Levinstein Properties: After Delisting, How Cash Allocation Looks Through Bondholders' Eyes
The main article already pointed to refinancing as the key 2026 test. This follow-up shows why the story is sharper from a bondholder lens: year-end cash fell to NIS 3.2 million against NIS 553.5 million of current financial liabilities, while dividends and payments to the parent kept moving.
What Changes Once You Look Through the Bonds
The main article already dealt with NOI, leasing-up, and refinancing. This follow-up narrows the lens: what is left for bondholders after the equity is delisted and the company remains a reporting entity whose only public layer is debt.
That changes the framing. As of January 21, 2025, the company became privately held by Levinstein Engineering, while the bonds remained in public hands. From that point on, every dividend is no longer a distribution to a broad public float. It is a direct transfer of cash to the controlling shareholder, while bondholders are left with a different test: how much real liquidity exists against the 2026 refinancing wall.
The year-end picture is blunt. Cash and cash equivalents fell to NIS 3.2 million from NIS 12.1 million a year earlier. Current financial liabilities rose to NIS 553.5 million from NIS 229.6 million at the end of 2024. This is not a covenant-stress story. Equity stood at NIS 1.374 billion and debt to CAP was 35%, far below the 70% ceiling under the bond deeds. This is not accounting distress. It is a funding-discipline story.
| Key metric | 2024 | 2025 | What it means for bondholders |
|---|---|---|---|
| Cash and cash equivalents | NIS 12.1 million | NIS 3.2 million | The liquidity cushion nearly disappeared |
| Cash flow from operations | NIS 42.9 million | NIS 34.0 million | The business still generates cash, but less than in the prior year |
| Current financial liabilities | NIS 229.6 million | NIS 553.5 million | 2026 starts with a much heavier refinancing wall |
| Non-current bank loans | NIS 163.7 million | NIS 5.4 million | Debt moved sharply toward the short end |
| Management-fee and expense-sharing charges to the parent | NIS 22.6 million | NIS 26.2 million | Cash moving up to the parent rose even under tighter funding conditions |
| Dividends paid | NIS 25.2 million | NIS 25.2 million | Distributions did not pause despite the thinner cash position |
The Real Cash Bridge
The Relevant Frame Is all-in cash flexibility
That is the right framing here, not normalized cash generation. The issue for bondholders is not what the assets might generate before growth spending and capital allocation. It is how much cash remains after the period's real uses.
On an all-in cash flexibility basis, the company generated only NIS 34.0 million of operating cash flow in 2025. Against that stood NIS 113 million of investing cash outflow, NIS 25.2 million of dividends, NIS 74.7 million of bond repayment, and NIS 4.3 million of long-term bank-loan repayment. The result is that year-end cash was not built out of the NIS 62.8 million of net income. It was reduced to NIS 3.2 million.
That is why the filing is so clear about where the bridge was closed. Financing cash flow was positive NIS 70.1 million in 2025, driven mainly by a NIS 149.3 million increase in short-term bank borrowing and a NIS 20.0 million commercial-paper issuance. In other words, the gap was not covered by existing cash or by asset monetization. It was covered by leaning harder on short-term funding.
There is also a quality point inside operating cash flow. Management says the year-on-year decline in operating cash flow mainly reflects rental payments collected at the end of 2024 on account of 2025. That means even the NIS 34.0 million operating number does not describe accelerating cash conversion. It describes a somewhat softer underlying cash base.
The Refinancing Wall Versus the Safety Margin
By debt-document terms, 2025 ends with a very crowded short-term maturity stack. Current financial liabilities include NIS 210.2 million of short-term bank loans, NIS 110.0 million of commercial paper, NIS 158.3 million of current maturities of long-term bank loans, and NIS 74.7 million of current maturities of bonds.
There are backstops. The NIS 370 million credit line was extended in August 2025 through August 31, 2026, and NIS 298 million remained undrawn at year-end. In addition, the central-bus-station financing package includes another NIS 100 million line that remained unused. The new NIS 100 million facility signed in December 2025, however, was already fully drawn by year-end.
The implication cuts both ways. On the one hand, this is not a shut funding wall. On the other hand, it is also not a cash cushion that makes refinancing optional. Bondholders are relying on banks staying in place, commercial paper continuing to roll, and management choosing to preserve flexibility instead of extracting more cash upward.
The board explicitly said there is no reasonable concern that the company will fail to meet its obligations, despite a consolidated working-capital deficit of NIS 607 million. The logic is that the real-estate assets are naturally classified as non-current while a meaningful portion of their funding sits in current liabilities, and that the group still has expected income, access to subsidiary cash, and available credit lines. That is a reasonable position. But from a bondholder angle it also sharpens the core point: liquidity does not rest on cash in the bank. It rests on the ability to keep refinancing.
The counter-read is easy to see. The company has NIS 1.374 billion of equity, debt to CAP of 35%, NIS 298 million of undrawn capacity on the main line, another NIS 100 million line tied to the central-bus-station financing package, and about NIS 555 million of unencumbered investment property. In addition, management expects about NIS 95 million of NOI in 2026, rising to about NIS 116 million once Pardesia is completed and the Beer Sheva and Kfar Saba assets reach full occupancy. This is not a solvency picture. But it is still a picture in which asset value and future NOI have to convert into cash or refinancing in real time.
Management Fees, Dividends, and the Priority Stack
This is where the bondholder lens genuinely diverges from the operating read. After delisting, every shareholder distribution goes to the controlling shareholder. In 2025 the company paid NIS 14.4 million in February and NIS 10.8 million in August, or NIS 25.2 million in total. After the balance-sheet date, on February 11, 2026, the board approved another NIS 14.4 million dividend for payment on April 9, 2026.
On that same date the board also reaffirmed a dividend policy under which the company distributes twice a year at least one-third of annual profit, after excluding revaluation gains and the related deferred-tax effects, as long as cash generation and business plans are not materially impaired. In other words, distributions are permitted under the documents and the covenant structure. From a bondholder perspective, that is exactly the point. A permitted distribution is not the same thing as a neutral one for liquidity building.
The same logic applies to management fees. In May 2024 the management agreement was updated so that the company pays the parent a fixed annual fee of NIS 11.5 million, indexed to CPI and plus VAT, instead of NIS 7.7 million under the prior agreement. In practice, management-fee and expense-sharing charges to the parent reached NIS 26.2 million in 2025, up from NIS 22.6 million in 2024. In the P&L itself, management fees to the parent rose to NIS 11.8 million from NIS 10.4 million a year earlier.
In addition, the construction-management agreement with the parent was extended in May 2025 for another five years. That framework generally entitles the parent to 5% of project cost excluding land, or 7.5% in multi-contractor setups. The filing does not break out the exact 2025 cash effect of that channel separately, but the structural point is clear: part of the investment budget sits inside a related-party fee framework.
That is why bondholders are not just reading debt against assets. They are reading a priority stack. When the company runs with NIS 3.2 million of cash, relies more heavily on short-term borrowing and commercial paper, and at the same time keeps paying dividends and higher management-related charges to the parent, the message is that management is comfortable keeping the liquidity cushion relatively thin as long as the credit market remains open.
Bottom Line for Bondholders
The right read of 2025 is not "immediate stress", but it is also not "comfortable balance sheet". Asset quality, equity, and covenant distance buy the company time. What it does not have is readily available cash. At year-end, almost the entire test moves through the ability to refinance rather than through a cash balance large enough to absorb a less friendly year.
That is the core of the continuation. After delisting, the equity market no longer acts as an external feedback mechanism on capital allocation. The lenders are the remaining outside constituency. As long as the company can roll short-term funding, keep credit lines open, and turn leasing-up and NOI into real cash, the thin cash balance is manageable. If one of those three weakens, the dividend, the parent-fee framework, and the dependence on short-duration debt will look materially less comfortable.
The near-term checkpoints are straightforward: actual refinancing of the short debt layer in 2026, preservation of the undrawn facilities, a meaningful rebuild in cash, and proof that expected NOI is starting to move from the assets into the cash account. That is where it will become clear whether 2025 was only a bridge year in funding terms, or a sign that bondholders are financing too thin a cushion for the controlling shareholder.
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