Sonol Nadlan: What Really Sits Behind the Haifa Logistics Valuation

What Is Actually Being Valued Here

The main article already made the broader point: most of the value beyond Sonol Israel is concentrated in Haifa. This follow-up isolates only that issue: what exactly the NIS 158.05 million valuation of the logistics compound represents, and what would have to happen for that value to become accessible rather than remain an appraisal number.

The first thing to sharpen is that the appraisal does not read the asset like a normal income-producing property. It does not ask what the 2025 NOI is worth, and it does not anchor itself to the current rent Sonol Israel pays for the logistics portion. It asks a different question altogether: how much this land parcel is worth if it is read as industrial and logistics land at the gate of Kishon Port, with room for a larger logistics project than the current use.

That distinction matters because it creates a balance-sheet number that is explainable, but not yet consumable as cash flow. At year-end 2025 the logistics compound shows NOI of only NIS 2.783 million, average occupancy of 34%, and 16,000 square meters actually leased. At the same time, the company presents a future Stage A project with expected annual rent of NIS 11.4 million, about NIS 76 million of construction cost, expected construction start in 2027 and expected income start in 2028. That is the core gap. The value is already living in a 2028 framework, while the cash flow is still living in a 2025 framework.

• The NIS 158.05 million value is not a capitalization of current rent. The appraiser explicitly says the existing logistics lease reflects an interim use and is therefore excluded from the valuation.
• Most of the value is built like land value for a future logistics center. The base is 41.249 dunams at NIS 3.75 million per dunam.
• Another NIS 3.37 million comes from a temporary public-open-space strip. The appraiser assigns 15% of an industrial-land value to a 5.999-dunam strip on the assumption that its designation could later change.
• The gap versus the Sonol Israel valuation is mostly about risk allocation. In the Sonol Nadlan case the valuation removes the 5% contamination haircut because the lease places remediation cost on Sonol Israel.

The Appraisal Deliberately Ignores the Current Cash Flow

To understand why the valuation looks demanding, it helps to start with what the appraiser chose not to do. Under the 1 July 2022 lease, total rent for the fuel-terminal site is NIS 860,000 a month, of which the logistics portion accounts for NIS 210,000 a month. In the invoice for January through March 2026, the logistics monthly rent had already risen to about NIS 234.5 thousand. Even so, the appraisal says this rent should not anchor value.

The internal logic is straightforward. The company retains the right to terminate the logistics lease with 180 days notice for any reason, while the tank-farm part cannot be terminated early. So in the appraiser's framework, the logistics lease is not a long-duration market lease that should drive value. It is a transition arrangement until a different use is implemented.

Put simply, the appraisal is telling the reader something very direct: do not read this site as if the current lease already reflects its full economic value. Read it as land that has not yet reached the use the company is aiming for.

That chart is not a price-target exercise and it does not prove full project economics. It simply shows how far the reading of the asset has already moved from current income to planned income. On a simple implied basis, 2025 NOI translates into a current yield of roughly 1.8% on a NIS 158.05 million valuation. That is not enough to explain the carrying value on its own. By contrast, the company itself presents expected Stage A annual rent of NIS 11.4 million against roughly NIS 76 million of construction cost still to be spent. That explains why the appraiser is willing to look ahead, but it does not prove the value is already accessible today.

What Builds the NIS 158.05 Million

This is where precision matters, because the appraisal is not a black box. It gives a fairly explicit calculation.

The more interesting point is not only the final number but the gap between the two valuations living inside the same appendix. For Sonol Israel, the appraiser used roughly NIS 3.56 million per dunam after a 5% discount for contamination uncertainty and reached NIS 153.2 million, including the solar contribution. For Sonol Nadlan, he moved to NIS 3.75 million per dunam without that contamination haircut and reached NIS 158.05 million even without a solar component.

So the value does not rise here because the asset is producing more cash flow. It rises because the contract pushes remediation cost away from the public company and onto Sonol Israel. That is an important distinction. It is defensible in accounting terms, but for an investor it means the valuation is sensitive not only to planning assumptions but also to how environmental risk has been contractually allocated between the company and the related-party tenant.

The Friction Did Not Disappear. It Was Moved Outside the Reported Number

The annual report offers three clear reminders that the value has not yet crossed into execution.

The Permit Is Still Missing

The company describes two different layers of the same asset. In the summary table in section 3.1.2 it presents Stage A of a logistics center at about 13,404 square meters, expected construction start in 2027 and expected income start in 2028. In section 9.12.2 it expands the picture and describes two logistics buildings and a longer-term total footprint of about 24,000 square meters. But as of year-end 2025, the permit had not yet been granted. The appraisal describes a resubmitted application after an appeal process, and says the next step depends on environmental-ministry approval before the file can go back to committee discussion.

So even on management's own framing, the jump from land value to accessible value is still stuck at the permit gate.

Stage B Requires Relocation, Not Just Construction

Even after Stage A, the picture is not clean. The company states explicitly that the second stage requires relocating the urea plant into the tank-farm area and moving the oils plant out of the compound. That is not a footnote. It is the core difference between the 13.4 thousand square meters in Stage A and the roughly 24 thousand square meters of total logistics footprint in the longer-term plan.

In other words, part of the value assumes not only permit approval, but also a reorganization of the site's internal land use. Until that happens, part of the upside remains theoretical.

The Contamination Is Not a Direct Company Cost, but It Is Still Real Friction

Within plot 31 there is an area of roughly 4.3 dunams that had previously been leased to Gadot, and soil investigations identified contamination hotspots requiring treatment and remediation. In November 2024 the investigation findings were delivered, and in February 2025 the Environmental Protection Ministry approved a remediation plan based on excavation and soil removal. According to the annual report, Sonol Israel estimates the cost at roughly NIS 2.0 million to NIS 2.5 million and will bear it in full.

That is exactly the subtle point a reader can miss. There is no direct cost exposure at the public-company level, but there is still real execution friction. To move the site all the way through realization, it is not enough to know who pays for contamination. The treatment, approvals and timetable still have to be worked through in practice. The Sonol Nadlan valuation removes that discount from the number. It does not remove it from reality.

When Does This Become Accessible Value Rather Than Appraised Value

The easiest mistake in reading this asset is to think the main question is whether the appraisal is "right." That is a secondary question. The more important one is what must happen for the appraisal to turn into value shareholders can actually access.

The first trigger is an effective building permit for Stage A. Without that, the first 13.4 thousand square meters remain a planning scenario.

The second trigger is capital allocation. The company estimates about NIS 76 million of construction cost for Stage A. In section 19 it states, in general terms, that if needed it may finance the development and enhancement of its properties through liens on the specific asset. That matters because it reminds the reader that this is not only a planning question. It is also a financing and execution question.

The third trigger is real cash flow. The market does not need another appraisal to understand the story. It needs to see whether the Haifa logistics site starts moving from a roughly NIS 2.8 million annual NOI transition lease toward a built, contracted structure that actually pulls the company closer to the NIS 11.4 million annual rent it presents for Stage A.

The fourth trigger is real progress on the temporary open-space strip. NIS 3.37 million of the appraisal rests on rezoning potential for 5.999 dunams. That is not large enough to make or break the whole thesis, but it does remind the reader that part of the value rests on additional planning optionality beyond the logistics center itself.

So the conclusion is simpler than it first looks. The NIS 158.05 million valuation is not a mistake, but it is not cash in the bank either. It is the value of land read through a future-use framework, with a current lease treated as interim use, with the contamination haircut removed because of contractual risk allocation, and with a small but real contribution from a strip that is still formally marked as temporary public open space.

Until the permit is granted, the operational relocations happen, and NOI starts catching up with the appraisal, the Haifa logistics compound will remain mainly an appraiser's model with a business horizon, not an asset that has already proved the economics implied by its value.