Kardan N.V. in 2025: Dalian Stabilized, but the Value Is Still Stuck Beneath the Debt

Getting To Know The Company

Kardan N.V. is no longer a diversified holding company. After the collapse of Tahal and the practical disappearance of the water infrastructure business from the consolidated story, the public vehicle now rests almost entirely on one asset: Galleria Dalian in northeastern China, plus a much smaller tail of jointly held residential projects. That is why the right way to read 2025 does not start with the question of whether the mall is functioning. It is functioning better. The real question is whether the value sitting underneath that mall can actually travel up to the parent before December 31, 2026, the maturity date of the bonds.

What is working now? The mall ended 2025 at 96.5% occupancy, the open-store ratio rose to 95.1%, the number of tenants reached 220, and NOI (net operating income) rose to EUR 6.836 million. The fair-value loss also narrowed sharply to only EUR 2.4 million, versus EUR 14.6 million in 2024. At the same time, the project loan was refinanced in May 2025 into a 15-year structure, so bank pressure at the asset level eased materially.

But this is still not a clean picture. The company ended 2025 with an attributable equity deficit of EUR 128.9 million, a total equity deficit of EUR 143.4 million, a working-capital deficit of EUR 208.4 million, and bonds with a carrying amount of EUR 115.0 million that were fully reclassified to current liabilities. On top of that sits an explicit going-concern note, and on top of that there is another practical blocker: the shares are due to be delisted from trading in Tel Aviv in June 2026. By now, trading in the equity is already close to irrelevant, with only ILS 1,308 of turnover on the latest trading day in the market snapshot.

That is the point a superficial reader may miss. They may see a mall valued at RMB 792 million against bank debt of RMB 366.5 million and assume there is a comfortable cushion. That is the wrong read. The valuation itself states that this is an asset-level market value with no deduction for charges, liabilities, or taxes, and also warns that a disposal within 12 months could require a 20% to 35% discount. At the same time, the lending syndicate may restrict upstreaming of cash and requires a minimum cash balance at the project. So even when Dalian looks better, the cash is still not free.

The economic map at the end of 2025 looks like this:

That picture explains why 2025 matters. The focus has shifted from whether Dalian can stabilize operationally to whether that stabilization is enough to extract value through the debt stack, the collateral structure, and the liquidity constraints.

Events And Triggers

The first trigger: 2025 strips out the accounting illusion of 2024. In the prior year the company booked a EUR 244.5 million gain from the new debt arrangement, so the bottom line looked far stronger than the actual business economics. In 2025 that one-off gain disappeared, and the report takes the reader back to the basic structure: a net loss of EUR 84.3 million, driven almost entirely by the financing layer rather than by a fresh operational collapse.

The second trigger: On May 27, 2025, the Dalian loan was refinanced into a RMB 375 million facility with a 15-year tenor. This mattered. It reduced bank pressure at the asset level, set annual payments at about RMB 37 million, and extended the funding life of the mall. But it also kept the bank deeply embedded in the story: security over the mall and the project company shares, a minimum cash-balance requirement, and the right to ask for additional collateral or early repayment if the asset value or lease quality deteriorates.

The third trigger: On February 25, 2026, Savills published the updated valuation. It set the mall’s market value at RMB 792 million, down again from RMB 811 million at the end of 2024, RMB 923 million at the end of 2023, and RMB 1.22 billion in mid-2022. In other words, the operating asset improved, but the value kept eroding. That is the core contradiction in Kardan.

The fourth trigger: The share price now has almost no real role as a discovery mechanism. The stock moved to the preservation list after the June 2022 debt arrangement, the bondholders now own about 89.99% of the equity following that arrangement, and the Tel Aviv delisting is scheduled for June 2026. In practical terms, Kardan now reads less like a normal real estate equity and more like a public wrapper around debt and a base asset.

Efficiency, Profitability, And Competition

The operational improvement in Dalian is real

If Dalian is isolated from the rest of the structure, 2025 looks better than Kardan’s headline net loss suggests. Mall income rose to EUR 10.684 million, NOI rose to EUR 6.836 million, average occupancy increased to 95.2%, and the open-store ratio reached 95.1% versus 92.1% at the end of 2024. The management company also kept tightening operating costs: according to the annual report, mall operating expenses excluding property tax fell from RMB 34.7 million in 2019 to RMB 23.5 million in 2025, while rental and management income rose from RMB 59.9 million to RMB 85.7 million.

This is not just a matter of tone. The Savills valuation states that the mall reached a historical peak of more than 7.4 million visitors in 2025. In plain terms, Dalian no longer looks like a broken mall waiting for a miracle. It looks like an asset that has reached a far more mature operating stage.

But some of that improvement was bought with softer terms

This is where the story becomes more interesting. Higher occupancy does not mean the mall regained pricing power. In fact, the annual report says that during 2025 several agreements were signed on especially large and problematic spaces, either because of location, shape, or category. The examples the company gives are not trivial: a gym, a duty-free store, a children’s swimming facility, and a supermarket expansion. Together they represented only 7 stores, but around 40% of the area leased during 2025. The company also says that some of those spaces had been vacant for a long time, so leases were signed on lower rent terms.

Savills reinforces that point from a different angle. It describes the mall’s 2025 leasing strategy as more active, including more favorable commercial terms to attract new tenants, especially for large spaces that are harder to lease or harder to renew on better economics. In other words, occupancy improved, but part of the improvement came through economic concessions.

That matters because a 96% occupancy headline sounds like strength. In reality it also reflects adaptation to a weaker retail market and an asset that prefers filling space on softer terms rather than leaving it empty.

The next wall is lease rollover

Savills says that more than 80% of the leases will expire within one to three years, meaning between 2026 and 2028, and more than 95% of leases will expire by the end of year five. The implication is simple: 2025 did not buy Kardan multi-year stability. It bought a better starting point for a large renewal cycle.

And the market backdrop is not especially supportive. Savills describes Dalian as a buyer’s market, where prime shopping-mall asking rents slipped slightly in the fourth quarter of 2025, from RMB 610.8 per square meter per month to RMB 610.2. Kardan adds that more street shops opened around the mall, with asking rents in a range of one-third to two-thirds of mall rent. It also says nearby office spaces are being converted into businesses that could have sat inside the mall. So the competitive pressure is not theoretical.

There is another weak point in the tenant mix. The valuation states that the kids category is still the largest leased-area component, and that more than 20% of tenants at the valuation date were kids-related. At the same time, both Kardan and Savills highlight the sharp decline in the birth rate as a pressure point on that category. This is not an immediate 2025 problem, but it is clearly a yellow flag for the next lease-roll cycle.

At the group level, the business almost stabilized before finance

The non-obvious part of the report is that Kardan almost stopped losing money at the operating line. Operating loss narrowed to only EUR 0.3 million, versus EUR 13.8 million in 2024. That mostly reflects the sharp reduction in the mall’s fair-value loss. The share of profit from associates and JVs also moved from a EUR 5.5 million loss to a small EUR 0.3 million profit, and that portfolio even distributed a EUR 1.9 million gross dividend.

But this is exactly why Kardan is interesting. Once the reader moves from the asset layer to the financing layer, almost all of that improvement disappears. Financing expense still stood at EUR 84.1 million, so almost the entire operating improvement was immediately wiped out.

Cash Flow, Debt, And Capital Structure

The consolidated cash picture is not the same thing as parent flexibility

Here the cash framing matters, and it needs to be explicit. On an all-in consolidated cash-flexibility basis, 2025 was not a cash-burn year. Cash flow from operating activities was positive, at EUR 2.1 million. Investment in property and equipment and investment property was minimal, only EUR 0.2 million, and net financing cash flow was close to flat. Cash and cash equivalents rose to EUR 8.8 million from EUR 7.1 million at the end of 2024.

But that is exactly one of the places where the consolidated view can mislead. Kardan’s cash sits inside a layered structure. The mall is financed with local bank debt and must maintain a minimum cash balance equal to 1.2 times the next six months of payments. Beyond that, any upstreaming of funds is subject to syndicate approval. So the fact that the group did not burn cash does not mean the parent gained room to repay its bonds.

The debt layer above the asset is far heavier than the operating margin

As of December 31, 2025, total liabilities stood at EUR 277.0 million against EUR 133.6 million of assets. That includes EUR 115.0 million of bonds, all classified as current, bank and other loans of EUR 46.3 million, and an EUR 82.3 million balance with a former subsidiary that left consolidation. The note on that balance states that Kardan is not a guarantor of those loans, but the bottom line is that it still sits inside a swollen current-liabilities picture.

There is no bond covenant about to trip tomorrow morning. In fact, the report says that the June 2022 and December 2024 debt arrangements did not include financial covenants for the bonds. But that does not really make the picture easier. Kardan’s test is not covenant headroom. It is the calendar. On December 31, 2026 the bonds mature, and the company itself says that, based on its cash-flow forecast, it does not currently have sufficient sources to fully repay the debt on time.

The bridge from appraised value to accessible cash is far narrower than the headline

To understand Kardan, the reader needs to move from asset value to accessible value. The mall is valued at RMB 792 million, and bank debt on it stood at RMB 366.5 million at year-end. At first glance that looks like a comfortable spread. But the valuation itself says a disposal within 12 months could come with a 20% to 35% discount. Once that discount is applied, gross proceeds fall to RMB 633.6 million or RMB 514.8 million. After bank debt, and before taxes, transaction costs, dividend restrictions, or any other friction, the residual drops to only RMB 267.1 million or RMB 148.3 million.

This is exactly the difference between value created and value accessible. And one more layer needs to be added: the valuation itself explicitly says it made no allowance for mortgages, liabilities, sale expenses, or taxes. So even the chart above is generous. It shows what remains after bank debt only, not what would necessarily reach the parent.

The refinancing solved one problem, but not Kardan’s problem

The Dalian refinancing mattered. The new loan carries a rate of five-year prime plus 1.4%, with a stepped arrangement fee, and annual payments of about RMB 37 million. The company also says it is in compliance with the new agreement as of the report date. All of that improves the asset’s ability to keep operating.

But it does not solve Kardan’s problem, because Kardan’s problem sits at the parent level. The company still needs to move value upstream or solve the bonds at the holdco level. The refinancing bought time for the asset. It did not, by itself, create cash for the parent.

Outlook And Forward View

Finding one: 2025 is not a turnaround year for the public company. It is a stabilization year for the asset underneath the public company. That is important, but it is not the same thing.

Finding two: 2026 is a monetization test, not an NOI test. Even if NOI stays around 2025 levels, that will not be enough unless there is a real path to repay or restructure the bonds by December 31, 2026.

Finding three: the high occupancy of 2025 came with a price. Part of the space was re-let on softer commercial terms, and a large lease-renewal wall now sits in 2026 through 2028. So 96.5% occupancy cannot be read as though it were locked in for the next several years.

Finding four: the China residential tail is no longer an immediate source of pressure, but it is not a rescue wheel either. The investment in associates and JVs fell to EUR 20.2 million, the share of profit was EUR 0.3 million, and gross dividends amounted to EUR 1.9 million. That helps, but not against EUR 115 million of bonds.

What has to happen by December 31, 2026

Kardan needs to show one of two things, and ideally both: either an asset disposal on terms that do not wipe out the entire cushion, or a bond solution at the parent level that does not rely only on hope that the asset will sell “eventually.” Until something like that appears, the improvement in Dalian remains important but not decisive.

At the same time, Dalian itself needs to pass through the lease-renewal cycle without reversing. If 2025 was a clean-up year, then 2026 through 2028 will be the test years: can tenants be rolled without another meaningful giveback on rent economics, and can the high store-opening and footfall numbers actually convert into durable commercial stability?

There is also a quieter third test. The bank needs to remain calm. As long as results stay stable and the company meets the minimum cash-balance requirement, the new agreement buys time. If asset value drops, leases weaken, or sector concerns re-emerge, the syndicate can move back to the center of the story very quickly.

What kind of year is next

2026 looks like a proof year for value realization, not a normal growth year. If a sale, a debt solution, or a credible path to upstream cash appears, the market will be able to reread both the going-concern note and the value of the asset. If not, Kardan will remain a company that owns a functioning asset but still cannot turn it into accessible cash on time.

That also explains why short and medium-term market reaction will not revolve mainly around another few hundred thousand euros of NOI. It will revolve around monetization, debt resolution, lease renewals, and exit costs.

Risks

The first risk is forced monetization under time pressure. The valuation itself warns of a 20% to 35% discount in a sale within 12 months. There are also at least seven other malls in Dalian offered for sale, and some have reportedly been on the shelf for a long time. This is not a market with a long line of buyers.

The second risk is lease renewal and occupancy quality. More than 80% of leases expire within three years, part of the 2025 improvement came through softer commercial terms, and the kids category is still meaningful precisely at a time of falling birth rates. If the next rollover wave requires more concessions, NOI can weaken faster than occupancy suggests.

The third risk is FX exposure. Most group assets are denominated in Chinese yuan, while the bonds are linked to Israeli CPI and denominated in shekels. The company itself says that in 2025 the yuan depreciated 9.4% against the euro and 10.9% against the shekel, and that the combination of a weaker yuan and a stronger shekel hurt the results. As long as that structure remains, operational improvement at the asset can still be diluted in translation.

The fourth risk is liquidity and parent-layer pressure. The company explicitly states that it does not currently have sufficient sources to fully repay the bonds on time. This is no longer a theoretical risk. It is the official starting point of the report.

The fifth risk is marketability and actionability. The June 2026 delisting and the negligible trading volume until then are not cosmetic details. They sharply reduce the room for minority shareholders to act, weaken the role of the equity market, and leave the story primarily in the domain of debt resolution, monetization, and the base asset.

Conclusions

Kardan ends 2025 with a better asset and a weaker public company. What supports the thesis now is a mall that has finally reached a reasonable operating level, a more orderly bank financing structure, and a JV portfolio that is no longer destroying value at the same rate as before. What blocks the thesis is that this value is still trapped beneath debt, collateral, and upstreaming limits, while the bonds mature on December 31, 2026.

Current thesis: in 2025 Kardan looks less like a story about a broken mall and more like a story about value that remains stuck on the way from the asset to the debt.

What changed versus the 2024 read? The center of gravity shifted from Dalian’s operational survival to Dalian’s monetization capacity. That is an important shift. Kardan’s problem now sits less in the mall itself and more in the structure above it.

Counter-thesis: one can argue that this cautious reading misses an asset that really did improve. Dalian is highly occupied, NOI increased, tenants came back, the bank loan was spread over 15 years, and the China JV portfolio returned to a small profit. If the asset is sold close enough to appraised value, the debt picture can look materially less severe.

What can change the market read in the short and medium term? Any concrete sign of a sale, a bond resolution, or an ability to move cash upstream. On the other side, any sign of a deep-discount disposal, renewed bank pressure, or weak lease renewals would immediately push the story back to liquidity.

Why does this matter? Because in Kardan there is no debate about whether an asset exists. It does. The debate is whether that value really belongs to debt and equity holders in time, or whether it remains value on paper inside a leveraged local structure.

Over the next 2 to 4 quarters, the thesis strengthens if Kardan presents a real path to repay or restructure the bonds and gets through the first lease-renewal wave without a sharp hit to the mall’s economics. It weakens if the company remains dependent on theoretical value in an asset whose actual sale may happen on far worse terms.