Melisron: How Much Cash Is Really Left After Residential Buildout, Dividends, and Debt Service
Melisron still generates strong cash from its income-producing core, but 2025 showed where the story changes: after a jump to ILS 878 million in land-inventory purchases, reported operating cash dropped to ILS 294 million. The key question is no longer only how much NOI the group can produce, but how much real cash flexibility remains after residential growth, distributions, and debt service.
The main article argued that Melisron can no longer be read only through NOI, AFFO, or mall quality. This continuation isolates the part that the main piece had to compress: how much cash the core business really generates, and how much is left after residential buildout, dividends, and debt service.
The easy mistake is to look at AFFO of ILS 1.234 billion and treat it as if it were the group’s free cash. That would be wrong. AFFO is an important measure of recurring earning power in the income-producing platform, but it is not measured after land-inventory purchases, not after investment spending, and not after actual debt repayments. In 2025 Melisron proved that the core is still very strong. In the same year, it also proved that residential is no longer sitting at the margin of the capital-allocation story.
That is why two cash frames are needed here. The first asks how much cash the existing business can generate before major growth investment and capital uses. The second asks how much is left after the group actually paid for land inventory, investment spending, dividends, and debt service. Only the combination tells the full story.
Two cash frames, three different readings
The first important point is that Melisron did not lose the cash-generating power of its income-producing base. Quite the opposite. AFFO rose to ILS 1.234 billion from ILS 1.160 billion. On a reported cash-flow basis, before purchases and investments in land inventory, the group generated ILS 1.172 billion versus ILS 1.150 billion in 2024. The investor presentation shows a slightly higher figure, ILS 1.214 billion, as cash flow from operating activities excluding residential activity. In other words, the cash engine is still there.
But that reading is no longer enough. Once the analysis moves from recurring cash generation to actual cash retained, the jump in capital uses becomes obvious. Purchases and investments in land inventory rose to ILS 878 million, versus just ILS 47 million in 2024. That is the point at which operating cash flow after this item falls to only ILS 294 million, compared with ILS 1.103 billion a year earlier.
| Cash frame | 2024 | 2025 | What it captures |
|---|---|---|---|
| Management AFFO | 1,160 | 1,234 | Recurring cash-generation power of the income-producing platform after management adjustments |
| Operating cash flow before purchases and investments in land inventory | 1,150 | 1,172 | Reported group cash generation before land-inventory absorption |
| Operating cash flow after purchases and investments in land inventory | 1,103 | 294 | Cash left inside operating activities after residential took priority in capital allocation |
The implication is straightforward: the core is not weaker, but the cash cushion is narrower. Anyone looking only at AFFO or only at NOI will miss the shift. What used to be mostly surplus cash from income-producing assets now also has to fund a residential platform that is growing much faster than the retained cash pool.
Where residential starts to consume balance-sheet room
The 2025 balance sheet shows exactly where that capital is going. Inventory of apartments for sale, buildings under construction, and land rose to ILS 850 million from ILS 309 million. Non-current land inventory rose to ILS 2.855 billion from ILS 2.159 billion. Together that already reaches ILS 3.705 billion, versus ILS 2.468 billion at the end of 2024. At the same time, the liability for construction services rose to ILS 378 million from ILS 86 million.
That does not mean the activity is problematic. It does mean it now requires a different lens. The 2025 presentation describes Aviv Melisron as a platform with a balance sheet of ILS 3.4 billion, equity attributable to owners of ILS 566 million, net debt to CAP of 79%, 27 projects under execution and advanced planning, and roughly 6,400 housing units to build. It also shows expected revenue of ILS 18.5 billion and expected operating profit of ILS 2.9 billion on a 100% basis.
Those figures explain the embedded value. They also explain why cash is starting to work harder. The future value in residential looks large, but the cash goes out now. The expected revenue and project operating profit in the presentation are forward-looking project economics, while the balance sheet is already carrying the land, the buildout, the construction obligations, and the leverage. That is the gap between future value and present-day cash flexibility.
The parent-level read also matters. In the board report, the company explains that the 2025 LTV bridge was affected, among other things, by a ILS 229 million loan extended to Aviv Melisron. So this is no longer just a consolidated activity expanding inside the group. It is also a direct capital-allocation call from the parent into the residential arm.
What is really left after dividends and debt service
This is where the second cash frame becomes more important for flexibility. Starting from the reported operating cash flow before purchases and investments in land inventory, ILS 1.172 billion, it is possible to see how that amount is reduced on the way to an actual increase of only ILS 333 million in year-end cash. The key point is that the increase in cash did not come from clean internal surplus alone. It also came from a very active refinancing cycle.
What this shows is not distress. It is a change in the structure of the story. In 2025 Melisron paid ILS 360 million of dividends to shareholders, ILS 55 million to minority holders, ILS 1.878 billion in bond repayments, and another ILS 33 million in long-term loan repayments. At the same time, it raised ILS 1.548 billion in bonds, took ILS 493 million of long-term loans, and increased net short-term credit by ILS 859 million.
So the cleaner way to say it is this: Melisron ended the year with more cash, but not because every major cash use was funded by internal generation. They were funded by a combination of a very strong income-producing core and an open debt market with solid refinancing access. That distinction matters because it changes the reading of every additional shekel directed toward residential growth.
The board report reinforces that interpretation. The company says that from the start of 2024 through the report date it raised roughly ILS 6 billion of bonds and commercial paper. That is real financing flexibility. But it also means that 2025 cash flexibility rested not only on what the assets generated, but also on what debt markets were willing to fund.
Why this is not pressure, but no longer surplus
The important point is not to overdramatize it. Melisron does not look pressured. It ended 2025 with LTV of 40.4%, while the company itself indicates a target of about 50%. Debt to CAP stood at 50.3%, versus a company target of about 57%. Cash and immediately realizable financial assets stood at about ILS 1.6 billion, alongside committed unused bank lines of about ILS 0.5 billion. By the end of 2026 the company has about ILS 1.95 billion of principal repayments due, and the presentation also points to about ILS 12.2 billion of unencumbered assets. The issuer rating was upgraded to ilAA in February 2025 and reaffirmed in February 2026.
| Balance-sheet metric | 2025 | Management or operating anchor | What it means |
|---|---|---|---|
| LTV | 40.4% | Company target of about 50% | There is balance-sheet room, but it is no longer unlimited |
| Debt to CAP | 50.3% | Company target of about 57% | There is still headroom, but residential is already using part of it |
| Cash and liquid financial assets | about ILS 1.6b | about ILS 0.5b of unused committed lines | Liquidity looks comfortable, but 2026 is already heavy with maturities |
| Principal due by end-2026 | about ILS 1.95b | Proven debt-market access and about ILS 12.2b of unencumbered assets | The funding test is manageable, not automatically solved |
So the debate is not whether Melisron has a weak balance sheet. It does not. The debate is whether the group’s flexibility will remain mostly self-directed, or whether it will lean more heavily on continued debt-market access and on turning residential from a heavy balance-sheet user into a real cash contributor.
That is also why management’s 2026 framing matters more than usual here. The presentation says that in 2026 Aviv Melisron is expected to accelerate with 13 projects under execution totaling about 2,400 housing units. If that comes with deliveries, profitability, and cash generation, the flexibility picture will stay reasonable. If it mainly comes through more inventory, more construction, and more tied-up capital, the market will start reading residential less as upside optionality and more as a standing capital consumer.
Conclusion
The bottom line is clear: Melisron’s income-producing core still generates enough cash to support the dividend, service a meaningful part of the debt burden, and back growth. But 2025 is the first year that shows in a sharp way that residential is already changing the picture. Not by weakening asset quality, but by absorbing capital and narrowing what is truly left over.
If there is one numerical pair that explains the whole story, it is this: ILS 1.172 billion of operating cash flow before purchases and investments in land inventory, versus only ILS 294 million after that item. That gap is where Aviv Melisron stops being only a future growth engine and starts becoming a present-tense capital test.
From here, the market will not just need to see strong NOI, high occupancy, or another fair-value uplift. It will need to see that residential can start returning capital, and that the group’s funding machine remains open and efficient even while three capital pockets, income-producing real estate, offices, and residential, pull at the balance sheet at the same time.
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