Sales Are There, Cash Is Late: The Real Cost of Carasso’s Sales Models
Carasso Real Estate ended 2025 with NIS 658.9 million of development revenue even though it sold only 211 units versus 352 a year earlier. This follow-up shows that the gap runs through softer sales terms, waived indexation, and a financing component already cut out of revenue, while operating cash flow fell to negative NIS 396.2 million.
The Sales Are Real, But The Cash Quality Has Changed
The main article already argued that Carasso’s test has moved from RIBL to sales and cash. This follow-up isolates the mechanism connecting those two points: not just how many apartments were sold, but on what terms they were sold, how much money came in now, and how much of the consideration was pushed close to delivery.
The headline number that can mislead on first read is revenue. In 2025 development revenue rose to NIS 658.9 million from NIS 478.5 million in 2024, even though only 211 units were sold versus 352, for sales consideration of about NIS 747 million versus about NIS 1.28 billion. That does not mean demand improved. It means the company kept recognizing revenue through execution progress on contracts already signed while the pace of new sales weakened.
That is exactly where the sales models matter. The company itself says that 77% of 2025 sales value was generated through marketing models, versus 74% in 2024. In its warning-sign discussion it adds that most of the contracts signed from late 2023 and during 2024 were on favorable payment terms. So the question is no longer just whether there was a sale. The question is how much of the nominal price is already in the cash balance while the company keeps building and recognizing revenue.
That chart is the heart of the continuation. When revenue rises while both units sold and sales consideration fall sharply, the next step is to go back to the sales terms and ask what the company had to give up to keep the machine moving.
What Carasso Gave Up To Keep Sales Moving
The filing is unusually explicit here. The company offers waived indexation, payment structures where only 15% to 20% is paid near signing and the balance is paid near delivery, and developer loans. These are not side promotions. They have become a central part of the sales engine.
The table below is not additive, because the same contracts can include more than one benefit. It does show where cash quality deteriorates:
| Incentive layer | 2024 | 2025 | Why it matters |
|---|---|---|---|
| Sales through marketing models | 74% of sales value | 77% of sales value | Most sales now rely on softer terms rather than standard sales terms |
| Contracts with favorable payment terms | NIS 943 million, of which NIS 180 million was paid at signing | NIS 188 million, of which NIS 29 million was paid at signing | Only about 19% came in upfront in 2024, and only about 15% in 2025 |
| Waived indexation | NIS 716 million, 56% of sales value | NIS 395 million, 53% of sales value | The company gives up part of its protection against time and inflation |
| Developer loans | NIS 148 million, 12% of sales value | NIS 126 million, 17% of sales value | Even as absolute sales fell, buyer financing became a larger share of the mix |
The most important column here is not the absolute contract volume. It is how much cash the company actually sees at the start. In favorable-payment contracts in 2025, only about NIS 29 million was collected out of about NIS 188 million of contract value, or roughly 15%. In 2024 the ratio was about 19%. In other words, even inside the favorable-payment bucket itself, the immediate cash layer became thinner.
And that is before underwriting quality enters the discussion. In developer-loan transactions, the lending bank assesses the buyer’s repayment capacity, so Carasso relies on bank underwriting. But in contracts with favorable payment terms, the company says explicitly that it did not perform its own independent underwriting. It relied on having already received 15% to 20% of the price upfront and on the assumption that this equity payment should cover most of the expected damage if some buyers do not complete the transaction. That is not proof of trouble, but it is also not the same sales quality as a fully financed, fully underwritten sale.
The picture also does not yet show a cancellation wave. During 2025 only one purchase contract was cancelled, and the value was negligible. That matters, because the yellow flag here is not about cancellations that have already happened. It is about cash being pushed forward in time while the company itself funds the bridge period.
The Accounting Cost Is Already In The Filing
The most important point in this continuation is that the price of these incentives is already visible in the numbers. In transactions with favorable payment terms, the company calculated a significant financing component of about NIS 11.7 million in 2025, versus about NIS 4.8 million in 2024, and treated it as a reduction in transaction prices for revenue-recognition purposes. In other words, the accounting itself already says that not every contractual selling price is the equivalent of a cash price.
Developer loans are not free either. In 2025 the company paid about NIS 7.2 million of interest to mortgage banks in connection with those programs, versus about NIS 5.7 million in 2024. In some transactions the developer loan does pull cash forward for the company and reduces the need for project-bank debt, but it still costs money and it still weakens the economic quality of the sale.
There is one more point that is easy to miss. The company says explicitly that the gross-profit figures shown in the project tables do not include the significant financing component that comes from buyer incentives. That is not a technical note. It means part of the cost of softer selling terms does not sit where readers instinctively look for it, inside the project gross-profit tables. It is already being taken out earlier through revenue or running through other financing lines.
So the right way to read 2025 is not “profitability held up despite a weak market.” The sharper read is this: the company kept recognized revenue moving, but it did so through sales terms whose cost is already visible in the filing even if it does not all sit in one line.
Why This Hits Cash Flow Now
This is where the gap between the income statement and the cash balance becomes concrete. Operating cash flow was negative NIS 396.2 million in 2025, versus negative NIS 211.5 million in 2024. The company itself says the deterioration came from higher investment in projects under execution, a relatively slow sales pace, and a change in industry payment terms. In the same section it also states that there is ongoing negative operating cash flow and negative 12-month working capital in the solo statements.
The cash-flow statement shows where the money got stuck. Inventory of buildings for sale increased by NIS 135.7 million, land inventory increased by NIS 113.4 million, and the liability for construction services fell by NIS 143.1 million. Contract liabilities did increase by NIS 23.7 million, but that is nowhere near enough to close the gap. Even without assigning every line directly to the sales models, the picture is clear: the company is still building and investing faster than it is converting contracts into free cash.
That is the core of the story. These marketing models are not just a way to get through a softer demand period. They push a larger share of the business economics forward in time. Revenue is recognized based on construction progress, but a large part of the cash arrives later, sometimes without indexation and sometimes after the company has already paid interest to help the buyer. That is why NIS 658.9 million of development revenue and negative NIS 396.2 million of operating cash flow are not contradictory. They are exactly what weaker cash-conversion quality looks like.
What Has To Improve From Here
Checkpoint one: the share of sales under marketing models has to come down, not just change shape. As long as 77% of sales still relies on softer terms, it is hard to call this a clean normalization.
Checkpoint two: the significant financing component has to stop rising. If 2026 brings another increase above NIS 11.7 million, it will be hard to argue that the market has gone back to normal terms.
Checkpoint three: the gap between revenue and cash flow has to begin closing. Selling is not enough. The company needs more advances, more deliveries that turn contracts into cash, and less dependence on buyer financing.
The counter-thesis is easy to understand. The company says exposure in these transactions is not expected to be material, buyers still pay 15% to 20% upfront, developer loans come with bank underwriting, and only one purchase contract was cancelled in 2025 for a negligible amount. Those are fair arguments. But they mostly answer the question of ultimate loss, not the question of cash-conversion quality.
And that is exactly what this continuation is trying to isolate. In 2025 Carasso did not show stronger demand. It showed an ability to keep the machine moving in a weaker market through time, waived indexation, and buyer financing. As long as that brings the cash later and raises the economic price of selling, the sales are real, but they are not worth the same thing.
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