Midas Investments: The assets are moving, but 2026 at the parent level still depends on monetizations

Getting to Know the Company

Midas Investments looks, at first glance, like a small real estate company with a few Israeli assets and a promising US pipeline. That is too shallow a read. In practice, this is a small listed parent company sitting above very different layers of value: 22% of the Momentum project in Netanya, 24.67% of Kiryat Anavim, the Herbert Samuel development project in Tel Aviv, and a string of US logistics holdings, from Virginia to Washington, and after the balance-sheet date, Norton as well. If you look only at appraisals and potential NOI, you see optionality. If you look at the parent-company layer, you see a liquidity bottleneck.

What is working now? Momentum is no longer just a new building waiting for tenants. In 2025 average occupancy rose to 68% from 64%, leased area rose to 8,421 square meters from 7,696, and NOI, net operating income from the asset, jumped to NIS 8.6 million from NIS 1.9 million. In the US, the Washington transaction was added, bringing a net revaluation gain of about NIS 5.4 million, and after the balance-sheet date Norton was added as well. There is real movement in the assets.

What is still not clean? The company ended 2025 with a NIS 12.1 million net loss, negative operating cash flow of NIS 10.1 million, cash of just NIS 11.6 million, equity of NIS 44.7 million, and a NIS 49.3 million working-capital deficit. This is no longer a theoretical discussion about asset value. It is a discussion about timing. Can that value move up the chain to the listed parent before the near-term debt needs a solution.

That is the key point. At Midas, the question is not whether there are assets that can create value. The question is whether that value is accessible to common shareholders at the listed-parent level, after asset-level loans, partners, incentive mechanisms, minority interests, and the parent company's own debt.

There is also a practical actionability constraint that needs to be on the table early. The company's equity market cap is only about NIS 39 million, and the latest trading day showed just about NIS 13.2 thousand of turnover in the stock. At the same time, the market value of Series E bonds was about NIS 50.5 million, Series D about NIS 38.3 million, and Convertible Series 2 about NIS 36.1 million. In other words, the tradable debt surface is already larger than the equity layer. In that kind of structure, the market tends to react first to financing, refinancing, and monetizations, and only after that to appraisals.

That number matters because it explains how 2026 should be read. This is not a year in which it is enough to show that appraised asset value has gone up. It is a year in which the company has to show that this value can translate into cash, refinancing capacity, or at least real breathing room at the parent-company level.

Events and Triggers

The core insight is that 2025 and early 2026 gave Midas more assets, more optionality, and more value on paper, but not less operating or financing complexity. Every positive trigger here comes with a practical test.

The US footprint is expanding, but through value-add assets

The first trigger: in January 2025 the Washington deal was added, an indirect 9.49% stake in a logistics center in Maryland, in the Washington DC area, with about 47,000 square meters of built area. This is not a trivial asset. Based on the deal description, the property was partially leased to two American corporations for annual rent of about $3.3 million, and under a full-lease scenario the company and its partners estimated it could reach about $7 million in annual rent over time. As of June 30, 2025 the asset was appraised at about $101 million, and Midas booked a net revaluation gain of about NIS 5.4 million.

But this is exactly where the reading has to slow down. The increase in value did not come because the asset was already operating at the new level, but mainly because a low-rent tenant paying only about $4 per square foot vacated, while market rents were estimated at about $14.5 per square foot. In other words, the company bought back potential, not the fully delivered result. By the time the report was approved, only part of that area had been re-leased, occupancy rose to about 68%, and expected NOI was estimated at about $6.2 million. That is real progress, but it is still not fully proven or fully leased.

The second trigger: in February 2026, after the balance-sheet date, Norton in Massachusetts was added as a 10% holding in a logistics center with about 42,573 square meters. The asset is partially leased to an American corporation for about 15 years, with annual rent of about $4.5 million and a 3% annual step-up. The positive thesis is obvious: the company and its partners estimate that once the vacant space is leased, annual rent could reach about $6.2 million. But again, the parent company does not get that option for free. Midas' share of the required equity for the deal is about $2.2 million.

The third trigger: the US book also has a more stable side. Durham and Livonia, the two Vericast assets, remained 100% occupied in 2025. NOI rose to $1.091 million in Durham and to $1.203 million in Livonia. These assets do not carry the whole thesis on their own, but they do show that not all of the US exposure is a re-leasing story.

Against that stands Virginia, which is already a warning signal. Asset value slipped slightly to $52.5 million, NOI fell to $1.484 million from $1.696 million, and the appraisal now assumes 58% occupancy in year one. So even inside the logistics portfolio there is a sharp split between assets that generate stable cash and assets that still need repair.

The capital markets helped, but also highlight the dependence on them

The fourth trigger: on March 31, 2025 Midas repaid Convertible Series 1 principal of NIS 51.9 million. On the surface that looks like a clean reset. In practice, it was quickly replaced with a new financing structure. In July 2025 the company issued Convertible Series 2 with NIS 35 million of principal, in November it added another NIS 5 million, and during the year it also expanded Series D and Series E. This is not the behavior of a company leaving the capital markets behind. It is the behavior of a company rolling its dependence forward and trying to buy time.

The fifth trigger: the company managed to remain in compliance with its bond covenants, but the cushion does not look wide. At the covenant level it reported roughly NIS 45 million of equity and a 75% net financial debt to net CAP ratio. That is still above the breach thresholds, but it is not deep comfort territory, especially when the entire equity market cap sits around the same general magnitude.

In Israel, the operating improvement is real, but financing is still open

The sixth trigger: Momentum posted a meaningful operating improvement, but the bank still has not fully closed the financing event. Debt at the project level, about NIS 176.1 million, was classified as short term at year-end 2025. The reason was failure to meet the required NOI thresholds for 2024 and 2025. On December 31, 2025 a waiver was obtained, and by the time the report was signed the maturity had been extended by two months in order to arrange long-term financing. That is positive, because there was no acceleration. But it is also a reminder that the asset improved faster than the financing framework caught up with it.

The seventh trigger: Herbert Samuel made planning progress. In April 2025 the deposit notice for the plan was received, and in July 2025 the partition lawsuit was deleted. That removes part of the legal noise and improves the planning picture. Even so, perspective matters. Herbert Samuel still has no construction, no marketing, and no near-term cash answer. This is a strategic trigger, not a cash-flow trigger.

That chart sharpens why the positive triggers should not be overread. Even in a year that added assets, booked revaluations, and showed real improvement at Momentum, the bottom line stayed negative in every quarter.

Efficiency, Profitability, and Competition

The operating picture improved at the asset level in 2025, but at the group level it still does not look like a business with clean, recurring profitability. That is the heart of the gap between asset value and parent-company economics.

In 2025 total revenue and other income stood at NIS 6.977 million, versus NIS 11.039 million in 2024. The story behind the numbers is more complex than the consolidated line. On one side the company recorded a NIS 7.75 million gain from remeasuring an investment, a NIS 1.753 million gain from an investment sale, and sharp improvement at Momentum. On the other side, the share of profit from equity-accounted entities swung to a NIS 2.912 million loss, and finance expenses rose to NIS 14.607 million from NIS 9.713 million. In other words, even as the assets improve, the financing layer continues to consume the result.

This may be the most important chart in the article. The company owns a meaningful asset base relative to its size, but most of the liabilities sit precisely in the unallocated layer, the layer that looks much more like the parent company and its financing than like any single property. That is exactly where the gap between economic value and accessible value is created.

Momentum, the improvement is real, but it is not finished

At Momentum the operating step-up is real. Revenue rose to NIS 10.7 million from NIS 5.2 million, NOI rose to NIS 8.6 million from NIS 1.9 million, adjusted NOI rose to NIS 9.4 million from NIS 7.3 million, and the number of tenants rose to 21 from 19. Fixed contracted rent for 2026 through 2029 runs at about NIS 11.1 million to NIS 11.5 million annually, with another NIS 82.4 million for 2030 and beyond.

But anyone rushing to say the asset is already "done" is missing two things. First, the bank debt had to be classified as short term and required a waiver. Second, the appraisal still rests on representative NOI of NIS 14.405 million, far above actual NOI of NIS 8.626 million. So even after the impressive improvement in 2025 there is still a meaningful gap between the asset's current economics and the economics underlying the valuation.

That gap matters especially because the asset is not judged only by occupancy, but by whether it can support long-term financing without another waiver request. The audit key matter on liquidity pointed exactly in that direction, tying the liquidity discussion to the bank loan taken for the investment property.

Kiryat Anavim, still more of a planning story than an operating one

Kiryat Anavim is exactly the kind of asset that can mislead in both directions. If you look only at 9% occupancy in 2025, you conclude the asset is weak. If you look only at the planning upside, you conclude it is a hidden gem. Both reads are too simple.

The 2025 numbers describe an asset in reset mode: average occupancy fell to 9% from 32%, leased area fell to 260 square meters from 962, and yet NOI turned slightly positive at NIS 489 thousand, versus negative NIS 358 thousand in 2024. That means that even while income compressed, costs fell harder. It does not turn Kiryat Anavim into a mature income-producing property. It simply means the ground is better prepared for a new phase than it was before.

The more interesting data point sits in the appraisal layer. The 2025 appraisal assigns a value of NIS 62.4 million, assumes representative NOI of NIS 4.803 million, and assumes 8% occupancy in year one and 100% from year two onward. In other words, the valuation does not rest on 2025 performance, but on the scenario in which the spaces reopen and lease up. The same appraisal explicitly says there is a management deficit caused by the current operating format and occupancy level, and that this deficit should shrink once a supermarket or another chain opens and the remaining space is leased.

More than that, the appraisal intentionally excluded upside from additional planning potential before there is formal planning progress. That matters to both sides of the thesis. On one side, it shows restraint and avoids inflating value. On the other, it is a reminder that the future upside at Kiryat Anavim has not yet become proven value.

The US portfolio, a mixed book of stability and value-add

US logistics is not one story. Durham and Livonia are the stable assets, with a single tenant, 100% occupancy, and NOI around $1.1 million to $1.2 million per property. These look like cash-flow assets.

Virginia, Washington, and Norton look different. Virginia comes after real operating erosion and with an appraisal that assumes a gradual occupancy recovery. Washington is built on re-leasing and on a large spread between historically low rent and market rent. Norton enters the book already as a partially leased acquisition with a clear value-add angle. That is not negative by itself. It simply means the US business increases not only potential value, but also execution burden.

Cash Flow, Debt, and Capital Structure

If one framework has to be chosen for Midas, it is the full cash picture, how much cash is actually left after interest, repayments, investments, and carrying the holding company itself. That is the relevant lens here, not normalized cash generation before investments and not representative asset-level NOI.

In 2025 the answer was uncomfortable. Operating cash flow was negative NIS 10.1 million. Investing used another NIS 9.6 million, mainly around investment in another company and loans to equity-accounted entities. Financing was negative NIS 23.2 million despite bond issuance, because repayments of Series 1 and Series D were larger. By year-end cash had fallen to NIS 11.6 million from NIS 54.4 million.

That is exactly why accounting gains are not enough. In 2025 the company received only NIS 2.228 million of dividends from equity-accounted entities, while it paid NIS 7.923 million of interest. The ability of the assets to work for the parent company is still limited.

From a debt-structure perspective, two critical points sit inside 2026. The first is Series D, with NIS 37.956 million of current maturities due at the end of December 2026. The second is the bank loan at Herbert Samuel, NIS 23.083 million at Midas' share, also due in December 2026. Those two items alone explain why the working-capital deficit sits at the center of the reading.

It is important to be precise. The company is not yet in a breach event. It remained in compliance with its bond covenants, and the trustees did not report a cause for immediate repayment. But that does not mean the oxygen cushion is deep. It only means that by the end of 2025 the company was still on the right side of the line.

That chart almost explains the whole 2026 thesis by itself. The company starts the year with about NIS 9.6 million, assumes NIS 60 million of proceeds from the sale of holdings in an investee, and uses that cash to fund operating expenses, interest, Norton, further investments, and above all NIS 40.3 million of bond principal. In other words, 2026 is not a year of operating self-funding. It is a bridge year via monetizations.

The same logic continues into 2027, with another NIS 21.2 million of proceeds from asset or holding sales and an expected closing cash balance of NIS 12.7 million. That tells you the company itself is not presenting a rapid shift to a broad self-funded model. It is presenting active funding-chain management.

Outlook

Before getting into the detail, four less obvious findings need to be set out clearly:

• Momentum's improvement is real, but it still has not fully resolved the financing event. An asset can improve quickly while its debt remains short.
• The US logistics portfolio increases total potential value, but it also shifts more of the thesis toward value-add assets rather than only stabilized assets.
• Most of the liabilities do not sit next to the assets themselves, but at the parent-company layer, so not every future NOI dollar is immediately accessible to common shareholders.
• The 2026 forecast is effectively built on monetizing holdings. That means the central question for the coming year is financing execution, not only operating execution.

2026 looks like a bridge year

The right way to read the next year is as a bridge year. Not a breakout year, because cash is still not being built from recurring operations at the parent. Not a reset year either, because the assets themselves did move forward. It is a year in which the company has to connect better assets with a workable parent-level funding path.

At Momentum, what has to happen is a move from waiver status to a stable financing structure. The asset can already show NOI of NIS 8.6 million, but the appraisal still talks about NIS 14.4 million, and the bank already showed in 2025 that it is looking at actual NOI. So the real trigger here is not one more tenant in isolation, but long-term refinancing on terms that recognize the operating improvement without creating new strain at the parent level.

At Kiryat Anavim, what has to happen is a move from abstract upgrade potential to visible leasing. The appraisal talks about representative NOI of NIS 4.8 million, but 2025 ended with only NIS 489 thousand and 9% occupancy. That is an enormous gap. It does not mean the valuation is wrong. It means the distance between today and the representative case is still very large.

In the US, the three assets that really matter are Virginia, Washington, and Norton. Each tells a value-add story, but not the same kind of story. Virginia needs occupancy back. Washington has to prove that the new leasing can actually lift income toward the level reflected in the appraisal. Norton has to move from acquisition thesis to operating delivery. That means the next few quarters matter less because of another appraisal, and more because of signed leases and actual conversion into income.

What could improve the read

Two developments could materially improve the read on Midas over the next 2 to 4 quarters. The first is a meaningful asset or holding monetization that proves the company can move cash up to the parent, rather than only create value inside partnerships. The second is a successful financing resolution, especially around Momentum and Herbert Samuel, without simply replacing one pressure point with another.

If those two things happen, the current market cap, around NIS 39 million, could start to look very low relative to the underlying asset base. But the sequence matters. First cash, then market interpretation.

What could break the thesis

The main vulnerability is that the company could remain dependent on the capital markets or on monetizations precisely when the market is less open or when monetizations are delayed. In that kind of structure, even improving assets may not protect shareholders if the parent gets too tight first.

The second vulnerability is that appraisals in both the US and Israel continue to move faster than actual leasing. That is especially visible at Momentum, Kiryat Anavim, Washington, and Virginia. When accounting value advances faster than operating income, the risk is not just optical. It also affects refinancing capacity based on economics that have not fully been delivered yet.

Risks

Risk one, parent-level liquidity. Working capital is negative, operating cash flow is negative, and the 2026 plan assumes monetizations. If a sale is delayed, the company will need an alternative funding source.

Risk two, refinancing. Momentum already needed a waiver, and Herbert Samuel sits on a bank loan due in December 2026. Any delay in refinancing could create new pressure at exactly the wrong time.

Risk three, value above the common-shareholder layer. A meaningful part of the asset base is held through associates, joint ventures, and outside partners. Even when value is created, not all of it is available and not all of it is immediate.

Risk four, US value-add assets. Virginia, Washington, and Norton depend, to different degrees, on re-leasing and higher rent levels. That is potential, but it is also execution risk.

Risk five, Kiryat Anavim. The asset is running in a reduced operating mode, and the appraisal depends on reopening and meaningful leasing. If planning and marketing slip, value will remain inaccessible for longer.

Risk six, market frictions. A small market cap and very low trading volumes do not create the business risk themselves, but they do increase volatility and make it harder for the market to digest a complex story.

Conclusions

Midas ends 2025 with two stories running in parallel. On one side, the assets are moving: Momentum is improving, Washington carries visible potential, Norton broadens the portfolio, and Durham and Livonia provide stability. On the other, the parent company is still not feeding off that progress fast enough to make 2026 a calm year. The main bottleneck is value accessibility, not the existence of value itself.

Current thesis in one line: Midas has more asset value than the market cap implies, but until it proves that this value can move up to the parent in time, the stock will continue to be read through monetizations and financing rather than through appraisals.

What has changed is not the existence of asset optionality, but the quality of some of the Israeli assets and the broader US logistics footprint. At the same time, it is now clearer that this improvement still has not solved the parent-company liquidity issue.

Counter-thesis: the article may be too conservative, because Momentum has already improved materially, Kiryat Anavim still does not reflect its upgrade potential, and Washington and Norton provide a clear path to higher NOI. If that happens alongside a successful monetization, the gap between value and market price could close quickly.

What could change market interpretation over the near to medium term is not another revaluation, but a transaction that generates real parent-level cash or a financing move that extends the runway without adding new pressure. That is the core of the story.

Why does it matter? Because Midas is a classic test case for the difference between economic value created inside assets and value that can actually reach shareholders of a relatively leveraged parent company.

Over the next 2 to 4 quarters the thesis strengthens if the company completes monetizations, refinances debt on reasonable terms, and keeps improving the value-add assets. It weakens if one of the expected cash sources slips, if financing events remain unresolved, or if the value-add assets progress more slowly than the appraisals imply.