold unit necessarily reflects only external market demand. Alongside that, the company has 29 legal claims totaling NIS 6.2 million, mainly around construction defects and rent compensation. That does not currently look existential, but it is another sign that moving from growth into fuller execution also brings more operational friction.

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Conclusions

At first glance Gilad Mai’s 2025 looks like a strong expansion year. On a second read it says something more complicated: the company succeeded in widening the pipeline, moving financing around, and extracting partial value from Netanya, but it still did not prove that the business has entered a stable profitability and liquidity track. The central blocker remains the same one: the move from project-level value to accessible surplus at the listed-company layer.

The current thesis in one line: Gilad Mai’s pipeline got bigger, but 2025 still did not prove that the company itself became stronger at the same pace.

What changed versus the earlier understanding is that the company now has a broader project map, more advanced financing moves, and real operating triggers in Netanya, Netivot, and Tzfat. What did not change enough is the equity layer and the ability to turn all of that into free cash.

The strongest counter-thesis is that this is exactly what a good bridge year looks like in a residential developer: partially monetize one project, refinance, bring in a partner, open the next pipeline, and then let Modiin and the projects behind it mature into surplus. That is a serious argument. The problem is that it still needs several fast operating and financing proofs.

What could change the market reading over the short to medium term is not another revenue headline, but four clear checkpoints: surplus release from Modiin, the pace of Netanya’s move into execution, a full permit and real sales in Tzfat, and the ability to fund Tiberias and Nof Hagalil without stretching equity further.

Why this matters: in a bond-listed developer, value that does not move from the project to the listed entity in time is real value, but not necessarily accessible value.

For the thesis to strengthen over the next 2 to 4 quarters, the company has to show that Modiin really becomes accessible surplus, that Netanya moves into execution without a quality slide, and that Tzfat gets its permit and starts moving from a financing story into a sales story. What would weaken the thesis is a delay in Modiin, the need for earlier-than-expected new financing, or evidence that sales in Netivot and Netanya rely too heavily on terms that strain working capital.